The News: Zoom revenue rose to $1.12 billion in the fourth quarter of fiscal year 2023, up four percent from the $1.07 billion reported one year ago by the video conferencing, cloud contact center, and collaboration software vendor. For the full FY2023 ended January 31, 2023, Zoom revenue rose seven percent to $4.39 billion, up from $4.1 billion one year ago. Zoom reported its Q4 and full fiscal year (FY2023) earnings on February 27. Read the full Q4 earnings Press Release from Zoom Video Communications, Inc.
Zoom Revenue in Q4 Hits $1.12B, up 4% YoY, Beating Estimates
Analyst Take: Zoom’s revenue of $1.12 billion for Q4 FY23 keeps the company’s streak of rising quarterly earnings results continuing, showing the ongoing value of its products and services to its customers. Contributing to that success is Zoom’s 18 percent year-over-year rise in enterprise revenue to $636.1 million for Q4. Even more impressive is that for the full FY2023, enterprise segment revenue rose 24 percent to $2.41 billion from one year ago. These are positive business indicators during times of ongoing macroeconomic pressures, which are still affecting many companies in the consumer and tech sectors, including Zoom.
Here are the Zoom Q4 and full FY2023 results by the numbers:
- Q4 2023 revenue of $1.12 billion, up four percent from $1.07 billion one year ago. The $1.12 billion in revenue beat consensus estimates of $1.1 billion from analysts at Investing.com.
- Q4 2023 non-GAAP net income of $366.6 million, down seven percent from $394 million one year ago.
- Q4 2023 non-GAAP earnings per diluted share of $1.22, down from $1.29 per diluted share one year ago. The share price beat the $0.81 per share price expected by analysts at Investing.com.
- Q4 2023 non-GAAP operating margin of 36.2 percent, down from 39.2 percent one year ago.
- Full FY2023 revenue of $4.4 billion, up seven percent from $4.1 billion one year ago.
- Full FY2023 non-GAAP net income of $1.33 billion, down 14 percent from $1.55 billion one year ago.
- Full FY2023 non-GAAP earnings per diluted share of $4.37, down from $5.07 per diluted share one year ago.
- Full FY2023 non-GAAP operating margin of 35.9 percent, down from 40.4 percent one year ago.
Yes, Zoom’s earnings numbers are lagging a bit compared to its robust business during the height of the Covid-19 pandemic from 2020 to 2021 when work-from-home shutdowns dramatically boosted the company’s revenue. But this has been the experience of a broad range of tech companies since mid-2022 as business began returning to more normal levels following the sudden business increases at the start of the pandemic. This transition from boom to normal takes a bit of time to settle and we are seeing that in the earnings of Zoom and a wide range of other tech and consumer companies.
Zoom Revenue Details
Other positive business indicators were also noted in Zoom’s earning numbers, including a total of 3,471 customers that are spending more than $100,000 in trailing 12 months revenue, which was a rise of 27 percent; a 115 percent trailing 12-month net dollar expansion rate for enterprise customers; and Zoom Phone services growing more than 100 percent YoY to total more than 5.5 million seats in Q4.
Zoom’s non-GAAP free cash flow for Q4 was $183.3 million, down three percent from $188.6 million one year ago, while its full FY2023 free cash flow was $1.19 billion, down 19 percent from $1.47 billion one year ago.
Zoom also showed progress in bringing in new customers and retaining existing customers through FY2023. At the end of FY2023, Zoom had about 213,000 enterprise customers, an increase of 12 percent from a year ago, and an online average monthly churn of 3.4 percent for Q4, which is down 40 basis points from the same quarter one year ago.
Zoom Guidance for Q1 and Full FY2024
Zoom’s revenue and earnings announcement for Q4 of FY2023 also included earnings guidance for Q1 and for the full FY2024.
For Q1 of FY2024, Zoom said it expects total revenue between $1.08 billion and $1.085 billion, and non-GAAP income from operations between $374.0 million and $379.0 million. Non-GAAP diluted EPS is expected to be between $0.96 and $0.98, according to the company.
For the full FY2024, total revenue is expected to be between $4.435 billion and $4.455 billion, while full fiscal year non-GAAP income from operations is expected to be between $1.606 billion and $1.626 billion. For the full fiscal year 2024, non-GAAP diluted EPS is expected to be between $4.11 and $4.18.
Zoom Revenue Overview
In reviewing these numbers, we remain bullish about Zoom, which continues to innovate and grow its product lines and services for busy enterprises. Zoom introduced Zoom Mail and Zoom Calendar last fall as it dove into its strategy of pivoting from being only a video conferencing vendor to offering a full-service platform that can integrate more services and grow the company’s sales and revenue.
That is a smart move and it is helping Zoom to embrace the idea of hybrid workplaces that promote deeper collaboration, improved human connections, and more flexible work environments for customers and their employees.
All of this, of course, continues to be inspired and enabled by Zoom founder and CEO, Eric S. Yuan, who is passionate about leading the company through these changes and adjustments.
It will be fascinating to continue to track Zoom and its innovative leadership team as the company makes its next moves in the marketplace. For the last several quarters we have said that we see good things coming from this company and we expect that will continue into the future.
Disclosure: Futurum Research 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 Futurum Research as a whole.
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