Zoom Communications Inc (ZM) reported its fiscal second-quarter results after the bell on Tuesday, and the numbers were a bit of a mixed bag. The company beat on both the top and bottom lines, but its guidance for the current quarter left investors wanting more. Shares fell about 3% in after-hours trading.
Here's the rundown. Revenue came in at $1.28 billion, edging past the consensus estimate of $1.27 billion. Adjusted earnings were $1.55 per share, also ahead of the $1.48 analysts were looking for. That's a solid beat, but the market is forward-looking, and the Q3 forecast wasn't as rosy.
Zoom expects third-quarter revenue between $1.275 billion and $1.28 billion, slightly below the $1.282 billion analysts had penciled in. Adjusted earnings are projected at $1.46 to $1.48 per share, versus the $1.50 consensus. That shortfall is likely what's spooking investors.
On the bright side, the company raised its full-year guidance. Revenue is now expected to be $5.085 billion to $5.095 billion, right in line with the $5.09 billion estimate. Adjusted earnings are seen at $6.08 to $6.12 per share, versus the $6.08 consensus. So the year looks fine, but the near-term hiccup is the story.
Digging into the quarter, total revenue was up 4.9% year-over-year. Enterprise revenue grew 7.8% to $787.5 million, while online revenue inched up just 0.6% to $489.7 million. The company ended the quarter with 4,625 customers generating more than $100,000 in trailing 12-month revenue, an 8.2% increase from a year ago. Online monthly average churn was 2.9%.
CEO Eric Yuan highlighted the company's AI push in the earnings release. "Our AI-first Customer Experience portfolio continues to scale, delivering high-double-digit ARR expansion, driven in part by strong adoption of Zoom Virtual Agent, whose customer count increased 256% year over year," he said.
Cash flow was healthy too. Operating cash flow came in at $494.8 million, and free cash flow was $472.4 million. The company ended the quarter with $7.2 billion in cash, cash equivalents, and marketable securities, excluding restricted cash.
Management will discuss the results on an earnings call with investors and analysts at 5 p.m. ET. That's where we might get more color on the guidance and what's driving the softer outlook.
At the time of publication, Zoom shares were trading at $97.97 in after-hours, down 2.92%. It's a reminder that even when you beat, the market cares about what's next.
