Despite signs that Wall Street may not regard its current hot streak as enduring into the mid term as Covid-19 vaccines become available throughout the major economies, in the here and now, video conferencing firm Zoom is carrying on racking up the revenues as indicated by a strong third quarter.
For the three-month period ended 31 October 2020, the breakout company of 2020 reported total revenue of $777.2m, up 367% year-over-year, while GAAP income from operations was $192.2m, compared with a GAAP loss from operations of $1.7m in the third quarter of the previous fiscal year.
After adjusting for stock-based compensation expense and related payroll taxes, and acquisition-related expenses, non-GAAP income from operations for the third quarter was $290.8m, up from $21.3m in the third quarter of fiscal year 2020. For the third quarter, GAAP operating margin was 24.7% and non-GAAP operating margin was 37.4%.
Driving the revenue increase in the quarter was the company’s ongoing influx of customers, including acquiring new customers and expanding across existing customers.
At the end of the third quarter of fiscal year 2021, Zoom had approximately 433,700 customers with more than 10 employees, up approximately 485% from the same quarter last fiscal year, and 1,289 customers contributing more than $100,000 in trailing 12 months revenue, up approximately 136% from the same quarter last fiscal year. It also revealed a trailing 12 months net dollar expansion rate in customers with more than 10 employees above 130% for the tenth consecutive quarter.
Q3 2020 followed a similarly robust second quarter where revenues totalled of $663.5m, up 355% year-on-year, and GAAP income from operations for the quarter of $188.1m, compared with $2.3m in the second quarter of fiscal year 2020. During Q2 the number contributing more than $100,000 in trailing 12 months revenue was up 112% year-on-year, and Zoom had approximately 370,200 customers with more than 10 employees, an annual increase of 458%.
Commenting on the company’s performance during the third quarter and future prospects, Zoom founder and CEO Eric S. Yuan said that strong demand and execution led to the revenue growth, and the firm remained focused on the communication needs of customers and communities as they navigate the current environment and adapt to a new world of work from anywhere. “We aspire to provide the most innovative, secure, reliable and high-quality communications platform to help people connect, collaborate, build and learn,” he said. “We expect to strengthen our market position as we finish the fiscal year.”
Indeed, the company forecast a total revenue outlook of approximately $2.575bn to $2.58bn for fiscal year 2021, approximately a 314% increase year-on-year. Fourth quarter 2021 total revenue is expected to be between $806m and $811m, and non-GAAP income from operations is expected to be between $243m and $248m.
Zoom’s revenue outlook takes into consideration the demand for remote work solutions for businesses. It also assumes increased churn in the fourth quarter when compared with historic churn levels due to a higher percentage of customers who purchased monthly subscriptions.