Zoom earnings top estimates, stock rises premarket

Yahoo Finance Live anchors discuss first-quarter earnings for Zoom.

Video transcript

JULIE HYMAN: All right, let us talk about Zoom for a moment as well. Zoom is reversing the pandemic's boom stock blues, perhaps. Shares are getting a boost on better than expected numbers and an upbeat forecast for the current period. And the company also says it expects a 10% increase in revenue this current quarter. That follows a 12% revenue rise in the first quarter. Now, here, again, it's all about expectations. So the idea being that 12% in the first quarter and 10% in the second quarter would be the slowest growth that Zoom has ever seen. But it could have been worse, I guess, is the feeling on the Street, right?

JARED BLIKRE: I think so, and the stock has gotten so beaten down. I mean, we were talking-- last week was an anomaly. You don't have those huge down days for Walmart and big guys like Target very often. But Zoom has already gotten pummeled here. So a lot of people are looking at the Cathie Wood disruption stocks and just looking for a reason to punt along based on that alone.

And we were talking with an analyst yesterday. And I asked, are we ever going to see Zoom get back to that breakneck growth that we saw before the pandemic into the early part of the pandemic? And the answer is most likely not. They have to retool, as do a lot of other companies. And here's that bulging bicep chart that we have from Brian Sozzi. We're going to talk with Ines Ferre. She's talking about a lot of these stocks that have completely round tripped their gains so far since the pandemic.

JULIE HYMAN: Yeah, and that analyst also talked about the free cash flow is really going to be an important metric for the likes of Zoom. Free cash flow expanded to $501 million in the quarter. $454 million was the year earlier quarter. And the company is also really emphasizing that it has migrated from individual retail customers, who are still make up a good amount of their business, to enterprise customers. So enterprise customers up 24% to nearly 200,000 last quarter. I don't know if they count the individuals at those enterprises. I imagine it would have to be because it's not 200,000 companies.

And the company is also talking about the number of customers that contribute over $100,000 over the prior 12 months, that that was up 46%. And that seems to be something that analysts were also keying in on. And Zoom's also adding more products. They've been talking about the Zoom Phone. They just bought a company called Solvvy, I believe is what it's called.

JARED BLIKRE: Is that Scandinavian?

JULIE HYMAN: It's a-- no, it should be, right? Yes, it's an IKEA piece of furniture that Zoom has acquired. No, it's customer-- it's conversational AI for their call center business.

JARED BLIKRE: Oh, right.

JULIE HYMAN: They've really been pushing their call center product [INAUDIBLE].

JARED BLIKRE: Those products have been disappointing and frustrating so far. But if anybody-- hey, Zoom has put the best product on the market, arguably. And we'll see what they can do with that. They've been a leader in the space, so I think going forward, they're not going to be a high multiple company like they were in the past, or as high. But they're going to be a little bit more boring and stable, and that's probably a good thing.

JULIE HYMAN: And we're going to talk to the CFO, Kelly Steckelberg, a little bit later in the show about all of this.