Zoom powers through resistance on strong earnings and share buyback announcement

Zoom Video Communications, Inc. (NASDAQ: ZM) reported strong financial results for its fourth quarter of fiscal year 2024. The company beat on top and bottom line. Customer churn was in line with expectations, which was an important metric for investors. Guidance was mixed but better than feared. Add in a share buyback and there was enough fuel to jolt the stock through a confluence of moving averages. 

The company reported adjusted earnings per share (EPS) of $1.42, beating the consensus estimate of $1.15 by $0.27. This represents a 16% increase from the previous year. Zoom's revenues for the quarter stood at $1.15 billion, registering a year-over-year growth of 2.6% and exceeding the estimate of $1.13 billion.

The company's enterprise business showed significant growth, with revenue up 4.9% YoY to $667.3 million. Zoom also reported a trailing 12-month net dollar expansion rate for Enterprise customers of 101%, indicating strong expansion across existing customers. 

The online average monthly churn for the quarter was 3.0%, in line with expectations and down 40 basis points (bps) from the same quarter last fiscal year, indicating a decrease in customer attrition. Zoom had approximately 220,400 Enterprise customers, up 3.5% YoY. Zoom witnessed a rise of around 9.8% in the number of customers contributing over $100,000 in trailing 12 months revenue, totaling 3,810 customers.

The company issued mixed guidance for the first quarter (April) of fiscal year 2025, expecting EPS of $1.18-1.20, compared to estimates of $1.13. Revenue is expected to be $1.125 billion, compared to estimates of $1.13 billion. 

For the full fiscal year 2025, Zoom expects EPS of $4.85-4.88, compared to estimates of $4.66. Revenue is expected to be $4.60 billion, compared to estimates of $4.637 billion. 

Zoom also authorized the repurchase of up to $1.5 billion of its Class A common stock. 

The stock reacted positively to the report, popping more than 12% in extended trading. For fiscal 2024, ZM stock had retreated nearly 12%. 

The strong performance in the enterprise market and the company's guidance for fiscal 2025 indicate a promising future for Zoom Video Communications.

Overall, Zoom's earnings report for the fourth quarter of fiscal year 2024 exhibited remarkable financial performance, with both EPS and revenues surpassing market expectations. The company's strong customer growth, combined with its improving churn rate, indicates a positive trajectory in capturing and retaining enterprise customers. Additionally, the provided guidance for fiscal year 2025 shows the company's optimism in sustaining its growth momentum. With its solid financial position, Zoom is well-positioned to continue its growth and evolve into a broader communications platform for businesses.