Zoom Lifts Annual Results Forecast As AI Features Boost Demand

Zoom raised its annual revenue and profit forecasts, citing the impact of hybrid work trends and the integration of AI technology into its products. CEO Eric Yuan highlighted the success of Zoom AI Companion and reported a 66.2% increase in quarterly free cash flow.

Outlook International Desk

Updated on: 21 November 2023 12:36 pm

The company also raised its full-year revenue outlook to a range of $4.506 billion to $4.511 billion

Zoom Video Communications (ZM.O) raised its annual revenue and profit forecasts on Monday, as hybrid work trends and the integration of artificial intelligence technology into its products boosted demand.

During the COVID-19 lockdowns, platforms such as Zoom, Microsoft's (MSFT.O) Teams, and Cisco's (CSCO.O) Webex gained widespread recognition and sustained robust demand as businesses transitioned to hybrid work models.

Zoom has now adjusted its annual profit forecast, anticipating a range of $4.93 to $4.95 per share, surpassing its earlier projection of $4.63 to $4.67.

The company also raised its full-year revenue outlook to a range of $4.506 billion to $4.511 billion, compared to the previous estimate of $4.485 billion to $4.495 billion.

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"We bolstered Zoom's all-in-one intelligent collaboration platform with advanced new capabilities like Zoom AI Companion and continued to evolve our customer and employee engagement solutions," CEO Eric Yuan said.

Zoom's AI Companion, introduced during the third quarter, allows paid users to access features including meeting summaries and catch-ups, as well as email and chat-composed prompts. More than 220,000 accounts had enabled it as of Monday.

Moreover, Zoom reported a 66.2% increase in quarterly free cash flow, reaching $453.2 million, with an anticipated full-year free cash flow of $1.34 billion to $1.35 billion.

"Cash flow was the highlight, but also encouraged by traction with Phone and Contact Center... gives us greater confidence that we can see growth re-accelerate in the near term," RBC analyst Rishi Jaluria said.

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The phone segment grew to roughly 7 million paid seats, while the contact center reached about 700 customers as of quarter-end.

Looking ahead, Zoom forecasts current-quarter revenue in the range of $1.125 billion to $1.130 billion, aligning with expectations according to LSEG data.

In the third quarter, Zoom's revenue experienced a 3.2% growth to $1.14 billion, slightly exceeding estimates. On an adjusted basis, the company earned $1.29 per share, surpassing expectations of $1.09.