Zoom Video Communications’ net profit rose by about 16 times in the fourth quarter, compared with a year ago, as a growing customer base boosted revenue amid coronavirus-induced lockdowns.
The Nasdaq-listed company, which has its headquarters in California, said in a regulatory filing that net profit for the period was $260.6 million, up from $15.4m a year ago. Zoom's financial year ended on January 31, 2021.
Revenue increased by 369 per cent to $882.5m to beat analysts’ estimates of $811.8m, according to Refinitiv.
The fourth quarter marked a “strong finish” to an “unprecedented year”, said Zoom founder and chief executive Eric Yuan.
“Our ability to rapidly respond and execute drove strong financial results throughout the year," he said.
“We significantly scaled up our business to provide critical communications and collaboration services to our customers and the global community in response to the pandemic.”
Zoom’s shares closed about 9.7 per cent up at $409.7 on Monday. They gained another 8.4 per cent in after-hours trading to hit $444 a share.
The company’s stock has gained more than 260 per cent over the past 12 months and about 14 per cent since the start of this year.
Full-year profit stood at $672.3m, 26 times higher on an annual basis, while revenue grew by 326 per cent to $2.7 billion.
Zoom attributed the growth to the company’s ability to “acquire new customers” and “expand across existing customers”.
By the end of the fourth quarter, the company had about 467,100 paid clients with more than 10 employees, up by about 470 per cent from the period last year.
Its paid subscriber base grew by 33,400 from the previous quarter ending on October 31, a figure way below the increase for the previous three quarters, which ranged from 63,500 to 183,500.
Zoom raised its revenue outlook for the first quarter ending in April this year and the 2021-2022 financial year.
First-quarter revenue was forecast in the range of $900m and $905m while full-year revenue is expected to be between $3.7bn and $3.8bn – about 37 per cent more than its financial earnings in the 2020-2021 financial year.
“We believe we are well positioned for strong growth with our innovative video communications platform, on which our customers can build, run and grow their businesses,” said Mr Yuan.
The video conferencing platform has been adopted by businesses, schools, universities and people due to Covid-19 movement restrictions and lockdowns.
Its biggest competitors include Google's Meet and Microsoft's Teams platforms.
The number of large customers – companies that generated more than $100,000 in revenue for Zoom in the past year – grew by 156 per cent to 1,644 during the fourth quarter.
Zoom, which has become an essential service for office meetings and family gatherings during the pandemic, raised its research and development spending to $52.4m in the fourth quarter, an annual increase of 153 per cent.
R&D was about 6 per cent of the total revenue earned during the quarter. The company’s operating cash flow was about $400m in the quarter, 993 per cent higher than during the same period in the previous year.
Total cash and marketable securities stood at $4.2bn on January 31.
Industry experts have said Zoom's sizeable cash reserves and high share price will help it acquire new businesses.
Zoom is reportedly developing an email facility that will compete with Google's Gmail and Microsoft's Outlook.
