Zoom Video Communications raised its annual revenue and profit forecasts on Monday, as hybrid work trends and integrating artificial intelligence technology into its products boosted demand. The company expects full-year sales to be between $4.47 billion and $4.49 billion, up about 2% from last year. The San Jose-based tech firm aims to expand the use of its A.I. tools like Zoom I.Q., which creates meeting summaries with content from documents and other sources, and the Zoom contact center suite, which provides better customer outcomes through interpretable and steerable A.I. systems that can help agents understand and respond to customer requests.
On its quarterly conference call with analysts, CEO Eric Yuan, the company’s president, noted that Zoom has already seen a boost in revenue from customers looking to leverage its AI features. Yuan said he expects that trend to continue as companies shift toward a hybrid working model where they want some people to be in the office while others telecommute. He added that 80% of U.S. respondents to one of Zoom’s surveys anticipate their interactions will still have some virtual element even after the COVID lockdowns end.
In the first quarter of 2022, Zoom’s total revenues jumped 191% year-over-year to $956.2 million, exceeding the high-end of its guidance range and beating analysts’ expectations. Adjusted EPS came in at $1.32, up from $0.97 a year ago and a penny above the consensus estimate of $0.97.
Zoom said that during the first quarter, its sales to enterprise customers grew by 13% while its sales to small and medium businesses fell by 5%. Zoom said its enterprise business is expected to grow by a mid-single-digit percentage in the second half of this fiscal year.
In its outlook, Zoom raised its 2024 earnings per share target to between $4.93 and $4.95, up from its previous projection of between $4.83 and $4.95. The company also expects to boost its operating cash flow this year and next, which will help it fund growth and dividend payments.
The company ended the quarter with $6.5 billion in cash, cash equivalents, marketable securities, and no long-term debt. Operating cash flow soared to $553.2 million in the quarter, while free cash flow jumped by 67% to $493.2 million.
Founder and CEO Yuan, 50, had always dreamed of moving to Silicon Valley from China and struggled for years with visa rejections before finally obtaining a U.S. visa in 1997 at 27. He worked as a programmer in Silicon Valley before starting his software startup, which ultimately became the global videoconferencing giant Zoom. He told CNBC that Zoom still has room to grow as more companies return to a traditional office schedule. Watch the full interview above. —CNBC’s Rishi Jaluria and Emily Smith contributed to this report.
