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Zoom Video Communications raised its annual revenue forecast by more than 30% after comfortably beating quarterly estimates on Monday as it converts more of its huge free user base to paid subscriptions.
Shares of Zoom, which have surged almost four-fold this year, rose 5% after the bell. Earlier in the day they hit a record closing high of $325.10 in regular trading.
Video-conferencing platforms, once used mostly as a technological substitute for in-person meetings, became a vital part of day-to-day life this year for people stuck at home under coronavirus restrictions, be it for work, school or socializing. Zoom rivals such as Microsoft Corp’s Teams and Cisco System Inc’s Webex have also seen soaring usage.
When the pandemic hit in early 2020, Zoom was a relative upstart founded by a former Cisco executive that had gone public on a promise to make video conferencing software easier to use. But the ease of use came with privacy and security concerns that drove some customers to competitors earlier this year and prompted Zoom to embark on a 90-day plan to address the issues.
The surge in usage also strained Zoom’s infrastructure, with some outages last week as schools in many parts of the United States resumed classes virtually.
Since the start of the pandemic, Zoom has worked to convert the mass of free users into paying customers.
The company said revenue rose 355% to $663.5 million, above analysts’ average estimate of $500.5 million.
Zoom said it now has 370,200 institutional customers with more than 10 employees, up about 458% from the same quarter last year.
The company, founded and headed by former Cisco manager Eric Yuan, raised its annual revenue target for fiscal year 2021 to a range of $2.37 billion to $2.39 billion, from $1.78 billion to $1.80 billion previously.
Net income attributable to common stockholders rose to $185.7 million, or 63 cents per share, from $5.5 million, or 2 cents per share, a year earlier.
Excluding items, the company earned 92 cents per share, beating the average analyst estimate of 45 cents, according to IBES data from Refinitiv.
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(Reporting by Neha Malara in Bengaluru and Stephen Nellis in San Francisco; Editing by Sriraj Kalluvila and Leslie Adler)
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