Zoom Video Communications Inc.’s ZM -1.15 percent customer count increased significantly and revenue nearly tripled in the first quarter, indicating that the pandemic-era tech darling is experiencing robust customer growth as offices reopen.
Zoom, which became a household name as remote work and distance learning grew in popularity during the pandemic, has been expanding beyond its initial focus on communications and collaboration to include webinars, chat, and third-party applications. Additionally, the company has introduced features to assist businesses where some employees have returned to the office while others continue to work remotely.
“The hybrid model is here to stay,” CEO Eric Yuan stated on Tuesday.
Zoom Rooms, the company’s take on the traditional conference room, and Zoom Phone, a telephone option for huddle rooms and executive offices, both saw significant user growth as more employees returned to traditional offices, company executives said. The cloud-based phone service now has 1.5 million seats, up from 1 million in January.
Zoom shares, which closed slightly lower Tuesday at $327.72, gained 2% in after-hours trading in response to the earnings report.
The company joins a growing list of technology firms that have seen strong demand as customers reintroduce employees to their offices and upgrade technology. Personal computer sales, which soared early in the pandemic, are expected to continue to rise as businesses and schools adopt hybrid arrangements.
Alex Cho, head of HP Inc.’s personal systems division, stated Tuesday at an industry event that computer-related assumptions have shifted. People are now investing in one computer per person, rather than one per household as was the case prior to the pandemic. He added that a growing trend is for individuals to own at least a second computer, including a dedicated work computer.
Cisco Systems Inc., a long-standing industry leader, and business software behemoth Salesforce.com Inc. also issued bullish forecasts. Salesforce reported a record number of contracts worth at least $1 million in the most recent quarter.
Zoom, which began trading on public markets in 2019, emerged as one of the largest beneficiaries of the shift to remote work and distance education, outperforming larger competitors such as Microsoft Corp. MSFT -0.91%
The number of paying users has risen dramatically. Customers with more than ten employees reached approximately 497,000 in the most recent quarter, up approximately 30,000 from the previous quarter, and customers who generated more than $100,000 in revenue over the previous 12 months reached 1,999, up approximately 22% from the previous quarter and more than doubling from a year ago.
Zoom’s first-quarter profit increased to more than $227 million, up from approximately $27 million a year ago. Meanwhile, revenue increased to $956.2 million from $328.2 million the previous year. According to FactSet, the results exceeded Zoom’s and Wall Street’s expectations.
Zoom has been investing heavily in capacity expansion and has provided free accounts to some organizations, such as school districts, during the pandemic. This resulted in a significant increase in operating expenses, primarily due to increased sales and marketing costs associated with Zoom’s increased hiring.
According to the company, there are still numerous unknowns surrounding the pandemic. It now anticipates annual revenue of $3.98 billion to $3.99 billion, up from $3.76 billion to $3.78 billion previously.
Additionally, the California-based company increased its full-year adjusted profit forecast to a range of $4.56 to $4.61 per share from $3.59 to $3.65 per share.