Dow Jones – Zoom’s Pandemic-Fueled Increase Continues — 2nd Replace

By Aaron Tilley 

Zoom Video Communications Inc. posted one other quarter of report gross sales and once more lifted its outlook as distant working and distance education drags on through the pandemic, however the progress has include greater prices that dissatisfied buyers.

Zoom has been offering a few of its companies free to customers, together with to now greater than 125,000 Ok-12 faculties that started the brand new tutorial yr largely educating remotely. That weighed on its profitability, Zoom stated Monday. Gross margin for the quarter fell to 67%, down from 71% within the prior three-month interval, as the corporate spent closely on cloud-computing service to facilitate all its customers.

The corporate reported gross sales of $777.2 million within the newest quarter, up from $166.6 million a yr earlier, because it posted a revenue of $198.Four million. Analysts surveyed by FactSet had anticipated gross sales of $694 million and internet revenue of $149 million for the three months ended October 31.

“We stay centered on the communication wants of our clients and communities as they navigate the present setting and adapt to a brand new world of labor from wherever utilizing Zoom,” Chief Govt Eric Yuan stated. “We count on to strengthen our market place as we end the fiscal yr,” he added.

The videoconferencing firm, which went public final yr, raised its full-year outlook for a 3rd time through the pandemic, cementing its place as one of many largest company winners from the shift to working from house and distant education.

Zoom stated it now expects gross sales within the present monetary yr ending in January to succeed in round $2.58 billion, up from the earlier quarter’s steerage of gross sales reaching as a lot as $2.39 billion.

Its shares have surged amid the Covid-19 outbreak and are up about sevenfold this yr. However shares had been down round 4% in after-hours buying and selling.

Zoom’s world increase in reputation has put it on the heart of a rivalry amongst tech firms pushing their companies for managing day by day life through the pandemic, pitting it towards far bigger rivals akin to Microsoft Corp. and Fb Inc.

The rise of Zoom, based 9 years in the past, hasn’t been with out setbacks. The Federal Commerce Fee this month stated it had settled a case with the corporate over how the videoconferencing platform handles person privateness. Zoom additionally reacted to strain to extra actively police content material on its platform.

Its free service additionally is predicted to proceed weighing on profitability, Zoom stated. “With the uncertainty of the longevity of the pandemic, it’s unclear how lengthy gross margins can be impacted as we stay dedicated to supporting the worldwide group,” Chief Monetary Officer Kelly Steckelberg stated, including that margins would ultimately enhance.

Zoom, nonetheless, has seen a big improve in its paying subscriber numbers. It stated it now has 433,700 clients with greater than 10 staff, up virtually six occasions from the earlier yr’s determine. The variety of its most profitable clients, these paying greater than $100,000 a yr, has greater than doubled from the yr earlier than.

Zoom stated it plans to capitalize extra broadly on its huge surge in reputation however continues to be assessing how greatest to focus on smaller shoppers, Chief Working Officer Aparna Bawa stated eventually month’s WSJ Tech Dwell convention.

The corporate stated it expects gross sales within the present quarter of $806 million to $811 million and adjusted per-share earnings of 77 cents to 79 cents. Wall Street is forecasting adjusted earnings per share of 62 cents for the quarter on gross sales of $728 million.

Write to Aaron Tilley at aaron.tilley@wsj.com

(END) Dow Jones Newswires

November 30, 2020 17:48 ET (22:48 GMT)

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