If Zoom (NASDAQ: ZOOM) wasn’t part of the North American lexicon before, it appears to be now, and most emphatically.
The company reported revenue growth of 169% from the previous year in its first-quarter earnings report on Tuesday, and nearly doubled its revenue guidance for the full year, as the coronavirus pandemic drove millions of new customers to the video calling service and turned it into a household name.
Shares gained ground in early Wednesday trading, however, as the company’s earnings calls revealed higher-than-expected cloud computing costs to deal with the surge in demand.
Analysts had expected nine cents in adjusted earnings per share and $202.7 million in revenue for the quarter, which ended Apr. 30. Comparing analysts’ estimates with results is not necessarily straightforward given the unpredictable effects of the pandemic during the quarter.
The company also significantly increased its guidance for the fiscal year. It now expects $1.21 to $1.29 in adjusted earnings per share on $1.78 billion to $1.80 billion in revenue. In March, it had forecast 42 cents to 45 cents in EPS on $905 million to $915 million in revenue.
Zoom’s gross margin narrowed to 68.4%, from 82.7% in the previous quarter and 80.2% in the year-ago quarter, as it added computing capacity, including from Amazon Web Services, to handle the swell of new users. The greater reliance on third-party clouds led to more costs, but it was critical to the company meeting the needs of its users, the company’s finance chief told analysts on a Zoom call with analysts on Tuesday.
Zoom shares gained 48 cents Wednesday morning to $208.56.
