TLDR
- Zoom delivered Q3 earnings of $1.52 per share on $1.23 billion revenue, beating estimates of $1.44 and $1.21 billion
- Annual guidance increased to $4.85-$4.86 billion revenue and $5.95-$5.97 earnings per share from prior forecasts
- AI Companion 3.0 gaining traction with enterprise clients, Custom AI tier priced at $12 per user monthly
- Shares rose 4% in premarket despite trading 86% below October 2020 peak of $568.34
Zoom Video Communications reported third-quarter financial results that exceeded analyst expectations. The company earned $1.52 per share with revenue reaching $1.23 billion.
Wall Street anticipated $1.44 per share on $1.21 billion in revenue. Shares jumped 3.8% to $81.60 in after-hours trading following the announcement.
The videoconferencing provider increased its full-year outlook after the strong quarter. Revenue projections now stand at $4.85 billion to $4.86 billion, up from $4.83 billion to $4.84 billion previously.
Profit expectations also improved. Zoom expects adjusted earnings between $5.95 and $5.97 per share for the fiscal year, raised from $5.81 to $5.84.
The company projects fourth-quarter earnings of $1.48 to $1.49 per share. Revenue should land between $1.23 billion and $1.24 billion. Both ranges exceed analyst consensus.
Zoom expanded its share repurchase authorization by $1 billion. Management’s confidence reflects the improving business trajectory.
Enterprise Clients Embrace AI Tools
CEO Eric Yuan highlighted strong adoption of Zoom’s artificial intelligence capabilities. The company has integrated AI features across its product portfolio to capture hybrid work demand.
“This quarter we announced AI Companion 3.0, and we’re thrilled to see AI Companion adoption grow meaningfully,” Yuan said. He noted strong momentum with Custom AI Companion and the AI-first Customer Experience suite.
Zoom launched AI Companion 3.0 in September with enhanced personalization features. The upgrade offers advanced capabilities for meeting assistance and task automation.
The Custom AI Companion add-on provides premium functionality at $12 per user per month. Yuan reported broad AI adoption across major enterprise deals this quarter.
Products like Phone, Contact Center and Virtual Agent are driving most current growth. The AI-first Customer Experience suite delivered one of Zoom’s best quarters in that category.
Strategic Partnerships Expand Reach
Zoom formed a partnership with Nvidia to strengthen its AI offerings. The collaboration incorporates Nvidia’s Nemotron technology to power AI Companion 3.0 across multiple industries.
The partnership targets sectors including finance, healthcare and government. These verticals require robust AI capabilities with strong security and compliance features.
Rebecca Wettemann from Valoir explained Zoom’s competitive advantage. “Zoom’s AI companion is included in eligible paid plans, making it an attractive foundation for future AI monetization efforts while driving adoption,” she said.
The bundling strategy lowers barriers to AI adoption. Customers get AI features without separate purchases, encouraging usage and creating upgrade paths.
Shares gained 4% in premarket trading Tuesday after the earnings release. The stock remains far below pandemic highs when videoconferencing became essential.
Zoom’s stock closed at $568.34 on October 19, 2020, marking its all-time peak. Shares have declined 86% from that level as workplace patterns shifted post-pandemic.
Third-quarter revenue of $1.23 billion topped the $1.21 billion consensus estimate. Adjusted earnings beat projections by 8 cents per share at $1.52.
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