Zoom Raised Its Full-Year Guidance

FY24Q1 revenue was $1.105 billion, a year-on-year increase of 3%, exceeding Bloomberg consensus expectations and company guidance. Among them, enterprise revenue was $623 million, with a year-on-year growth rate slowing to 12.86%; online revenue was $730 million, and the year-on-year decline narrowed to 7.98%.

The operating profit in the first quarter was $9.7 million, the operating profit margin was 0.9%, and the net profit was $15.4 million, exceeding market expectations. The non-GAAP operating profit margin was 38.2%, a significant quarter-on-quarter increase, and the net profit margin was 31.96%. Profit exceeded expectations mainly through optimizing cloud and data center expenditures, layoffs and other cost-cutting and efficiency-enhancing methods. General and administrative expenses fell by 10% year-on-year, while R&D expense ratios and sales expense ratios increased slightly year-on-year.

Free cash flow was $397 million, a year-on-year decrease of 20.84%, and a significant quarter-on-quarter increase. Cash, cash equivalents and marketable securities totaled $5.6 billion, down about 2% year-over-year. Overall, the cash flow is still relatively abundant.

The number of enterprise customers in FY24Q1 was 215,900, and the year-on-year growth rate slowed to 9%, reflecting the relatively slow expansion of enterprise customers, and competitors such as Microsoft will also have a certain negative impact. In this quarter, the proportion of corporate income further increased, and the company continued to transform to the B-end.

Enterprise customers trailing 12-month net dollar expansion of 112% continued to decline sequentially, with enterprise client spending growth contracting slightly. However, the number of customers who contributed more than US$100,000 was 3580, YoY+22.77%, and the growth rate slowed down further.

FY24Q1 online revenue was US$730 million, and the year-on-year decline narrowed to 7.98%.

The churn rate of online business is under control. The average monthly churn rate for online business in the first quarter was 3.1%, down 50 basis points year-over-year.

Customer retention is high. Online customers with at least 16 months of continuous service represented 72.0% of total online MRR, an increase of 700 basis points year-over-year.

Total revenue for FY24 is expected to be between US$1.110 billion and US$1.115 billion. Non-GAAP operating income is expected to be between $405 million and $410 million. Non-GAAP diluted EPS is expected to be between $1.04 and $1.06.

The company raised its guidance for the full fiscal year 2024. FY24 is expected to have total revenue between US$4.465 billion and US$4.485 billion, non-GAAP operating profit is expected to be between US$1.63 billion and US$1.65 billion, and non-GAAP diluted EPS is expected to be between US$4.25 and US$4.31.

At present, the company's forward price-to-earnings ratio is between 16.5 and 16.8, and the valuation is not too high. However, the company's business growth dilemma has not been resolved. Under the background of corporate shrinkage and fierce competition, it is expected that the company's revenue growth will further increase slow down. AI is a direction worth investing in, and its contribution to the company's revenue and profits still needs to be observed.