Zoom Video Communications (ZM) has reported financial results for this year’s third quarter that beat Wall Street forecasts across the board.
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The video conferencing company announced earnings per share (EPS) of $1.52, which topped the consensus expectation among analysts of $1.44. Revenue in the summer quarter totaled $1.23 billion, which was ahead of the $1.21 billion forecast on Wall Street.
Management attributed the strong results to 6.1% growth among its enterprise customers. The company also reported a 41.2% operating margin and operating cash of $629 million for what was its Fiscal third quarter.
Zoom’s income statement. Source: The Fly
Zoom’s Guidance
Zoom said that it’s seeing upside from its growing use of artificial intelligence (AI), particularly in its contact centers. Management said that its AI Companion feature is resonating with customers. CEO Eric Yuan said in the company’s earnings release that Zoom is seeing “broad AI adoption across major deals.”
In terms of guidance, Zoom maintained its revenue outlook for the current fourth quarter, saying it expects sales of $1.230 billion to $1.235 billion. However, it raised its earnings guidance to between $1.48 and $1.49 per share. That’s ahead of Wall Street’s consensus forecast of $1.45 a share for this quarter.
The company’s board of directors authorized an additional $1 billion for its share repurchase program, adding to the $310.4 million remaining from its previous share repurchase authorization. ZM stock is up 4% in after hours trading following the release of its latest financial results.
Is ZM Stock a Buy?
The stock of Zoom Video Communications has a consensus Moderate Buy rating among 17 Wall Street analysts. That rating is based on six Buy, 10 Hold, and one Sell recommendations issued in the last three months. The average ZM price target of $92.43 implies 16.60% upside from current levels. These ratings could change after the company’s financial results.
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