Investing.com -- Shares in Zoom Video Communications (NASDAQ:ZM) moved lower in premarket U.S. trading on Tuesday after the video conferencing giant unveiled a broadly cautious outlook for its current quarter and fiscal year.
A pandemic-era darling that became an essential tool for many remote workers, Zoom has faced a post-COVID uptick in competition and lingering questions over how it plans to integrate artificial intelligence into its offerings.
Even still, the company reported a stronger-than-expected performance for its fiscal first quarter, surpassing analyst estimates for both earnings per share (EPS) and revenue.
Adjusted EPS of $1.35 in the three months ended on April 30 topped analysts' consensus projections of $1.19, while revenue of $1.14 billion was also ahead of expectations thanks in large part to an uptick in the acquisition of new customers. Quarterly enterprise revenue climbed by 5.3% to $665.7 million.
Zoom's adjusted operating margin stood at 40.0%.
CEO Eric S. Yuan said the firm's performance during the quarter was bolstered by the integration of AI across its platform and strategic investments.
"These innovations combined with our execution and focused investment enabled us to outperform our guidance," Yuan commented in a statement.
Zoom said it now has $7.4 billion in cash on hand and projected free cash flow of $1.47 billion in its current financial year, although analysts at Evercore ISI flagged that it has not yet provided "incremental color on how that will be deployed directionally" aside from a $1.5 billion share buyback announced in the previous quarter.
"This likely remains a pain point for some," they said.
Looking ahead, Zoom anticipates that adjusted EPS in its second quarter will be between $1.20 and $1.21, slightly below the Wall Street's consensus predictions of $1.23. Revenue is also expected to be between $1.145 to $1.15 billion, compared to analysts' estimates of $1.15 billion.
For the full fiscal year 2025, Zoom forecasts adjusted EPS of $4.99 to $5.02, which is above the consensus of $4.91. The annual revenue guidance now stands at $4.61 to $4.62 billion, versus projections of $4.61 billion.
Analysts at Goldman Sachs noted that there was not much change to Zoom's outlook in relation to its prior estimates, arguing that this "points to a still choppy demand environment that could prolong an inflection to decelerating growth trends."
Senad Karaahmetovic contributed to this report.