Zoom Video Communications (Nasdaq: ZM) stated results surpassing expectations for fiscal 2025 first-quarter earnings and revenue. The video chat platform provider also revised its fiscal year upward 2025 outlook against the backdrop of solid demand for its offerings as enterprises continue to follow hybrid work forms. The stock of Zoom ended Tuesday’s trading session at $63.86, down $0.23, or 0.36%, from the prior close.
The company, headquartered in San Jose, California, reported first-quarter revenues of $1.14 billion, an increase of 3.20% from $1.10 billion in the comparable quarter of fiscal 2023.
For the recent quarter, Zoom recorded a 1Q 2025 net income of $216.31 million, or $0.69 per share, compared with $15.44 million, or $0.05 per share, in 1Q 2024.
Excluding stock-based remuneration cost and related payroll taxes, litigation settlements, acquisition-related expenses, restructuring expenses, losses on strategic investments, and tax-effect on non-GAAP adjustments, among others, the Q1 2025 non-GAAP net income was $426.32 million, or $1.35 per share, up from $353.25 million, or $1.16 per share, in Q1 2024.
Analysts polled by LSEG expected Zoom to post Q1 adjusted net income of $1.20 per share on revenues of $1.13 billion.
Regarding the quarterly results, Eric Yuan, Zoom founder, and CEO, stated, “The innovations combined with our execution and focused investment enabled us to outperform our guidance and drive operating cash flow growth of 40.6% and free cash flow growth of 43.6% year over year.”
Segment wise:
- Enterprise revenues were $665.70 million, an increase of 5.30% on a y-o-y basis. This represents 58% of the total revenues, up from 57% last year.
- Online revenues were $475.50 million in 1Q 2024, almost flat from last year.
During the first quarter of 2025, Zoom’s non-GAAP operating margin was 40%. The operating cash flow surged 40.60% y-o-y to $588.20 million. The company ended the first quarter with total cash, liquid assets, and marketable securities, excluding restricted cash, of $7.4 billion.
Zoom had 3,883 clients paying over $100,000 in TTM (trailing twelve months) in 1Q 2025, an increase of 8.50% from 1Q 2024.
Looking ahead, the company now projects FY 2025 revenues in the range of $4.61 billion to $4.62 billion, an upward revision from the prior outlook of roughly $4.60 billion. Financial analysts on Wall Street foresee the company reporting revenues of $4.61 billion.
Zoom also stated that it now anticipates FY 2025 earnings of between $4.99 and $5.02 per share, up from the earlier forecast of $4.85 to $4.88 per share.
The company also expects 2Q 2025 revenues in the range of $1.145 billion and $1.15 billion. Likewise, Zoom anticipates 2Q 2025 non-GAAP earnings of $1.20 to $1.21 per share. The consensus estimates call for earnings of $1.22 per share on revenues of $1.15 billion.
The robust outlook indicates that Zoom’s initiatives to adopt artificial intelligence (AI) into its products and widen its spectrum of services have received a positive response, fueling the increase of hybrid work.
The quarterly earnings exceeded expectations, coupled with a revision upward of the fiscal year 2025 outlook is expected to keep the stock of Zoom slightly bullish in the short term.
The historical price chart shows that the shares of the stock of Zoom are ascending after consolidating at the $61 level. The next resistance is anticipated to be only near $71. Furthermore, the stock is currently being traded above its 50-day moving average, with the MACD indicator indicating a positive reading. Therefore, we anticipate Zoom’s stock to remain in an uptrend in the near term.
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