Shares of Zoom Video Communications Inc. gained slightly in extended trading today as the videoconferencing software firm delivered better-than-expected first-quarter results.

The company reported a net income of $15.4 million for the quarter, a big improvement from three months earlier when it posted its first net loss since 2018. Earnings before certain costs such as stock compensation came to $1.16 per share, well ahead of the analysts’ forecast of 99 cents per share. Zoom’s revenue topped $1.11 billion, up 3% from a year earlier and above the forecast of $1.08 billion.

Zoom founder and Chief Executive Eric Yuan (pictured) said in a statement that today’s results reflect “enterprise growth and stabilizing online revenue,” in addition to “greater efficiencies” that helped to boost its bottom line.

One impressive statistic is that Zoom managed to grow its customer base fairly significantly. It ended the quarter with 215,900 enterprise customers, up 9% from a year earlier. Of those, 3,580 are generating more than $100,000 in revenue per year, up 23% from the year before.

“The solid start to the year has enabled us to raise our outlook for fiscal-year 2024 while continuing to invest in innovations such as AI to help make interactions more meaningful and communications more effective,” Yuan said.

For the coming quarter, Zoom is forecasting revenue of $1.11 billion to $1.115 billion, which is more or less in line with Wall Street’s consensus estimate of $1.11 billion. Zoom also forecast a profit of between $1.04 and $1.06 per share, the midpoint of which aligns with Wall Street’s $1.05 per share forecast.

For fiscal 2024, Zoom said it’s raising its revenue guidance to a range of $4.465 billion to $4.485 billion, up from its previous guidance of between $4.435 billion and $4.455 billion. Meanwhile, it has raised its earnings forecast to between $4.25 to $4.31 a share, up from its earlier target of $4.11 to $4.18 per share. Zoom’s new guidance suggests the company will deliver above Wall Street’s target of $4.45 billion in revenue and $4.22 per share in earnings.

Zoom’s shares, which rose 3% in the regular trading session, initially jumped an additional 5% after-hours before losing most of those gains later.

Prior to the earnings call, analysts with Rosenblatt Securities warned that Zoom was facing a “big renewal quarter” with any COVID-era contracts coming up. Zoom’s numbers suggest it did well to retain many of those customers, but the analysts said it was able to do so only by offering substantial discounts and free services.

Holger Mueller of Constellation Research Inc. said although Zoom’s present growth rate is slow, its management is determined to accelerate it. Zoom continues to invest in its business, he said, with its costs rising more than 30% over the last year.

“Its general and administrative costs in particular rose by 70%, almost matching what it spends on R&D,” the analyst said. “While that can be interpreted as a sign of slowing growth, it can also be seen as growing maturity of the company. At least, Zoom’s cost of revenue barely increased, which shows it did well in its cloud contract negotiations. Now it comes down to Eric Yuan and his team to deliver on expectations, which call for a $1 increase in earnings per share. It’s ambitious, but possible.”

With Zoom facing stiff competition from rival services such as Microsoft Teams and Cisco Systems Inc.’s WebEx, the company has doubled down on its efforts to add new services that differentiate its offering. During the quarter, Zoom notably established a partnership with the artificial intelligence startup Anthropic to integrate its generative AI-powered chatbot Claude. Zoom also announced a key acquisition, buying the employee engagement startup Workvivo Ltd.

Photo: CNBC/YouTube