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Zoom lifts annual results forecast as AI features boost demand
Published Nov 20, 2023 04:13PM ET
Updated Nov 20, 2023 06:30PM ET
© Reuters. Small toy figures are seen in front of Zoom logo in this illustration picture taken March 15, 2021. REUTERS/Dado Ruvic/Illustration/File Photo
By Samrhitha A
(Reuters) -Zoom Video Communications raised its annual revenue and profit forecasts on Monday, as hybrid work trends and the integration of artificial intelligence technology into its products boosted demand.
Platforms including Zoom (NASDAQ:ZM), Microsoft (NASDAQ:MSFT)'s Teams and Cisco (NASDAQ:CSCO)'s Webex became household names during the COVID lockdowns and have enjoyed resilient demand as many businesses shifted to hybrid work models.
Zoom now expects annual adjusted profit per share between $4.93 and $4.95, higher than its prior forecast of $4.63 and $4.67.
The company lifted its full-year revenue forecast to between $4.506 billion and $4.511 billion, from $4.485 billion to $4.495 billion earlier.
"We bolstered Zoom's all-in-one intelligent collaboration platform with advanced new capabilities like Zoom AI Companion and continued to evolve our customer and employee engagement solutions," CEO Eric Yuan said.
Zoom's AI Companion, introduced during the third quarter, allows paid users to access features including meeting summaries and catch-ups, as well as email and chat composed prompts. More than 220,000 accounts had enabled it as of Monday.
The company's quarterly free cash flow grew 66.2% to $453.2 million, and Zoom expects $1.34 billion to $1.35 billion for the full year.
"Cash flow was the highlight, but also encouraged by traction with Phone and Contact Center... gives us greater confidence that we can see growth re-accelerate in the near term," RBC analyst Rishi Jaluria said.
The Phone segment grew to roughly 7 million paid seats while Contact Center reached about 700 customers as of quarter-end.
Zoom's current-quarter revenue is expected to be between $1.125 billion and $1.130 billion, in line with expectations, according to LSEG data.
For the third quarter, revenue grew 3.2% to $1.14 billion, slightly above estimates.
It earned $1.29 per share on an adjusted basis, surpassing expectations of $1.09.
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