Covid-19 drives Zoom boom in first quarter of 2020

Described by leading financial analysts as “incredible” and a performance not witnessed for decades, video-conferencing software firm Zoom has revealed first-quarter results showing revenues growing by as much as 169% year-on-year.

The company has perhaps been the key beneficiary of stay-at-home directives and lockdown orders around the world to prevent the spread of the coronavirus spurring higher demand for distributed, face-to-face interactions and collaboration. The software platform has established itself among both enterprise and consumer users and has been used in major parliaments as they maintain their official business.

For the quarter ended 30 April 2020, total revenue for the quarter was $328.2m, and this 169% year-on-year spike in cash generate was the engine for generally accepted accounting principles (GAAP) income from operations of $23.4m, a massive leap on the $1.6m in the first quarter of the previous fiscal year.

Non-GAAP income from operations for the first quarter was $54.6m, up from $8.2m a year earlier. GAAP net income attributable was $27m, and non-GAAP net income for the quarter $58.3m, after adjusting for stock-based compensation expense and related payroll taxes, expenses related to charitable donation of common stock, and undistributed earnings attributable to participating securities.

A year ago, the latter figure was $8.9m. Net cash provided by operating activities was $259m for the quarter just ended, compared with $22.2m at the corresponding period the year before.

In a stark example of just what a quarter the company has enjoyed, at the end of the first quarter of fiscal year 2021, 30 April 2020, Zoom had approximately 265,400 customers with more than 10 employees, up approximately 354% from the same quarter in the previous fiscal year.

Some 769 customers contributed more than $100,000 in trailing 12 months revenue, up approximately 90% from the same quarter last fiscal year. It also had a trailing 12-month net dollar expansion rate in customers with more than 10 employees above 130% for the eighth consecutive quarter.

Commenting on the stellar performance achieved during the quarter, Zoom founder and CEO Eric Yuan said that the company had been “humbled” by the accelerated adoption of the Zoom platform worldwide in light of the Covid-19 crisis.

“Use cases have grown rapidly as people integrated Zoom into their work, learning and personal lives,” he said. “I am proud of our Zoom employees who dedicated themselves to support customers and the global community during this crisis. With their tremendous efforts, we were able to provide high-quality video services to new and existing customers.”

Looking to the future, Zoom expects the growth to continue over 2020 as more companies relied on conferencing and provided second-quarter guidance calculating total revenue to be between $495m and $500m, and non-GAAP income from operations between $130m and $135m.

For its full financial year ending 31 January 2020, Zoom said that it was on track for revenues of between $1.775bn and $1.8bn. The revenue outlook took into consideration the demand for remote work solutions for businesses and assumed increased churn in the second half of the fiscal year when compared with historic churn levels, due to a higher percentage of customers who purchased monthly subscriptions in the first quarter. Non-GAAP income from operations is expected to be between $355m and $380m.