Zoom Q1 FY 2022 Earnings Preview: Revenue Growth, Customer Expansion & Stock Performance Insights

Zoom’s focus remains on customers generating over $100K in trailing 12-month revenue, a key indicator of its enterprise market strength.

Highlights to Watch

• Analysts forecast adjusted EPS of $0.97, a significant increase from $0.20 in Q1 FY 2021.
• The count of large-contract customers with annual revenue exceeding $100,000 is projected to grow year-over-year.
• Revenue growth is expected to continue robustly but at a moderated pace compared to recent quarters as the global economy rebounds from the COVID-19 impact.

Over the past year, Zoom Video Communications Inc. (ZM) has solidified its position as the premier video conferencing solution for remote workforces, propelled by the pandemic-driven shift to virtual collaboration. With vaccine rollouts and gradual economic normalization, Zoom is innovating to sustain momentum. A prime example is the upcoming launch of Zoom Events, an interactive virtual event platform announced in March and slated for release this summer.

Investors eagerly await Zoom’s Q1 FY 2022 earnings report on June 1, 2021. The company’s fiscal year ends January 31. Market analysts anticipate strong year-over-year growth in both adjusted earnings per share (EPS) and revenue, albeit at a tempered rate compared to the exceptional growth seen in previous quarters.

Another critical metric is the number of Zoom’s large enterprise customers generating over $100,000 in trailing twelve-month (TTM) revenue. These clients typically exhibit higher retention rates and provide a more stable revenue foundation post-pandemic. Analysts predict continued year-over-year expansion in this valuable customer segment.

Zoom’s stock performance has outpaced the broader market over the last year, delivering a remarkable total return of 102.7%, significantly exceeding the S&P 500’s 38.8% return. The stock saw a notable surge starting late August last year, peaking in mid-October, followed by a brief decline before resuming upward momentum.

Zoom’s Earnings Trajectory

Following its Q4 FY 2021 earnings release in early March, Zoom’s stock experienced a dip despite an impressive 723.8% rise in adjusted EPS, signaling a deceleration from prior quarters. Revenue growth hit 368.8%, the fastest quarterly increase in over three years, fueled by the ongoing remote work trend.

In Q3 FY 2021, adjusted EPS surged by 1,055.8%, the fastest since Q1 FY 2020, while revenue climbed 366.5% year-over-year. This growth was driven by both new customer acquisitions and expanded usage among existing clients.

For Q1 FY 2022, analysts project adjusted EPS growth of 390.0% and revenue growth of 175.7%, indicating continued but moderated expansion. Full-year FY 2022 forecasts suggest adjusted EPS growth of 9.8% and revenue growth of 43.0%, a significant slowdown compared to FY 2021’s stellar performance.

Source: Visible Alpha

Key Growth Indicator: High-Value Customers

Investors will closely monitor the number of customers contributing over $100,000 in TTM revenue. This segment reflects Zoom’s ability to scale and attract large organizations, which tend to provide more consistent revenue streams compared to smaller clients who may switch platforms more frequently.

At the end of FY 2019, Zoom had 344 customers in this category. By FY 2021’s close, this number had surged nearly fivefold to 1,644. Analysts expect a 135.6% year-over-year increase in Q1 FY 2022, with projections reaching 2,257 for the full fiscal year—more than 6.5 times the FY 2019 figure.

As the global economy recovers and employees gradually return to offices, securing and expanding large enterprise contracts will be crucial for Zoom’s sustained growth.

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