ZM Stock Price Increases Over 8% Pre-Market: Why It Happened

By Amit Chowdhry ● March 2, 2021
  • The stock price of Zoom Video Communications, Inc. (NASDAQ:ZM) increased by over 8% pre-market. This is why it happened.

The stock price of Zoom Video Communications, Inc. (NASDAQ:ZM) increased by over 8% pre-market as of 6:03 AM ET. Investors are responding to the company’s fourth-quarter results and the company’s guidance.

These were some of the highlights from the report:

Q4 2021 Highlights:

– Revenue: Total revenue for the quarter was $882.5 million, up 369% year-over-year.

– Income from Operations and Operating Margin: GAAP income from operations for the quarter was $256.1 million, compared to GAAP income from operations of $10.6 million in the fourth quarter of fiscal year 2020. 

– Net Income and Net Income Per Share: GAAP net income attributable to common stockholders for the quarter was $260.4 million, or $0.87 per share, compared to GAAP net income attributable to common stockholders of $15.3 million, or $0.05 per share in the fourth quarter of fiscal year 2020.

– Non-GAAP net income for the quarter was $365.4 million, after adjusting for stock-based compensation expense and related payroll taxes, acquisition-related expenses, and undistributed earnings attributable to participating securities. Non-GAAP net income per share was $1.22. In the fourth quarter of fiscal year 2020, non-GAAP net income was $43.2 million, or $0.15 per share.

– Cash and Marketable Securities: Total cash, cash equivalents, and marketable securities, excluding restricted cash, as of January 31, 2021 was $4.2447 billion.

– Cash Flow: Net cash provided by operating activities was $399.4 million for the quarter, compared to $36.6 million in the fourth quarter of fiscal year 2020. And free cash flow, which is net cash provided by operating activities less purchases of property and equipment, was $377.9 million, compared to $26.6 million in the fourth quarter of fiscal year 2020.

Full Fiscal Year 2021 Financial Highlights:

– Revenue: Total revenue for the fiscal year was $2.6514 billion, up 326% year-over-year.

– Income from Operations and Operating Margin: GAAP income from operations for the fiscal year was $659.8 million, compared to GAAP income from operations of $12.7 million for fiscal year 2020. After adjusting for stock-based compensation expense and related payroll taxes, expenses related to charitable donation of common stock, and acquisition-related expenses, non-GAAP income from operations for the fiscal year was $983.3 million, up from $88.7 million for fiscal year 2020. For the fiscal year, GAAP operating margin was 24.9% and non-GAAP operating margin was 37.1%.

– Net Income and Net Income Per Share: GAAP net income attributable to common stockholders for the fiscal year was $671.5 million, or $2.25 per share, compared to GAAP net income attributable to common stockholders of $21.7 million, or $0.09 per share for fiscal year 2020.

– Non-GAAP net income for the fiscal year was $995.7 million, after adjusting for stock-based compensation expense and related payroll taxes, expenses related to charitable donation of common stock, acquisition-related expenses, and undistributed earnings attributable to participating securities. Non-GAAP net income per share was $3.34. In fiscal year 2020, non-GAAP net income was $101.3 million, or $0.35 per share.

– Cash Flow: Net cash provided by operating activities was $1.4712 billion for the fiscal year, compared to $151.9 million for fiscal year 2020. And free cash flow, which is net cash provided by operating activities less purchases of property and equipment, was $1,391.2 million, compared to $113.8 million for fiscal year 2020.

Customer Metrics:

The drivers of total revenue included acquiring new customers and expanding across existing customers. And at the end of the fourth quarter of fiscal year 2021, Zoom had about 467,100 customers with more than 10 employees, up approximately 470% from the same quarter last fiscal year. And 1,644 customers contributing more than $100,000 in trailing 12 months (“TTM”) revenue, up approximately 156% from the same quarter last fiscal year. Plus there was a trailing 12-month net dollar expansion rate in customers with more than 10 employees above 130% for the 11th consecutive quarter.

Financial Outlook: Zoom said it is providing the following guidance for its first quarter of fiscal year 2022 and its full fiscal year 2022.

First Quarter Fiscal Year 2022: The total revenue is expected to be between $900 million and $905 million and non-GAAP income from operations is expected to be between $295 million and $300 million. And Q1 non-GAAP diluted EPS is expected to be between $0.95 and $0.97 with approximately 307 million non-GAAP weighted average shares outstanding.

Full Fiscal Year 2022: The total revenue is expected to be between $3.76 billion and $3.78 billion and non-GAAP income from operations is expected to be between $1.125 billion and $1.145 billion. Full fiscal year non-GAAP diluted EPS is expected to be between $3.59 and $3.65 with approximately 311 million non-GAAP weighted average shares outstanding.

KEY QUOTE:

“The fourth quarter marked a strong finish to an unprecedented year for Zoom. In FY2021, we significantly scaled our business to provide critical communications and collaboration services to our customers and the global community in response to the pandemic. We are humbled by our role as a trusted partner and an engine for the modern work-from-anywhere environment. Our ability to rapidly respond and execute drove strong financial results throughout the year. As we enter FY2022, 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; our globally recognized brand; and a team ever focused on delivering happiness to our customers.”

— Eric S. Yuan, Founder and Chief Executive Officer of Zoom

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.