On Tuesday, Zoom Video Communications’ shares soared on better-than-expected fourth-quarter results and Contact Center AI suite sales.
The video-conferencing company’s stock advanced 8.00% to $68.17 per share on February 27. Moreover, analysts predict a 1.75% lift to $69.36 apiece in the coming market session.
Zoom reported fiscal Q4 earnings per share of $1.42, 24.56% higher than the $1.14 market consensus. It marked a 10.08% year-over-year increase from the $1.29 EPS in Q4 2022.
Similarly, it posted $1.15 billion in November-January revenue, 1.77% above the $1.13 billion analyst forecast. The figure pointed to a 7.48% lift from $1.07 billion in the same period in the previous fiscal year.
Revenue exceeded the high end of its guidance by $16.00 million, with its enterprise segment generating 58.00% of total earnings. Likewise, the non-GAAP operating margin lifted from 35.90% to 39.20%, leading to a 24.00% jump in free cash flow.
Head of Investor Relations, Tom McCallum, closed the earnings call by announcing a $1.50 billion stock buyback. The buyback will reduce Zoom’s total outstanding shares by 7.00%, likely leading to an appreciation in stock price.
Also, investors responded positively to the communication platform’s plans to cut costs by increasing its AI capabilities. It plans to cut nearly 2.00% of its workforce and focus on AI, adding to the 1,300 jobs it laid off last year.
The California-headquartered firm thrived during the pandemic as businesses were forced to adopt a work-from-home structure. Nevertheless, industry watchers cautioned of slowing demand as companies shift back to office-based arrangements.
Contact Center Represents Zoom in the AI Arms Race
Founder and CEO Eric Yuan stressed that the Contact Center AI suite gave Zoom the edge over its competitors, including Microsoft Teams, Google Meet, and Skype. The suite includes AI Expert Assist, virtual agents, omnichannel support, automated workforce management, and assisted quality control.
Furthermore, Yuan said AI Companion, their generative AI (GenAI) assistant, has expanded to six products just five months after its release. He added that the company’s AI-first roadmap is focused on helping clients expedite business processes to drive customer value.
Contact Center provides access to Zoom features, including screen sharing, file sharing, image optimization, background generation, and integrated chat. Lastly, its AI-powered Revenue Accelerator grants real-time coaching to help users boost communication and presentation skills.
