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Zoom beats estimates on strong product demand, announces share buyback

Published 02/26/2024, 04:15 PM
Updated 02/26/2024, 06:15 PM
© Reuters. Small toy figures are seen in front of Zoom logo in this illustration picture taken March 15, 2021. REUTERS/Dado Ruvic/Illustration

By Zaheer Kachwala

(Reuters) -Zoom Video Communications on Monday posted better-than-expected quarterly results helped by strong demand for its expanding product portfolio as more employers embrace hybrid work models, sending its shares up about 10% in extended trading.

Zoom (NASDAQ:ZM) also authorized a stock buyback of up to $1.5 billion of its outstanding Class A common stock.

The video-conferencing provider's fourth-quarter results indicate Zoom's attempts to integrate AI into its products and diversify its portfolio have paid off, as it takes advantage of a surge in hybrid working.

It reported an adjusted profit of $1.42 per share for the quarter ended Jan. 31, above analysts' estimates of $1.15 per share, according to LSEG data. Revenue stood at $1.15 billion, beating an estimate of $1.13 billion.

"The company is doubling down on its long-term strategy to integrate generative AI rather than risk its massive cash holdings on a start-up that might more immediately drive topline growth," said Ryan Koontz, a senior equity analyst at Needham and Co.

Zoom introduced its AI companion during its third quarter, allowing paid users to access features including meeting summaries and catch-ups, as well as email and chat composing prompts.

"We are also going to build new services and are driven by Zoom AI companion, this year we are going to double down on Zoom AI customization and also focus on monetization," said Zoom CEO Eric Yuan on a post-earnings conference call.

The Zoom AI companion has over 510,000 accounts enabled in the past five months, CFO Kelly Steckelberg said.

The company also reported operating cash flow margin of 30.6% for the reported quarter.

© Reuters. Small toy figures are seen in front of Zoom logo in this illustration picture taken March 15, 2021. REUTERS/Dado Ruvic/Illustration

Zoom forecast fiscal-year 2025 revenue of about $4.60 billion, which is below analysts' estimate of $4.66 billion.

It also forecast first-quarter revenue of $1.13 billion, in line with analysts' expectations.

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