The News: Zoom revenue for the third quarter (Q3) of fiscal year (FY) 2024 reached $1.14 billion, up 3.2% from the $1.1 billion reported one year ago by the video conferencing, cloud contact center, and collaboration software vendor. Zoom reported its Q3 earnings on November 20 for the quarter ending October 31, which beat analyst estimates on revenue and earnings per share (EPS). Read the full Q3 earnings press release on the Zoom Video Communications, Inc. investor web page.
Zoom Revenue Up 3.2% to $1.4 Billion in Q3, Beating Analyst Estimates
Analyst Take: Zoom revenue was solid again for Q3, showing steady growth and providing positive momentum heading into 2024. There is other good news here as the company again grew its enterprise customer numbers and provided solid guidance for Q4 and the full fiscal year of 2024.
Here are the Zoom Q3 results by the numbers:
- Q3 FY 2024 revenue of $1.14 billion, up 3.2% from $1.1 billion year-over-year (YoY). The $1.14 billion in revenue beat consensus estimates of $1.126 billion from analysts at Investing.com.
- Q3 FY 2024 non-generally accepted accounting principles (non-GAAP) net income of $401.2 million, up 24% from $323.2 million YoY.
- Q3 FY 2024 non-GAAP earnings per diluted share of $1.29, up from $1.07 per diluted share YoY. The share price beat the $1.08 per share price expected by analysts at Investing.com.
- Q3 FY 2024 non-GAAP income from operations of $447.1 million, up from $380.9 million YoY.
- Q3 FY 2024 non-GAAP operating margin of 39.3%, up from 34.6% YoY.
- Q3 FY 2024 non-GAAP free cash flow was $453.2 million, up 66% from $272.6 million YoY.
This quarter was good for Zoom with several positive indicators for the new year. We like seeing Zoom’s steady earnings progress, which is a big plus as macroeconomic conditions continue to show challenges around the world.
Zoom Revenue: Enterprise Customer Growth Continues
We are particularly happy to see Zoom’s continuing growth in customers that are spending more than $100,000 in trailing 12 months revenue. For Q3, Zoom tallied 3,731 customers in that category, which is up by 13.5% YoY. Zoom also saw its enterprise customer numbers rise 5% to 218,100 customers in Q3 as Zoom continues to find new opportunities in a competitive marketplace.
Zoom’s total enterprise revenue for Q3 rose to $660.6 million, which is up 7.5% YoY, again showing the company’s progress in growing its enterprise business and its products and services to help customers.
Zoom Revenue Guidance for Q4 FY2024
Zoom’s revenue and earnings announcement for Q3 also included earnings guidance for fourth quarter (Q4) of FY 2024 and for the full FY 2024. For Q4 of FY 2024, Zoom expects total revenue between $1.125 billion and $1.130 billion, and non-GAAP income from operations between $409 million and $414 million. Non-GAAP diluted earnings per share (EPS) are expected to be between $1.13 and $1.15, according to the company.
For the full year of FY 2024, total revenue is expected to be between $4.506 billion and $4.511 billion, while full FY 2024 non-GAAP income from operations is expected to be between $1.740 billion and $1.745 billion. For the full fiscal year 2024, non-GAAP diluted EPS is expected to be between $4.93 and $4.95 per share.
Zoom Revenue Overview: What It All Means
It has been quite a ride for Zoom since the start of the COVID-19 pandemic in March 2020 when companies around the world quickly adopted mandatory work-from-home policies as the pandemic shut the world down. Zoom saw huge growth and revenue during that time, followed by a drop and then a leveling off that inspired Zoom to innovate with new mixes of products and services that are helping to maintain long-term customer interest and engagement.
Those product and strategy adjustments by Zoom are continuing and the company’s steady earnings progress today is a positive indicator that these adjustments are working, we believe. Observers who are again looking for the overnight earnings growth seen by Zoom from 2020 to 2021 during the worst of the pandemic must recognize that those heady days will not likely come again on a big scale, but that the company is doing just fine on it. We like Zoom’s platform strategy and product diversification as of late and are impressed that those plans are driving the steady growth that we are observing at the end of 2023.
Zoom’s continuing solid enterprise customer growth is a big positive for Zoom CEO and founder Eric S. Yuan and his executive team, but we would like to see Zoom find ways to see those customer gains drive double-digit growth for the company to sustain its momentum. We are optimistic about Zoom’s solid guidance heading into 2024.
Zoom offers a wide range of products and services as it continues to build out what it calls its all-in-one intelligent collaboration platform, which includes everything from chat to video conferencing, AI-powered Zoom IQ Meeting Summary, Team Chat Compose, Intelligent Director, Zoom Virtual Agent, Zoom Contact Center, and more.
We remain bullish on Zoom as we watch with interest as the company continues to innovate and react well to the always changing marketplace. Part of that innovation comes from Zoom’s accelerating investments in generative AI, which are delivering broad AI-powered collaboration advancements to its products for customers. We believe this wise strategy is paying dividends as customers discover and take advantage of new use cases for these powerful innovations and tools in their work and operations.
Daniel Newman and his co-host of The Six Five Webcast, Patrick Moorhead of Moor Insights and Strategy discussed Zoom’s latest earnings in their latest episode. Check it out here and be sure to subscribe to The Six Five Webcast so you never miss an episode.
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
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
