US video chat software provider Zoom Video Communications Inc. brought in fiscal fourth-quarter earnings that surpassed analysts’ forecasts as demand for its growing product offerings surged on increased hybrid working.
The San Jose, California-based company reported an adjusted profit of $1.42 per share in the three months ending January 31, ending above estimates of $1.15 per share. Revenue for the quarter rose 2.6% year-over-year (YoY) from $1.12 billion a year ago to $1.15 billion, topping expectations of $1.13 billion.
Net income stood at $298.8 million compared to a net loss of $104.1 million in the same quarter of the previous year. Operating cash flow margin was at 30.6% in the fourth quarter.
The firm also announced a $1.5 billion share buyback of its outstanding Class A common stock. The move followed a $1.0 billion share repurchase authorization that began in February 2022 and expired this month.
Zoom’s AI, Product Expansion Efforts Pay Off
Zoom’s solid fourth-quarter results signaled the fruition of its efforts to include artificial intelligence (AI) in its product lines and expand its portfolio as it leverages a growing hybrid working environment.
The company saw its sales lose significant momentum after a pandemic-driven rise due to competition for corporate clients from tech giant Microsoft Corp. and consumers opting out of videoconferencing platforms.
Aiming to gain more business customers, the firm diversified its product offerings to include phone systems, call centers, and AI assistants.
Senior equity analyst Ryan Koontz stated that Zoom is strengthening its long-term plan to integrate generative (AI) instead of risking investing big in a startup that may quickly boost revenue growth.
The video chat operator launched its large language model (LLM) AI Companion, formerly Zoom IQ, in the third quarter–providing paid users of the platform with features including meeting summaries, smart recordings, and email and chat composition.
In the last five months, the company has seen 510,000 accounts using its GenAI service.
Zoom chief executive Eric Yuan said they plan to develop new AI Companion-enabled services this year, increase their efforts on Zoom AI customization, and prioritize monetization.
