Zoom Q1 2022 Earnings Beat Estimates, ZM Stock Cools Down After Popping 16%

UTC by Bhushan Akolkar · 2 min read
Zoom Q1 2022 Earnings Beat Estimates, ZM Stock Cools Down After Popping 16%
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Zoom manages to deliver better earnings than Street estimates while also sharing a positive growth outlook for the second quarter.

On Monday, May 23, video chat software company Zoom Video Communications Inc (NASDAQ: ZM) reported better-than-estimated Q1 earnings. The company reported earnings at $1.03 per share vs analysts’ expectations of 87 cents per share.

Zoom Performance in Q1

Furthermore, the company’s revenue stood on the expected lines at $1.07 billion. Thus, the company managed to sail past well above the earnings estimate for the quarter. Furthermore, the company also gave an upbeat forecast for the second quarter. Its full-year profitability guidance is also well above analysts’ expectations.

Improving earnings with at par revenues shows that the company is successful in managing costs and growth decelerates. For growth stocks like Zoom, investors are looking at companies that can produce earnings while withstanding rising interest rates and inflation.

The Zoom stock (NASDAQ: ZM) shot up by 16% on Monday after hours soon as the company reported its earnings. But it has cooled down significantly since then and is currently trading 6% up in the pre-market session. Zoom founder and CEO, Eric S. Yuan also appraised what additional steps the company took in the first quarter. Yuan said:

“In Q1, we launched Zoom Contact Center, Zoom Whiteboard and Zoom IQ for Sales, demonstrating our continued focus on enhancing the customer experience and promoting hybrid work. We believe these innovative solutions will further expand our market opportunity for future growth and expansion with customers. Additionally in Q1, we delivered revenue of over one billion dollars driven by ongoing success in Enterprise, Zoom Rooms, and Zoom Phone, which reached 3 million seats during the quarter”.

Pandemic Darling Zoom Is Now Investors’ Pain

Zoom was once the darling stock of investors during the pandemic season of 2020 and mid-2021. With the work from home culture picking up very fast back then, Zoom picked up very fast growth becoming the go-to app for online meetings.

The company reported five straight quarters of revenue growth during the pandemic. However, the company is now struggling to keep up the same pace of expansion.

Zoom stock surged nearly 10x after March 2020 and touched its all-time high of $560 in October 2020. However, the stock has corrected 85% since then bleeding investors’ money by a huge amount.

For the second quarter, Zoom is expecting revenue growth of 9.2% against the analysts’ estimates of 8.7%. The company is expecting earnings per share anywhere between 90 to 92 cents. For the full fiscal year, Zoom is expecting revenue anywhere between $4.53 billion and $4.55 billion.

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Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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