Zoom Video (ZM) to Report Q3 Earnings: What's in the Cards?
Zoom Video Communications ZM is slated to release third-quarter fiscal 2024 results on Nov 20.
Zoom expects third-quarter fiscal 2024 revenues in the range of $1.115-$1.12 billion. The Zacks Consensus Estimate for the top line is currently pegged at $1.12 billion, indicating growth of 1.47% from the year-ago quarter.
Non-GAAP earnings are expected in the range of $1.07-$1.09 per share. The consensus mark for earnings has remained steady at $1.08 per share over the past 30 days, indicating growth of 0.93% year over year.
Zoom Video Communications, Inc. Price and EPS Surprise
Zoom Video Communications, Inc. price-eps-surprise | Zoom Video Communications, Inc. Quote
Factors to Note
Zoom’s fiscal third-quarter performance is likely to have gained from steady demand for products like Zoom Video Webinars, Zoom Rooms and Zoom Phones. An expanding portfolio of solutions is expected to have aided customer growth in the to-be-reported quarter.
The company’s artificial intelligence (AI) related advancements and partnerships in the fiscal third quarter are noteworthy. Zoom adopts a federated approach to AI, utilizing its own exclusive large-language AI models as well as models from renowned AI companies like OpenAI and Anthropic.
In the to-be-reported quarter, ZM offered its generative AI digital assistant to customers with paid services in its Zoom user accounts at no extra charge, which is expected to have been a key growth driver.
On Oct 3, the company announced new platform innovations that leverage robust AI capabilities aimed at simplifying the workday by providing efficient communication and collaboration tools.
The availability of Zoom Clips, which allows users to easily record, edit and share high-fidelity short-form video messages, both internally and externally, is likely to have aided enterprise customer growth in the to-be-reported quarter. The company also announced the launch of Notes, a fresh workspace designed for creating and collaborating both before, during and after meetings.
The consensus estimate for enterprise customers in the fiscal third quarter is currently pegged at 221,336.
The company’s freemium business model helps it win customers rapidly, whom it can later convert into paying customers. In the fiscal second quarter, customers contributing more than $100,000 in revenues in the trailing 12 months grew 17.8% to 3,672.
These customers accounted for 29% of revenues, up from 26% in the year-ago quarter. The momentum is expected to have continued in the to-be-reported quarter. The Zacks Consensus Estimate for customers contributing more than $100,000 in revenues in the fiscal third quarter is currently pegged at 3,796.
However, the company has been facing significant competition from the likes of Cisco, Microsoft and Google Meet. This might have led to a loss in small and medium-sized business customers, which is likely to have hurt top-line growth.
What Our Model Unveils
Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
Zoom has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are some stocks worth considering, as our model shows that these have the right combination of elements to beat on earnings this season.
Costco Wholesale COST has an Earnings ESP of +4.26% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Costco is set to announce its first-quarter fiscal 2024 results on Dec 14. Shares of COST have gained 29.6% year to date.
Synopsys SNPS has an Earnings ESP of +0.94% and a Zacks Rank #2 at present.
Synopsys is set to announce its fourth-quarter fiscal 2023 results on Nov 29. Shares of SNPS have declined 24.9% year to date.
Snowflake SNOW has an Earnings ESP of +67.33% and a Zacks Rank #2 at present.
Snowflake is set to announce its third-quarter fiscal 2024 results on Nov 29. Shares of SNOW have rallied 86% year to date.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Costco Wholesale Corporation (COST) : Free Stock Analysis Report
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Zoom Video Communications, Inc. (ZM) : Free Stock Analysis Report
