Zoom Video: FQ2'23 Key Metrics Outlook for FY 2023įor the current fiscal year, Zoom Video projects to generate $4.385-$4.395B in revenues and the company downgraded its forecast from $4.530-$4.550B which was issued just three months ago. During the pandemic, Zoom Video's net dollar expansion rate was 130% or higher, which means that customers are dialing back their spending on the Zoom Video platform. Zoom Video's NDER measure dropped to 120% in FQ2'23, showing two consecutive quarters of contraction. This figure measures internal revenue growth and shows how much existing cohorts of customers are increasing their spending on the company's products and services over time. Zoom Video expresses its customer monetization with a ratio called net dollar expansion rate/NDER.
What I see as a potential problem for Zoom Video is that not only is topline growth slowing, but customer monetization is weakening at the same time. Zoom Video: FQ2'23 Revenue Growth Net dollar expansion rate is declining
The firm had 204,000 Enterprise customers at the end of FQ2'23. Enterprise revenues grew 27% year over year to $599M in FQ2'23 which was in part driven by 18% growth in Zoom Video's Enterprise customer base. While total revenue performance was weak in the last quarter, enterprise customers are still a bright spot for Zoom Video because they are still adopting the firm's products and services rapidly. In the year-earlier period, Zoom Video grew its consolidated revenues 7 times faster, at a rate of 54%. In FQ2'23, Zoom Video generated $1,099.5M in revenues, showing only 8% year-over-year growth. At the height of the pandemic, the start-up doubled its revenues from $328M to $664M in FQ2'21, but growth prospects have moderated greatly in the last few quarters. However, the pandemic is wearing off and people are returning to their offices, which results in fundamentally altered growth prospects for Zoom Video. With COVID-19 condemning a lot of employees to remote work, companies rushed to adopt Zoom's video-conferencing technology, which resulted in a period of hyper-growth for the start-up. Since shares of Zoom Video are still expensive based on revenues and estimates are falling hard, the stock, I believe, is set to continue to revalue to the downside!ĭata by YCharts Massive post-pandemic revenue slowdownĭuring the pandemic, Zoom Video was a big winner for obvious reasons. The company also recently issued a disappointing topline outlook for FY 2023 due to normalizing business conditions that no longer support triple-digit annual revenue growth rates. After a prolonged period of hyper-growth during the COVID-19 pandemic, video-conferencing company Zoom Video Communications ( NASDAQ: ZM) is starting to see slowing revenue growth and weakening customer monetization in its core business.
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