Zoom Has Biggest Rally in a Year After Strong Forecast

The Zoom headquarters in San Jose, California.

(Bloomberg) -- Zoom Communications Inc. shares soared after the company delivered a stronger-than-expected forecast, suggesting that customers are buying more of its expanded line of software products.

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Revenue will be about $4.83 billion in the fiscal year ending in January, Zoom said Thursday in a statement. Profit, excluding some items, will be $5.81 a share to $5.84 a share. Analysts, on average, projected sales of $4.81 billion and earnings of $5.60 a share.

The company’s videoconferencing platform rose to prominence during the pandemic. As the world reopened from Covid restrictions, many consumers and small businesses let their Zoom licenses lapse. By contrast, corporate customers have largely held onto the company’s services even as more workers returned to offices and Microsoft Corp. increased competition with its Teams products.

The shares jumped 13% to $82.47 in New York on Friday, marking their biggest single-day gain since August 2024. The stock had been down 10% this year heading into the earnings report.

Fiscal second-quarter enterprise sales increased 7% to $730.7 million, compared with analysts’ average estimate of $716.7 million. Zoom said it had 4,274 customers in the period who contributed more than $100,000 each over the past year.

The company has been working the past few years to diversify into a platform of business tools, including an AI assistant. That AI companion feature now has “millions” of monthly active users, up four times compared with the prior year, Zoom said in a presentation.

“It was an uncontroversial quarter for Zoom — growth rates are stabilizing to improving, and the company continues to manage through ongoing growth headwinds,” wrote Tyler Radke, an analyst at Citigroup Inc.

“We delivered an across-the-board strong Q2 marked by achieving our highest year-over-year revenue growth in 11 quarters,” Chief Executive Officer Eric Yuan said in the statement.

Total revenue gained 4.7% to $1.22 billion in the period ended July 31. Profit, excluding some items, was $1.53 a share.

The results reflect rising momentum and that new paid AI features appear to be providing a lift to revenue, wrote John Butler, an analyst at Bloomberg Intelligence. Still, revenue growth has been meager since the end of the pandemic and is expected to remain around 3% annually for at least the next two years.

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(Updates with closing price in the fourth paragraph.)

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