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Zoom Video Communications Reports Fourth Quarter and Fiscal Year 2023 Financial Results


 

  • Fourth quarter total revenue of $1,117.8 million, up 4% year over year as reported and 6% in constant currency; full fiscal year total revenue of $4,393.0 million, up 7% year over year as reported and 9% in constant currency
  • Fourth quarter Enterprise revenue of $636.1 million, up 18% year over year; full fiscal year Enterprise revenue of $2,409.3 million, up 24% year over year
  • Year-end number of customers contributing more than $100,000 in trailing 12 months revenue up approximately 27% year over year

Zoom Video Communications, Inc. (NASDAQ: ZM), a leading provider of video-first unified communications, today announced financial results for the fourth quarter and fiscal year ended January 31, 2023.

“In fiscal year 2023, our growing base of Enterprise customers increasingly looked to Zoom to provide a seamless communication and collaboration platform, and drive productivity and efficiency during turbulent times,” said Zoom founder and CEO, Eric S. Yuan. “This was evident in the 27% growth in customers contributing more than $100,000 in trailing 12 months revenue, as well as the 115% trailing 12-month net dollar expansion rate for Enterprise customers. Zoom One adoption continued to accelerate and helped drive Zoom Phone to grow more than 100% year over year, surpassing 5.5 million seats in Q4. Our emerging technologies such as Zoom Contact Center picked up pace as customer experience teams recognized the value of a modern, integrated collaboration solution. While the macroeconomic situation continues to negatively impact our overall growth, we have maintained a healthy balance sheet and operating cash flow generation of approximately $1.29 billion.”

Fourth Quarter Fiscal Year 2023 Financial Highlights:

  • Revenue: Total revenue for the fourth quarter was $1,117.8 million, up 4% year over year. After adjusting for foreign currency impact, revenue in constant currency was $1,140.2 million, up 6% year over year. Enterprise revenue was $636.1 million, up 18% year over year, and Online revenue was $481.7 million, down 10% year over year.
  • (Loss) Income from Operations and Operating Margin: GAAP (loss) from operations for the fourth quarter was $(129.9) million, compared to GAAP income from operations of $251.8 million in the fourth quarter of fiscal year 2022. The GAAP loss from operations for the fourth quarter was due to additional stock-based compensation expense related to a change to our supplemental equity grant program. After adjusting for stock-based compensation expense and related payroll taxes, and acquisition-related expenses, non-GAAP income from operations for the fourth quarter was $404.8 million, down from $420.3 million in the fourth quarter of fiscal year 2022. For the fourth quarter, GAAP operating margin was (11.6)% and non-GAAP operating margin was 36.2%.
  • Net (Loss) Income and Diluted Net (Loss) Income Per Share: GAAP net (loss) attributable to common stockholders for the fourth quarter was $(104.1) million, or $(0.36) per share, compared to GAAP net income attributable to common stockholders of $490.5 million, or $1.60 per share in the fourth quarter of fiscal year 2022.

    Non-GAAP net income for the fourth quarter was $366.6 million, after adjusting for stock-based compensation expense and related payroll taxes, acquisition-related expenses, gains on strategic investments, net, income tax benefits from discrete activities, and undistributed earnings attributable to participating securities. Non-GAAP net income per share was $1.22. In the fourth quarter of fiscal year 2022, non-GAAP net income was $393.6 million, or $1.29 per share.
  • Cash and Marketable Securities: Total cash, cash equivalents, and marketable securities, excluding restricted cash, as of January 31, 2023 was $5,412.7 million.
  • Cash Flow: Net cash provided by operating activities was $211.6 million for the fourth quarter, compared to $209.4 million in the fourth quarter of fiscal year 2022. Free cash flow, which is net cash provided by operating activities less purchases of property and equipment, was $183.3 million, compared to $188.6 million in the fourth quarter of fiscal year 2022.

Full Fiscal Year 2023 Financial Highlights:

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  • Revenue: Total revenue for the fiscal year was $4,393.0 million, up 7% year over year. After adjusting for foreign currency impact, revenue in constant currency was $4,462.0 million, up 9% year over year. Enterprise revenue was $2,409.3 million, up 24% year over year, and Online revenue was $1,983.6 million, down 8% year over year.
  • Income from Operations and Operating Margin: GAAP income from operations for the fiscal year was $245.4 million, compared to $1,063.6 million for fiscal year 2022. After adjusting for stock-based compensation expense and related payroll taxes, litigation settlements, net, and acquisition-related expenses, non-GAAP income from operations for the fiscal year was $1,579.1 million, down from $1,657.1 million for fiscal year 2022. For the fiscal year, GAAP operating margin was 5.6% and non-GAAP operating margin was 35.9%.
  • Net Income and Diluted Net Income Per Share: GAAP net income attributable to common stockholders for the fiscal year was $103.7 million, or $0.34 per share, compared to GAAP net income attributable to common stockholders of $1,375.1 million, or $4.50 per share for fiscal year 2022.

    Non-GAAP net income for the fiscal year was $1,329.0 million, after adjusting for stock-based compensation expense and related payroll taxes, acquisition-related expenses, losses on strategic investments, net, litigation settlements, net, income tax benefits from discrete activities, and undistributed earnings attributable to participating securities. Non-GAAP net income per share was $4.37. In fiscal year 2022, non-GAAP net income was $1,549.1 million, or $5.07 per share.
  • Cash Flow: Net cash provided by operating activities was $1,290.3 million for the fiscal year, compared to $1,605.3 million for fiscal year 2022. Free cash flow, which is net cash provided by operating activities less purchases of property and equipment, was $1,186.4 million, compared to $1,472.7 million for fiscal year 2022.

Customer Metrics: Drivers of total revenue included acquiring new customers and expanding across existing customers. At the end of the fourth quarter of fiscal year 2023, Zoom had:

  • Approximately 213,000 Enterprise customers, up 12% year over year.
  • A trailing 12-month net dollar expansion rate for Enterprise customers of 115%.
  • 3,471 customers contributing more than $100,000 in trailing 12 months revenue, up approximately 27% from the same quarter last fiscal year.
  • Online average monthly churn of 3.4% for Q4, down 40 bps from the same quarter last fiscal year.
  • The percentage of total Online MRR from Online customers with a continual term of service of at least 16 months was 72.0%, up 1,300 bps year over year.

Financial Outlook: Zoom is providing the following guidance for its first quarter of fiscal year 2024 and its full fiscal year 2024.

  • First Quarter Fiscal Year 2024: Total revenue is expected to be between $1.080 billion and $1.085 billion and revenue in constant currency is expected to be between $1.097 billion and $1.102 billion. Non-GAAP income from operations is expected to be between $374.0 million and $379.0 million. First quarter non-GAAP diluted EPS is expected to be between $0.96 and $0.98 with approximately 304 million non-GAAP weighted average shares outstanding.
  • Full Fiscal Year 2024: Total revenue is expected to be between $4.435 billion and $4.455 billion and revenue in constant currency is expected to be between $4.458 billion and $4.478 billion, Non-GAAP income from operations is expected to be between $1.606 billion and $1.626 billion. Full fiscal year non-GAAP diluted EPS is expected to be between $4.11 and $4.18 with approximately 309 million non-GAAP weighted average shares outstanding.

Additional information on Zoom’s reported results, including a reconciliation of the non-GAAP results to their most comparable GAAP measures, is included in the financial tables below. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty of expenses that may be incurred in the future, although it is important to note that these factors could be material to Zoom’s results computed in accordance with GAAP.

 

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