Today after the bell, Zoom reported its Q4 earnings. The company’s recorded revenue of $188.3 million and its adjusted per-share profit of $0.15 were ahead of expectations, including $176.55 million in revenue and earnings per share of $0.07, according to Yahoo Finance averages.
Down several points during a broad market rally, Zoom has been a hot company to track in recent months. Its profile was heightened due to its position as an incidental benefactor of the world’s grappling with the novel coronavirus — as more countries and companies stressed staying home and working remotely, respectively, Zoom’s video conferencing tool was expected to see rising usage and demand.
The company’s shares were down sharply after reporting its earnings.
Zoom earnings, remote work and a terrible but possibly bright moment for startups
What follows is a dive into Zoom’s Q4 earnings, its expectations for the coming period and what those figures may have to say about the infection and its impacts. We’ll wrap with notes from startups that are building remote-work friendly products, sharing what they are seeing on the ground regarding demand for their services during this bleakly fascinating period of history.
Q4 and the future
Zoom’s Q4 was good in terms of growth, great in terms of adjusted profit and net positive in GAAP terms. That’s an impressive mix for a company expanding top line as quickly as Zoom is today.
The company’s quarterly revenue of $188.3 million was up 78% from the year-ago period. That result would be good by itself, but seeing Zoom come in so far above expectations was even better. Coupled to free cash flow of $26.6 million in the quarter, up several times from its year-ago result of $5.7 million, made the growth all the more stand-out.
Zoom is growing quickly and cleanly.
Looking ahead, Zoom is projecting better-than-expected results. The firm said in its earnings that it anticipates:
- Q1 F2021 revenue “between $199.0 million and $201.0 million”
- Q1 F2021 “non-GAAP diluted EPS is expected to be approximately $0.10”
Compared to expectations, those results are ahead. Again leaning on Yahoo Finance data, investors expect the firm to report $0.06 in adjusted per-share profit and revenue of $185.68 million. So for the next quarter, Zoom is planning on besting today’s expectations.
The trend continues looking further out, with Zoom anticipating:
- F2021 “revenue is expected to be between $905.0 million and $915.0 million”
- F2021 “non-GAAP diluted EPS is expected to be between $0.42 and $0.45”
Investors, using our same data source, expected $0.30 in adjusted, per-share profit and revenue of $868.37 million. So, Zoom is ahead of both current-quarter expectations and full-fiscal-year anticipation. Why are its shares down, given all of that? Perhaps investors had expected an even more impressive beat? Or an even larger gap-up in forecast when compared to expectations? Shares of Zoom have rallied into the stratosphere in recent weeks, which could have put expectations ahead of even the company’s quick growth.
Tying this all back to remote work: How did Zoom do compared to its own forecasts?
We care because if Zoom did better than it expected, we could be seeing the difference between the company’s natural growth rate and one bolstered by the crisis forcing more teams to work remotely, thus leaning on tools like Zoom.
Regarding the quarter’s figures in contrast to its promises, Zoom did very, very well. The firm promised “between $175.0 million and $176.0 million” in revenue for the period, which it crushed. What can we take from that? That if we were looking for a reason to argue that the virus was driving gains for remote-work-focused companies, we have data to undergird the point.
How to formally score the results is up to you, of course. Closer to home for TechCrunch, if startups building remote work-focused products are seeing similar results to Zoom, they are probably ahead of their board commits.
Let’s find out.
Everyone else
A few folks wrote in after I asked for notes from startups regarding how demand for their remote work-powering products was behaving.
Yama Habibzai from HiveIO told TechCrunch that his company is seeing an “initial uptick of opportunities coming in” for its “Virtual Desktop Infrastructure.” Luke Thomas from Friday said that his startup — which allows users to “share regular updates at work,” per its website — is “seeing something like 4x as many signups as before (this week versus last week),” an impressive result. Thomas also noted that his startup is also “seeing quite a few municipalities in California signing up,” perhaps driven by rising novel coronavirus infections, we’d add.
More companies have shared (FreeConferenceCall with some fascinating data, Brandlive as well), so I might break all of that into a separate post.
But the trend appears to be, yes, companies that are powering remote work are seeing a boost in demand in the face of the world’s current health catastrophe. And Zoom’s numbers appear to agree.
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