In a sign the company is making progress in selling more products to large enterprise customers, Zoom Video Communications Inc. upgraded its yearly forecasts. During extended trading following the news, the shares were up about 4%.
The company now expects that revenue for the year ending in January of 2024 will run as high as $4.5 billion. Annual earnings, excluding select items, will not run at $4.63 to $4.67 per share. The previous estimate was for annual earnings to come in at $4.25 to $4.31 per share.
There had been concern over the sales for Zoom, as its once explosive sales during the pandemic now face challenges by major rivals, such as Microsoft Corp’s new offerings. Zoom’s plans for boosting growth hinge on increasing its tools for bigger businesses, such as phone platforms, customer service systems, calendar applications and chat features powered by recent advances in artificial intelligence. It recently invested in AI startup Anthropic, and has announced it will be purchasing the workplace communication company Workvivo.
Fiscal second quarter enterprise revenue was up 10% to $659.5 million, beating analysts’ forecasts. That beat was seen as a positive indication that Zoom is on the right track with its plan to increase its service offerings for larger companies, according to Bloomberg Intelligence’s John Butler. Sales online to consumers and small businesses fell 4.3% to $479.2 million.
During a conference call on the results, Chief Financial Officer Kelly Steckelberg said, “Our increased total revenue guidance reflects a consistent view on Enterprise, with tempered expectations for Online for the remainder of the year.”
In the period ending July 31st, the California-based Zoom had 218,000 enterprise customers, an increase of 6.9% over the same period one year prior. 3,672 of those customers handed over more than $100,000 in trailing 12-month revenue, almost 18% more than one year prior.
Steckelberg also pointed to the high demand for the new non-video products the company was offering. Zoom Phone made about $500 million in annualized run rate revenue. The company’s contract center tool passed 500 customers, meanwhile. Steckelberg noted that while some companies have downsized their workforces, and that has impacted the company’s revenue, Zoom has been able to cross-sell new products to “replace that revenue.”
In the fiscal second quarter, the company saw total revenue increase 3.6% to $1.14 billion. Profit, excluding certain items was $1.34 per share. Both beat analyst estimates, according to Bloomberg data.
In extended trading, shares hit a high of $74.50, following a close in New York at $67.27.
