Shares in Zoom Video Communications rose Tuesday after the company reported April-quarter profit that fell from a year earlier but topped estimates. ZM stock climbed as the company's profit margin outlook came in above expectations.
"Zoom reported Q1 results above consensus, but reiterated revenue guidance due to currency and Russia-Ukraine headwind," Mizuho Securities analyst Siti Panigrahi said in a note to clients. "The company materially raised 2023 EPS and operating margin guidance."
Panigrahi added: "While enterprise continued to show strong momentum, online (consumer) experienced volatility. We continue to view fiscal 2023 as a transition year as Zoom invests to build a durable, post-pandemic growth profile through multiple growth levers to deliver high-teens growth."
Zoom Earnings Top Estimates
Zoom earnings for the April quarter of fiscal 2023 were $1.03 a share on an adjusted basis, down 22% from a year earlier.
Revenue rose 12% to $1.07 billion for Zoom. A year earlier, the San Jose, Calif.-based company earned $1.32 a share on sales of $956 million.
ZM stock analysts projected earnings of 88 cents a share on sales of $1.07 billion for the period ended April 30.
"We maintained strong profitability and cash flow, including 17% in GAAP operating margin, approximately 37% non-GAAP operating margin, approximately 49% operating cash flow margin and over 46% adjusted free cash flow margin," Chief Executive Eric Yuan said in the company's earnings news release.
Zoom earnings for the first quarter were released after the market close on Monday. ZM stock climbed 5.6% to close at 94.34 on the stock market today.
ZM Stock: Guidance Above Views
For the current quarter ending in July, Zoom said it expects per-share earnings of 91 cents at the midpoint of its outlook. The company forecast revenue in a range of $1.115 billion to $1.120 billion.
Analysts had predicted earnings of 88 cents per share on revenue of $1.11 billion.
Wall Street expected decelerating earnings and revenue growth for Zoom as economies normalize and in-person meetings rebound from the coronavirus pandemic.
Low Relative Strength Rating
Zoom's cloud-based software sets up audio and videoconferencing, with chat tools also available. Customers also can easily share content.
Heading into its earnings report, ZM stock owned an IBD Relative Strength Rating of only 9 vs. a best-possible 99, according to IBD Stock Checkup.
Zoom stock had retreated 53% in 2022. Zoom Video had $5.7 billion in cash on its balance sheet as of April 30.
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