The News: Zoom revenue rose to $1.14 billion in the second quarter of fiscal year 2024, up 3.6% from the $1.1 billion reported one year ago by the video conferencing, cloud contact center, and collaboration software vendor. Zoom reported its Q2 earnings on August 21 for the quarter ending July 31, 2023. Read the full Q2 earnings press release on the Zoom Video Communications, Inc. investor web page.
Zoom Revenue for Q2 Hits $1.14 Billion, Up 3.6% YoY, Beating Estimates
Analyst Take: Zoom’s revenue for Q2 FY24 rose 3.6% to $1.4 billion year-over-year (YoY), while its enterprise customer total rose by 6.9% to 218,100 customers, giving the company modest revenue gains and solid overall results for the quarter.
Zoom also saw its enterprise revenue rise to $659.5 million, which is up 10.2% YoY, again showing the company’s progress in growing its enterprise business and its products and services to help customers.
Here are the Zoom Q2 results by the numbers:
- Q2 FY2024 revenue of $1.14 billion, up 3.6% from $1.1 billion YoY. The $1.14 billion in revenue beat consensus estimates of $1.06 billion from analysts at Investing.com.
- Q2 FY2024 non-GAAP net income of $409.6 million, up 26.6% from $323 million YoY.
- Q2 FY2024 non-GAAP earnings per diluted share of $1.34, up from $1.05 per diluted share YoY. The share price beat the $1.06 per share price expected by analysts at Investing.com.
- Q2 FY2024 non-GAAP income from operations of $461.7 million, up 17.26% from $393.7 million YoY.
- Q2 FY2024 non-GAAP operating margin of 40.5%, up from 35.8% YoY.
Zoom’s healthy 17.26% increase in operating income is also notable as Zoom CEO and founder Eric S. Yuan and his executive team continue to shepherd the company to another healthy earnings performance.
Zoom Revenue Deep Dive
Zoom also saw other positive business indicators in its Q2 FY2024 earnings numbers, including continuing growth in customers that are spending more than $100,000 in trailing 12 months revenue. For Q2, Zoom tallied 3,672 customers in that category, which is up an impressive 17.8% YoY.
We are particularly optimistic about Zoom’s solid customer growth for the quarter. The 6.9% rise to 218,100 customers in Q2 is impressive for Zoom, which continues to capture interest and sales in a crowded marketplace by innovating and releasing compelling products that satisfy customer demands.
In addition, Zoom’s non-GAAP free cash flow (FCF) for Q2 was $289 million, down 26.2% from $229 million YoY.
Zoom Revenue Guidance for FY2024
Zoom’s revenue and earnings announcement for Q2 also included earnings guidance for Q3 of FY2024 and for the full FY2024.
For Q3 of FY2024, Zoom expects total revenue between $1.115 billion and $1.120 billion, and non-GAAP income from operations between $400 million and $405 million. Non-GAAP diluted earnings per share (EPS) is expected to be between $1.07 and $1.09, according to the company.
For the full FY2024, total revenue is expected to be between $4.485 billion and $4.495 billion, which is up $15 million from previous expectations. Full FY2024 non-GAAP income from operations is expected to be between $1.685 billion and $1.695 billion. For the full fiscal year 2024, non-GAAP diluted EPS is expected to be between $4.63 and $4.67 per share.
Zoom Revenue Overview
For Zoom, its solid Q2 earnings results mean that the company is continuing to adjust following the boom years of 2020 and 2021, when companies quickly adopted mandatory work-from-home policies as the Covid-19 pandemic quickly arrived and shut the world down. Zoom saw immense growth and revenue during that time, which has since leveled off and forced Zoom to innovate in new ways with new products and services to maintain long-term customer interest and engagement.
But while that higher 2020 to 2022 growth rate has eased, the company has maintained steady quarterly revenue showing its strong resilience to changing market conditions.
What becomes evident from this data is that the challenge to keep revenue growing depends on how Zoom can continue to drive innovation in its expanding product offerings that resonate with changing customers’ needs.
Zoom’s Secret Weapon – a Unique Approach to AI
Zoom has been investing in a unique approach to AI to drive the continued progress needed. They call it a federated approach to AI that allows customers to leverage multiple AI models – from Zoom’s own proprietary AI models to those from leading AI companies such as OpenAI and Anthropic. They are also allowing select customers to include their own AI models.
Zoom has been innovating and driving new customer interest with fresh products and revenue streams, including AI-powered Zoom IQ Meeting Summary, Team Chat Compose, and Intelligent Director. The company has also been working hard on products targeting customer experiences, including Zoom Virtual Agent and Zoom Contact Center, as it seeks new markets and services that will fill the compelling needs of customers around the world.
We believe these growth strategies will be critical to Zoom’s continued growth and market strength. We remain optimistic about Zoom as the company bolsters its all-in-one intelligent collaboration platform play with new features, AI capabilities, and other innovations that aim to meet customer requirements across a broad range of industries.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
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Author Information
As Practice Lead - Workplace Collaboration, Craig focuses on developing research, publications and insights that clarify how the workforce, the workplace, and the workflows enable group collaboration and communication. He provides research and analysis related to market sizing and forecasts, product and service evaluations, market trends, and end-user and buyer expectations. In addition to following the technology, Craig also studies the human elements of work - organizing his findings into the workforce, the workplace, and the workflows – and charting how these variables influence technologies and business strategies.
Prior to joining Wainhouse, now a part of The Futurum Group, Craig brings twenty years of experience in leadership roles related to P&L management, product development, strategic planning, and business development of security, SaaS, and unified communication offerings. Craig's experience includes positions at Poly, Dell, Microsoft, and IBM.
Craig holds a Master of Business Administration from the Texas McCombs School of Business as well as a Bachelor of Science in Business Administration from Tulane University.
