Zoom surpasses projections on strong product demand and announces share buybacks

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Zoom surpasses projections on strong product demand and announces share buybacks
Zoom surpasses projections on strong product demand and announces share buybacks

Zoom Video Communications posted better-than-expected quarterly results, bolstered by strong demand for its expanding product range, sending its stock up about 10% in extended trading.

Zoom Video Communications reported better-than-expected quarterly results on Monday, boosted by robust demand for its expanding product line as more firms adopt hybrid work patterns, driving its shares up about 10% in extended trade.

Zoom also authorized a buyback of up to $1.5 billion in outstanding Class A common stock.

Zoom’s fourth-quarter statistics show that its efforts to integrate AI into its products and broaden its portfolio have paid off, as it capitalizes on an increase in hybrid working.

According to LSEG statistics, it posted an adjusted profit of $1.42 per share for the quarter ended January 31, which was higher than analysts’ projections of $1.15. Revenue came in at $1.15 billion, exceeding expectations of $1.13 billion.

“The company is doubling down on its long-term strategy to integrate generative AI rather than risking its massive cash holdings on a start-up that might more immediately drive topline growth,” said Ryan Koontz, a senior stock analyst at Needham & Company.

Zoom launched its AI companion in the third quarter, giving paying users access to tools such as meeting summaries and catch-ups, as well as email and chat composition prompts.

“We are also going to build new services that are driven by Zoom AI companions, and this year we are going to double down on Zoom AI customization while also focusing on monetization,” said Zoom CEO Eric Yuan on a post-earnings call.

CFO Kelly Steckelberg reported that the Zoom AI companion has enabled over 510,000 accounts in the last five months.

The company also reported an operating cash flow margin of 30.6% for the quarter.

Zoom expects fiscal-year 2025 sales of around $4.60 billion, which is lower than analysts’ estimates of $4.66 billion.

It also expects first-quarter sales of $1.13 billion, in line with analyst projections.

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