Zoom Q2 Beats but Q3 Guidance Disappoints, Shares Fall

Zoom Communications Inc reported its second-quarter financial results after the market close on Tuesday. Here are the key takeaways from the earnings report.

Zoom stock is under pressure. What is driving the decline in ZM shares?

Zoom Q2 Earnings Highlights

Zoom reported second-quarter revenue of $1.28 billion, beating the consensus estimate of $1.27 billion. The communications company posted adjusted earnings per share of $1.55 for the second quarter, surpassing analyst expectations of $1.48.

Total revenue grew 4.9% year over year. Zoom said enterprise revenue increased 7.8% year over year to $787.5 million, while online revenue grew 0.6% year over year to $489.7 million.

Online average monthly churn was 2.9% in the quarter. The company ended the quarter with 4,625 customers contributing over $100,000 in trailing 12-month revenue, up 8.2% year over year.

Zoom founder and CEO Eric Yuan said: "We continue to expand our AI-first customer experience product portfolio, achieving high single-digit annual recurring revenue growth, partly driven by strong adoption of Zoom Virtual Agent, whose customer count grew 256% year over year."

Net cash provided by operating activities was $494.8 million in the quarter, with free cash flow of $472.4 million. Zoom ended the period with $7.2 billion in cash, cash equivalents, and marketable securities.

Zoom expects third-quarter revenue in the range of $1.275 billion to $1.28 billion, while analysts expected $1.282 billion. The company guided for third-quarter adjusted earnings per share of $1.46 to $1.48, versus analyst expectations of $1.50.

Zoom also raised its full-year guidance. The company now expects full-year revenue of $5.085 billion to $5.095 billion, compared to analyst expectations of $5.09 billion. Zoom now projects full-year adjusted earnings per share of $6.08 to $6.12, versus analyst expectations of $6.08.

Zoom's management team will host a conference call with investors and analysts at 5:00 PM ET to discuss the quarter's results.

ZM Stock Falls After Earnings

Zoom shares were down 2.92% in after-hours trading, trading at $97.97 at the time of writing on Tuesday.