Zoom crushes Q4, gives strong Q1 outlook
Shares of Zoom jumped in after-hours trading on Monday after the communications and collaboration firm posted better-than-expected fourth quarter results. The Q4 report capped off an unprecedented year of growth for Zoom, and the company said it expects the growth to continue into Q1.
Zoom's Q4 non-GAAP net income was $365.4 million, or $1.22 per share. Fourth quarter total revenue of $882.5 million, up 369 percent year-over-year.
Analysts were expecting earnings of 79 cents per share on revenue of $811.77 million.
FY 2021 was a strikingly successful year for Zoom, as the Covid-19 pandemic made work-from-home arrangements the norm across the globe. One year ago, when Zoom reported its fourth-quarter earnings for fiscal year 2020, the company didn't even mention the COVID-19 pandemic in its press release.
"The fourth quarter marked a strong finish to an unprecedented year for Zoom," Zoom founder and CEO Eric S. Yuan said in a statement. "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."
He added the company is "well positioned for strong growth" in FY 2022.
For the full FY 2021, non-GAAP net income was $995.7 million, or $3.34 per share. Total revenue for the fiscal year was $2.651.4 billion, up 326 percent year-over-year.
Zoom's year-over-year growth in revenue for the quarter was mainly driven by the sharp increase in new customers this year, which accounted for approximately 80 percent of incremental revenue. That's up from 59 percent in Q4 of last year. In terms of customer metrics, at the end of the fourth quarter of fiscal year 2021, Zoom had:
- Approximately 467,100 customers with more than 10 employees, up approximately 470 percent year-over-year.
- 1,644 customers contributing more than $100,000 in trailing 12 months ("TTM") revenue, up approximately 156 percent year-over-year.
- A trailing 12-month net dollar expansion rate in customers with more than 10 employees above 130 percent for the 11th consecutive quarter.
For Q1 FY 2022, Zoom expects a non-GAAP diluted EPS between 95 cents and 97 cents. Total revenue is expected to be between $900 million and $905 million.
Analysts are expecting earnings of 72 cents per share on revenue of $804.78 million.
Looking ahead to FY 2022, the trends that drove Zoom's surge in growth over the past year are sure to recede. On a Monday conference call, Yuan acknowledged that remote work will likely be less prevalent once the pandemic is over.
"We all want to go back to the office," he said, after being "stuck at home for such a long time."
Still, the company pointed to its areas of business that are likely to continue growing quickly in FY 2022, such as its two year-old product Zoom Phone. It was the fastest-growing product line quarter-over-quarter in Q4, and the company finished the calendar year with 18 Zoom Phone customers each with over 10,000 paid seats. By the end of the year, Zoom Phone had approximately 10,700 customers with more than 10 employees, up 269 percent year-over-year.
Zoom expects to see that growth continue into 2022, CFO Kelly Steckelberg said on Monday's conference call. The TAM for telephony is forecast to grow to $23 billion by 2024, she noted.