Zoom Video Communications Inc (Nasdaq: ZM) reported better-than-anticipated fiscal 2022 third-quarter revenues and earnings. Furthermore, the company also upwardly revised its FY 2022 outlook. However, the stock lost 14.71% or $35.64 to end Tuesday’s trading session at $206.64 as the online chat solutions provider is facing a slowdown in growth due to the return of the labor force to offices.
The San Jose, California-based company reported third-quarter revenues of $1.051 billion, an increase of 35% from $777.20 million in the similar period last year. Analysts surveyed by Thomson Reuters had anticipated the company to report revenues of $1.02 billion.
For the quarter ending October 31st, 2021, the telecommuting platform provider posted a net income of $340.27 million, or $1.11 per share, compared with $198.44 million, or $0.66 a share in the quarter ending October 31st, 2020.
Excluding stock-based compensation expense and related payroll taxes, and acquisition-related expenses, among others, the Q3 2022 non-GAAP net income was $338.383 million, or $1.11 per share, up from $297.171 million, or $0.99 a share, in Q3 2021. Analysts polled by Thomson Reuters had anticipated the company to report earnings of $1.09 a share.
At the end of Q3 2022, the company had 2,507 clients paying over $100,000 per year (trailing twelve months), an increase of 94% on a y-o-y basis. Furthermore, Zoom had roughly 512,100 clients with over ten employees, reflecting a rise of roughly 18% from last year, but missed the Bloomberg estimate of 516,174.
At the end of October 31st, 2021, the company had cash, cash equivalents, and marketable securities worth $5.40 billion. Net cash provided by operating activities declined to $394.60 million in the recent quarter, compared with $411.50 million in the third quarter last year. Free cash flow was $374.80 million in Q3 2022, down from $388.20 million in Q3 2021.
Looking ahead, for Q4 2022, the company anticipates non-GAAP income from operations to be between $361 million and $363 million. Non-GAAP earnings are expected to be in the range of $1.06 to $1.07 per share. Total revenue is forecast to be between $1.051 billion and $1.053 billion. Analysts forecast Zoom to post earnings of $1.05 per share on revenues of $1.02 billion for Q4 2022.
Furthermore, Zoom anticipates FY 2022 non-GAAP income from operations to be between $1.598 billion and $1.600 billion. Also, non-GAAP earnings are projected in the range of $4.84 to $4.85 per share. Total revenue is anticipated to be in the range of $4.079 billion to $4.081 billion, reflecting growth of roughly 54% on a y-o-y basis. Analysts anticipate the company to post earnings per share of $4.78 on revenues of $4.02 billion for FY 2022.
The quarterly beat, an upward revision of FY 2022 guidance, and a slowdown in growth are expected to keep the stock range-bound in the near term.
The historical price chart indicates that the stock is declining after facing a big sell-off at 425 levels. The next major support is anticipated only near 160. Additionally, the stock is trading below its 50-day moving average while the MACD indicator has a negative reading. Therefore, we are anticipating the stock to remain in a downtrend in the short term.
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