Zoom Video Communications, Inc. (ZM) 10-Q Quarterly Report May 2023

San Jose, California – May 22, 2023 – Zoom Video Communications, Inc. (NASDAQ: ZM), today announced financial results for the first fiscal quarter ended April 30, 2023.

“The Zoom platform is designed to support limitless human connection to empower the modern workday and strengthen customer relationships. Our customers see Zoom as mission-critical in how they collaborate internally and externally across the globe,” said Eric S. Yuan, Zoom Founder and CEO. “This relationship with our customers helped us to exceed our guidance due to Enterprise growth and stabilizing Online revenue while driving greater efficiencies in our business to deliver strong profitability and free cash flow margin. The solid start to the year has enabled us to raise our outlook for fiscal year 2024 while continuing to invest in innovations such as AI to help make interactions more meaningful and communications more effective.”

First Quarter Fiscal Year 2024 Financial Highlights:

•Revenue: Total revenue for the first quarter was $1,105.4 million, up 3% year over year. After adjusting for foreign currency impact, revenue in constant currency was $1,123.8 million, up 5% year over year. Enterprise revenue was $632.0 million, up 13% year over year, and Online revenue was $473.4 million, down 8% year over year.

•Income from Operations and Operating Margin: GAAP income from operations for the first quarter was $9.7 million, compared to GAAP income from operations of $187.1 million in the first quarter of fiscal year 2023. After adjusting for stock-based compensation expense and related payroll taxes, acquisition-related expenses, restructuring expenses, and ligation settlements, net, non-GAAP income from operations for the first quarter was $422.3 million, compared to non-GAAP income from operations of $399.6 million in the first quarter of fiscal year 2023. For the first quarter, GAAP operating margin was 0.9% and non-GAAP operating margin was 38.2%.

•Net Income and Diluted Net Income Per Share: GAAP net income attributable to common stockholders for the first quarter was $15.4 million, or $0.05 per share, compared to GAAP net income attributable to common stockholders of $113.6 million, or $0.37 per share in the first quarter of fiscal year 2023.

Non-GAAP net income for the first quarter was $353.3 million, after adjusting for stock-based compensation expense and related payroll taxes, losses (gains) on strategic investments, net, acquisition-related expenses, restructuring expenses, litigation settlements, net, undistributed earnings attributable to participating securities, and the tax effects on non-GAAP adjustments. Non-GAAP net income per share was $1.16. In the first quarter of fiscal year 2023, non-GAAP net income was $315.8 million, or $1.03 per share.

•Cash and Marketable Securities: Total cash, cash equivalents, and marketable securities, excluding restricted cash, as of April 30, 2023 was $5.6 billion.

•Cash Flow: Net cash provided by operating activities was $418.5 million for the first quarter, compared to $526.2 million in the first quarter of fiscal year 2023. Free cash flow, which is net cash provided by operating activities less purchases of property and equipment, was $396.7 million, compared to $501.1 million in the first quarter of fiscal year 2023.

Customer Metrics: Drivers of total revenue included acquiring new customers and expanding across existing customers. At the end of the first quarter of fiscal year 2024, Zoom had:

•Approximately 215,900 Enterprise customers, up 9% from the same quarter last fiscal year.

•A trailing 12-month net dollar expansion rate for Enterprise customers of 112%.

•3,580 customers contributing more than $100,000 in trailing 12 months revenue, up approximately 23% from the same quarter last fiscal year.

The following information was filed by Zoom Video Communications, Inc. (ZM) on Monday, May 22, 2023 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside Zoom Video Communications, Inc.'s 10-Q Quarterly Report:

Revenue - Geography Highlight
In addition, for the three months ended April 30, 2023, we experienced unfavorable foreign currency impact as a result of the continued strengthening of the U.S. dollar compared to certain foreign jurisdictions where we do a significant amount of business, which resulted in a $18.4 million negative impact on revenue during the three months ended April 30, 2023.

Revenue - Product Highlight
However, based on our current business plan and revenue prospects, we believe our existing cash, cash equivalents, and marketable securities, together with net cash provided by operations, will be sufficient to meet our needs for at least the next 12 months and allow us to capitalize on growth opportunities.
Revenue - Geography Highlight
Cash from operations could also be affected by various risks and uncertainties, including, but not limited to, the recent changes in macroeconomic conditions such as high inflation, recessionary environments, and the fluctuations in foreign currency exchange rates, could impact the timing of cash collections from our customers and other risks detailed in the section titled "Risk Factors."
Financial - Earnings Highlight
The increase in gross margin was mainly due to increased efficiencies as we expanded our internal data center capacity.
Other - Other Highlight
Liquidity and Capital Resources As of April 30, 2023, our principal sources of liquidity were cash, cash equivalents, and marketable securities of $5.6 billion, which were held for working capital purposes and for investment in growth opportunities.
Financial - Earnings
Gross margin increased to 76.1%...Read more
Financial - Shares
Gains (Losses) on Strategic Investments,...Read more
Other - Other
We believe that FCF is...Read more
Financial - Expense
The increase was primarily due...Read more
Financial - Shares
32 Table of Contents Financing...Read more
Other - Other
Many factors may contribute to...Read more
Financial - Expense
These costs are related to...Read more
Other - Other
The restructuring plan includes a...Read more
Revenue - Product
The increase in revenue was...Read more
Revenue - Product
For the three months ended...Read more
Revenue - Product
As of April 30, 2023...Read more
Financial - Expense
The increase in general and...Read more
Revenue - Product
Our revenue was $1,105.4 million...Read more
Other - Other
Our net dollar expansion rate...Read more
Financial - Income
Other Income (Expense), Net Other...Read more
M & A - Other
We continue to focus on...Read more
Revenue - Product
The increase in sales and...Read more
Other - Other
We also provide services, which...Read more
Revenue - Product
Our future capital requirements will...Read more
Financial - Debt
Our marketable 31 Table of...Read more
Revenue - Product
Customers Contributing More Than $100,000...Read more
Financial - Cash Flow
The decrease in operating cash...Read more
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FCF is presented for supplemental...Read more
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Innovation and Expansion of Our...Read more
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Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

Material Contracts, Statements, Certifications & more

Zoom Video Communications, Inc. provided additional information to their SEC Filing as exhibits

Exhibit 31.1: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 31.2: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 32.1: Section 1350 Certification

Ticker: ZM
CIK: 1585521
Form Type: 10-Q Quarterly Report
Accession Number: 0001585521-23-000128
Submitted to the SEC: Thu May 25 2023 4:02:18 PM EST
Accepted by the SEC: Thu May 25 2023
Period: Sunday, April 30, 2023
Industry: Computer Programming Data Processing