Technology

Zoom Reports Customer Growth in Latest Quarter, Raises Expectation

Zoom Video Communications Inc.’s


ZM -1.15%

customer count rose sharply and revenue almost tripled in the first quarter, signaling the tech darling of the pandemic era is enjoying robust customer growth as offices open back up.

Zoom, which became a household name during the pandemic as remote work and distance learning took off, has been expanding beyond its initial focus on communications and collaboration to offer services such as webinars, chat and third-party applications. The company has also introduced features to aid businesses that have some staff returning to offices while others continue to work remotely.

“The hybrid model is here to stay,” Chief Executive Officer Eric Yuan said Tuesday.

Zoom Rooms, the company’s take on the traditional conference room, and Zoom Phone, which the company sells as a telephone option for huddle rooms and executive offices, saw strong user growth as more employees returned to traditional offices, company executives said. The cloud-computing-based phone service has reached 1.5 million seats, up from 1 million the company reported in January.

Zoom shares, which closed down slightly Tuesday at $327.72, rose 2% in after-hours trading following the earnings report.

The company joins other tech firms that have enjoyed solid demand as customers bring their employees back to offices and upgrade technology. Personal-computer sales, which surged early in the pandemic, are expected to remain elevated as companies and schools embrace hybrid arrangements.

Alex Cho,

who runs

HP Inc.’s

personal systems unit, said at an industry event Tuesday that assumptions around computers have changed. People are now investing in one PC per person, rather than just one per household pre-pandemic. He said there is also a growing trend of having at least a second PC per person, including a dedicated work computer.

Similarly,

Cisco Systems Inc.,

a longtime industry bellwether, and business software giant

Salesforce.com Inc.

issued bullish outlooks. Salesforce, for the most recent quarter, reported a record number of contracts valued at least $1 million.

Zoom, which started trading in the public markets in 2019, emerged as one of the biggest winners from the shift to remote work and distance education, pitting it against larger rivals such as

Microsoft Corp.


MSFT -0.91%

The number of paying users has skyrocketed. The number of customers with more than 10 employees reached about 497,000 in the latest period, about 30,000 more than the previous quarter, and customers that generated more than $100,000 over the past 12 months reached 1,999, up about 22% from the previous quarter and more than double from the year earlier.

Overall, Zoom’s first-quarter profit reached more than $227 million from about $27 million a year earlier. Meanwhile, revenue reached $956.2 million, up from $328.2 million a year ago. The results beat Zoom’s and Wall Street projections, according to FactSet.

Zoom has been investing heavily to expand capacity and offered free accounts to some during the pandemic, such as school districts. That has led to a sharp increase in operating expenses, driven by sales and marketing costs as Zoom increased hiring.

The company said that there are still many unknowns around the pandemic. It now expects annual revenue to reach $3.98 billion to $3.99 billion, up from its earlier view of $3.76 billion to $3.78 billion.

The California-based company also raised adjusted profit projections for the year to a range of $4.56 to $4.61 a share from $3.59 to $3.65 a share.

Zoom’s Popularity Soars in the Pandemic

More WSJ coverage of the videoconferencing company, selected by the editors

Write to Maria Armental at maria.armental@wsj.com

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