Summary
Zoom Video Communications reported first quarter fiscal 2024 revenue of $1,105.4 million, up 2.9% from $1,073.8 million in the prior-year quarter. Gross profit was $841.4 million, up 3.6%, and gross margin rose to 76.1% from 75.6%. The top line grew, but GAAP operating income was $9.7 million, down 94.8% from $187.1 million. GAAP net income was $15.4 million, down 86.4% from $113.7 million, and diluted EPS was $0.05, down from $0.37. Operating margin fell to 0.9% from 17.4%, a decline of 16.5 percentage points. The drop in profitability reflects a much heavier cost base. On February 7, 2023, Zoom announced a restructuring plan that cuts approximately 15% of its current workforce, and the plan was substantially completed as of April 30, 2023.
Non-GAAP results look very different. Non-GAAP income from operations was $422.3 million, compared with $399.6 million in the prior-year quarter, and non-GAAP operating margin was 38.2%, compared with 37.2%. Non-GAAP net income was $353.3 million, and non-GAAP diluted EPS was $1.16, compared with $1.03. On a constant currency basis, revenue grew 5% year over year. Excluding the foreign currency drag, the underlying business still expanded, and the company cited Enterprise growth and stabilizing Online revenue as drivers. Customer metrics support that view. Zoom ended the quarter with approximately 215,900 Enterprise customers, up 9% from the same quarter last fiscal year. Customers spending more than $100,000 in trailing 12 months revenue totaled 3,580, up approximately 23%. The trailing 12-month net dollar expansion rate for Enterprise customers was 112%. Online average monthly churn was 3.1%, down 50 basis points, and 72.0% of total Online MRR came from customers with a continual term of service of at least 16 months, up 700 basis points.
Cash generation remained solid but lower. Operating cash flow was $418.5 million, down 20.5% from $526.2 million. Capital expenditures were $21.8 million, down 12.8% from $25.0 million. Free cash flow, a non-GAAP measure defined as operating cash flow less purchases of property and equipment, was $396.7 million, compared with $501.1 million. Current deferred revenue was $1.34 billion, up 4.0% from $1.29 billion, and remaining performance obligations were $3.48 billion, up 16.5% from $2.99 billion. Those backlog figures suggest booked business keeps growing even as GAAP profitability compressed.
Guidance covers the second quarter of fiscal 2024 and the full fiscal year 2024. For the second quarter, total revenue is expected to be between $1.110 billion and $1.115 billion, and constant currency revenue is expected to be between $1.120 billion and $1.125 billion. Non-GAAP income from operations is expected to be between $405.0 million and $410.0 million, and non-GAAP diluted EPS is expected to be between $1.04 and $1.06 with approximately 307 million weighted average shares outstanding. For the full fiscal year 2024, total revenue is expected to be between $4.465 billion and $4.485 billion, with constant currency revenue between $4.495 billion and $4.515 billion. Full fiscal year non-GAAP income from operations is guided to between $1.630 billion and $1.650 billion, and full fiscal year non-GAAP diluted EPS is guided to between $4.25 and $4.31 with approximately 308 million weighted average shares outstanding. The company raised its full fiscal year 2024 outlook.
