Zoom Video Communications (ZM  ) posted better than expected results for its first quarter, topping its own guidance and Wall Street's expectations.

Although these results are still a far cry from the 'glorious' pandemic days, the videoconferencing software company showed it is managing to play with the 'big guys' as it competes against the tech titan itself, Microsoft Inc (MSFT  ) and its Microsoft Teams conferencing app, while also facing off Cisco Systems Inc (CSCO  )-owned Webex app and Salesforce Inc (SRM  ) Slack app along the way.

Quarter Highlights

For the quarter that ended on April 30th, Zoom's revenue rose 3% to $1.1 billion, topping Wall Street's consensus of $1.08 and its own guided range between $1.08 billion to $1.805 billion. Adjusted earnings amounted to $1.16 a share, topping both the Wall Street consensus at 99 cents and its own guidance range between 96 to 98 cents. GAAP earnings amounted to five cents a share.

By the words of CEO Eric Yuan, the first quarter results reflect that online revenue is stabilizing and that business efficiency has improved, allowing space for growth.

The enterprise business was one of the highlights as revenue rose 13% YoY. Zoom's enterprise userbase counts 215,900 customers which is a 9% increase from last year's comparable quarter. Moreover, 3,580 customers have generated more than $100,000 in trailing 12 months revenue, which translates to a 23% YoY increase compared to last year's quarter which brought on a 46% increase. Meanwhile, Microsoft Teams has gathered 300 million users, as reported under the software giant's latest earnings results.

July Quarter Guidance

For its second quarter, the videoconferencing software company is expecting revenue in the range between $1.11 billion and $1.115 billion. Adjusted profits are guided in the range $4.465 billion and $4.485 billion, with non-GAAP profits of $4.25 to $4.31 a share.between $1.04 and $1.06 a share, coinciding with Wall Street's $1.05 per-share consensus.

As for the January 2024 fiscal year, Zoom boosted its guidance. Annual revenue is expected in the range between $4.465 billion and $4.485 billion, with resulting non-GAAP profits in the range between $4.25 to $4.31 a share.

The AI Game

Although Microsoft is clearly leading the way on the AI front, Zoom has also added several AI-powered features. Through its IQ AI-powered assistant, users will be able to get AI-generates summaries, message drafts, and get help to catch up when late to a meeting, among other functions. Meanwhile, Microsoft is testing an AI-powered assistant for Office documents while Google (GOOGL  ) is adding this new technology to generate texts and summaries in its Docs, Gmail, Sheets and Slides. It's safe to say that the artificial intelligence game is just getting started, especially with Microsoft's Build 2023 being underway. As Microsoft SEO Satya Nadella stated during his keynote on the first day of the conference, it feels like every week, there's something new.

Recap

Although solid, the enterprise business continues to slow down. But the online business began to show signs of improvement off a few quarters earlier than expected. Profitability remains impressive but at the end of the day, Microsoft is far more diverse and a lot better capitalized, not to mention too much bigger. Still, Zoom has geared up for post-pandemic growth, lowered costs and increased efficiency, that resulted in this 'sooner-than-expected reset', proving that it is a pandemic winner who is getting along in a post-pandemic world.

DISCLAIMER: This content is for informational purposes only. It is not intended as investing advice.