Video calling facility provider Zoom Video Communications Inc (Nasdaq: ZM) reported better-than-anticipated fiscal 2021 fourth-quarter results yesterday. More importantly, the company has revealed that it is scouting for suitable acquisitions. Furthermore, the company also issued better-than-anticipated Q1 and FY 2022 revenue and earnings outlook. Profit booking pushed the stock lower by $36.87 or 9.00% to end Tuesday’s trading at $372.79.
San Jose, a California-based company, posted fourth-quarter revenues of $882.485 million, up 369% from $188.251 million in the comparable quarter of fiscal 2020. In the earlier quarter, revenue growth was roughly 367%. The outbreak of the COVID-19 pandemic had forced people to work from home, leading to a surge in revenue for the company.
For the quarter ended January 31, 2021, net income was $260.393 million, or $0.87 per share, compared with $15.313 million, or $0.05 a share in the quarter ended January 31, 2020.
Excluding stock-based compensation expense and related payroll taxes, acquisition-related expenses, and undistributed earnings attributable to participating securities, the company recorded 4Q21 non-GAAP net income of $365.401 million, or $1.22 per share, an increase from $43.231 million, or $0.15 a share in 4Q20.
Analysts polled by Refinitiv had anticipated Zoom to post earnings of $0.79 per share on revenues of $811.80 million.
Commenting on the results, Eric Yuan, Founder and CEO of Zoom stated, “[..]. In FY 2021, we significantly scaled our business to provide critical communications and collaboration services to our customers and the global community in response to the pandemic. As we enter FY 2022, we believe we are well-positioned for strong growth with our innovative video communications platform, on which our customers can build, run, and grow their businesses.”
At the end of 4Q 2021, Zoom had roughly 467,100 clients with more than 10 employees, increasing about 470% on a y-o-y basis. The company had 1,644 customers who paid over $100,000 in the last 12 months, reflecting a growth of 156% from the comparable quarter last year. Zoom also reported a trailing 12-month net dollar expansion rate in clients with over ten employees, mirroring a 130% increase for the eleventh successive quarter.
During the fourth quarter, the company had an operating cash flow of $339.40 million, an increase of 993% from last year. Total cash, cash equivalents, and marketable securities, devoid of restricted cash, at the end of January 31, 2021, was $4.244 billion.
Net cash provided by operating activities was $399.40 million in 4Q 2021, compared with $36.60 million in 4Q 2020. Free cash flow (net cash provided by operating activities minus the purchase of property and machinery) was $377.90 million in Q4 2021, compared to $26.60 million in Q4 2020.
In the future, the company stated that total revenue for the first quarter of fiscal 2022 is anticipated to be in the range of $900 million to $905 million. The company also forecasts non-GAAP income from operations of between $295.0 million and $300.0 million.
Furthermore, Zoom stated that it expects Q1 non-GAAP diluted earnings in the range of $0.95 to $0.97 per share. Refinitiv’s analysts forecast the company to post adjusted earnings of $0.72 per share on revenues of $829.2 million.
For fiscal 2022, Zoom forecasts revenue of between $3.760 billion and $3.780 billion. Non-GAAP income from operations is anticipated to be in the range of $1.125 billion to $1.145 billion. Additionally, the company expects non-GAAP diluted earnings per share in the range of $3.59 to $3.65. Analysts polled by Refinitiv expect adjusted earnings of $2.96 per share on revenues of $3.56 billion.
The quarterly earnings beat and bullish Q1, FY 2022 outlook is expected to turn the stock bullish in the days ahead.
The historical price chart indicates that the stock is consolidating at 370 levels. The next resistance is anticipated only near 450. Additionally, the stochastics RSI indicator is rising from the oversold region. Therefore, we are expecting the stock to rally in the days ahead.
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