Risks are mostly macro and execution related. Zoom pointed to high inflation, potential recessionary environments, bank failures, and foreign currency swings as sources of uncertainty. Foreign currency movements reduced revenue by $18.4 million in the quarter. The company also flagged elongated sales cycles and lower overall corporate spending. Competition, slowing demand, higher market penetration, and the maturation of the business could all pressure growth. The Russia-Ukraine war weighed on EMEA revenue, though customers in Russia, Belarus, and Ukraine represented less than 1% of net assets and total consolidated revenue. Other listed risks include delays or outages at co-located data centers, internet infrastructure failures, market volatility, and global security concerns. In April 2023, Zoom acquired Workvivo, an employee experience platform, which adds integration work. The restructuring plan is aimed at cutting operating costs and supporting profitable growth.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2024 | Q4 FY2023 | QoQ | Q1 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.11B | $1.12B | -1.1% | $1.07B | +2.9% |
| Gross profit | $841.4M | $823.4M | +2.2% | $812.0M | +3.6% |
| Gross margin | 76.1% | 73.7% | +2.5 pp | 75.6% | +0.5 pp |
| Research & development | $209.3M | $261.3M | -19.9% | $144.3M | +45.0% |
| Sales & marketing | $422.5M | $505.6M | -16.4% | $362.8M | +16.5% |
| General & administrative | $199.9M | $186.5M | +7.2% | $117.8M | +69.6% |
| Total operating expenses | $831.7M | $953.3M | -12.8% | $624.9M | +33.1% |
| Operating income (loss) | $9.7M | -$129.9M | +107.5% | $187.1M | -94.8% |
| Operating margin | 0.9% | -11.6% | +12.5 pp | 17.4% | -16.5 pp |
| Net income (loss) | $15.4M | -$104.0M | +114.8% | $113.7M | -86.4% |
| Net margin | 1.4% | -9.3% | +10.7 pp | 10.6% | -9.2 pp |
| Diluted EPS | $0.05 | -$0.34 | +$0.39 | $0.37 | -$0.32 |
| Customers | 2,916 | — | — | 1,999 | +45.9% |
Risks
High inflation, potential recession, bank failures and foreign currency headwinds are pressuring demand and customer spending. MD&A states we recently experienced elongated sales cycles and a decrease in overall corporate spending, and unfavorable foreign currency reduced revenue by $18.4 million in the three months ended April 30, 2023.
New AI and machine learning entrants, including established companies with greater resources, could intensify competition and make our platform obsolete. Risk factors specifically warn that AI-powered communication and collaboration tools may adversely affect our business, results of operations and financial condition.
The February 2023 Restructuring Plan reduced our workforce by approximately 15% and was substantially completed as of April 30, 2023. Risks include additional charges, employee attrition, morale issues, management distraction, and failure to achieve targeted operating cost and margin benefits.
We have significant engineering personnel in China and face U.S.-China geopolitical tension, regulatory scrutiny, and Chinese government actions that have turned off service without warning. DOJ subpoenas sought information about interactions with foreign governments and user data, and a negative outcome could cause substantial fines, penalties and reputational harm.
Operating income declined 94.8% and net income declined 86.4% for the quarter ended April 30, 2023 compared with the prior-year quarter, with operating margin down 16.5 percentage points to 0.9%. Risk factors state there are no assurances we will maintain or increase profitability.
Lengthening sales cycles and greater deployment challenges as we increase sales to large organizations. Risk factors say large organizations have leverage and approval requirements that have and may continue to lengthen our sales cycle, leading to higher up-front costs and unpredictability; MD&A also notes elongated sales cycles.
Competition for software developers and sales personnel is intense, and restructuring actions plus stock price volatility may increase turnover and make equity awards less attractive. Risk factors say if we fail to attract or retain personnel, our business could be harmed.
Our business depends on retaining and upselling customers and upgrading free hosts, and the customer mix has shifted toward consumers who may have higher non-renewal rates. MD&A shows Online customer revenue declined 8% for the three months ended April 30, 2023, and online average monthly churn was 3.1% for that quarter.
DOJ investigations and securities class actions related to data privacy and security measures could result in substantial fines, penalties, reputational harm and management distraction. Risk factors disclose EDNY and NDCA subpoenas and prior putative class action and derivative lawsuits.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Free Cash Flow
Online Average Monthly Churn
Enterprise Customers
Customers Contributing More Than $100,000 in Trailing 12 Months Revenue
Free cash flow margin
Percentage of total Online MRR from Online customers with continual term of service of at least 16 months
Summary, forecast, risks and KPIs are extracted from Zoom Communications, Inc.'s SEC filings for Q1 FY2024 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.