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Zoom Reports Financial Results for the Third Quarter of Fiscal Year 2022
Zoom exceeded analysts’ estimates for the quarter and issued better-than-expected guidance.

Zoom Video Communications Inc’s third-quarter revenue growth rate slowed to 35 percent as demand for its video-conferencing tools eased from the pandemic-fuelled heights last year, sending its shares down about 6 percent on Monday.

Zoom reported better-than-expected quarterly earnings on Monday while warning investors of a revenue slowdown at the video-chat company as the pandemic come to an end.

The stock, a pandemic winner, fell to $227.5 in extended trading, after having lost about 28% this year.

Third Quarter Fiscal Year 2022 Financial Highlights:

Revenue

Revenue was at $1.05 billion (roughly Rs. 7,830 crores) in the quarter ended October 31, Zoom said, after rising 54 percent in the previous quarter and surging 360 percent a year earlier.

Income from Operations and Operating Margin

GAAP income from operations for the third quarter was $290.9 million, up from $192.2 million in the third quarter of the fiscal year 2021. After adjusting for stock-based compensation expense and related payroll taxes, and acquisition-related expenses. Non-GAAP income from operations for the third quarter was $411.3 million, up from $290.8 million in the third quarter of the fiscal year 2021. For the third quarter, GAAP operating margin was 27.7% and the non-GAAP operating margin was 39.1%.

Net Income and Diluted Net Income Per Share

GAAP net income attributable to common stockholders for the third quarter was $340.3 million, up from $198.4 million in the third quarter of the fiscal year 2021.

Non-GAAP net income for the third quarter was $338.4 million, after adjusting for stock-based compensation expense and related payroll taxes, acquisition-related expenses, gains on strategic investments, net, and undistributed earnings attributable to participating securities. Non-GAAP net income per share was $1.11. In the third quarter of the fiscal year 2021, non-GAAP net income was $297.2 million, or $0.99 per share.

Cash and Marketable Securities

Total cash, cash equivalents, and marketable securities, excluding restricted cash, as of October 31, 2021, were $5.4 billion.

Cash Flow

Net cash provided by operating activities was $394.6 million for the third quarter, compared to $411.5 million in the third quarter of the fiscal year 2021. Free cash flow, which is net cash provided by operating activities fewer purchases of property and equipment, was $374.8 million, compared to $388.2 million in the third quarter of the fiscal year 2021.

Customer Metrics

Drivers of total revenue included acquiring new customers and expanding across existing customers. At the end of the third quarter of the fiscal year 2022, Zoom had:

2,507 customers contributed more than $100,000 in trailing 12 months revenue, up approximately 94% from the same quarter last fiscal year.

Approximately 512,100 customers with more than 10 employees, up approximately 18% from the same quarter last fiscal year.

A trailing 12-month net dollar expansion rate in customers with more than 10 employees above 130% for the 14th consecutive quarter.

Moreover, the stiff competition posed by Cisco’s conferencing tool Webex and Microsoft’s Teams has made it challenging for Zoom to win over enterprise customers.

To retain its users, the company launched a variety of new offerings such as the Events platform, where businesses can host large-scale conferences, cloud-calling service Zoom Phone, and in-office meetings feature Zoom Rooms.

“Their Rooms and Phone businesses are 5 percent penetrated or below and that seems to imply plenty of remaining runway for growth even within their existing capabilities only,” said Joe McCormack, senior analyst at Third Bridge said.

Financial Statement :

 

Zoom Video Communications, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except share and per share amounts)

Three Months Ended October 31, Nine Months Ended October 31,
2021 2020 2021 2020
Revenue $ 1,050,756 $ 777,196 $ 3,028,488 $ 1,768,883
Cost of revenue 270,957 258,727 797,207 554,705
Gross profit 779,799 518,469 2,231,281 1,214,178
Operating expenses:
Research and development 98,508 42,582 245,994 111,705
Sales and marketing 293,698 190,157 810,544 470,886
General and administrative 96,736 93,488 362,971 227,856
Total operating expenses 488,942 326,227 1,419,509 810,447
Income from operations 290,857 192,242 811,772 403,731
Gains on strategic investments, net 122,421 154,497 2,538
Interest income and other, net (2,995 ) 1,779 (3,171 ) 7,112
Income before provision for (benefit from) income taxes 410,283 194,021 963,098 413,381
Provision for (benefit from) income taxes 69,900 (4,621 ) 78,100 1,675
Net income 340,383 198,642 884,998 411,706
Undistributed earnings attributable to participating securities (112 ) (202 ) (430 ) (531 )
Net income attributable to common stockholders $ 340,271 $ 198,440 $ 884,568 $ 411,175
Net income per share attributable to common stockholders:
Basic $ 1.14 $ 0.70 $ 2.99 $ 1.46
Diluted $ 1.11 $ 0.66 $ 2.89 $ 1.38
Weighted-average shares used in computing net income per share attributable to common stockholders:
Basic 297,375,011 284,783,006 295,647,626 282,564,481
Diluted 305,939,624 299,258,765 305,726,7

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