By Senad Karaahmetovic

The shares of Zoom Video Communications Premarket trades Tuesday saw a nearly 7 percent increase in (NASDAQ:), following the release of Q1 adjusted earnings per share that was better than anticipated.

ZM Q1 adjusted earnings per share of $1.03 was higher than $1.32 for the same period last year and more than the consensus estimate of 86c/share. Revenue was $1.07 Billion YoY. This is in line with analysts consensus.

Zoom reported an increase of 10% in free cash flow YoY to $501.1 million. It also beat the consensus estimate at $412.7million. Zoom reported approximately 198.900 enterprise customers as of the Q1 end.

Zoom predicts Q2 revenue of approximately $1.12 billion, well above analyst predictions of $1.11 trillion. Analysts were expecting 84c per shares. Zoom expects adjusted Q2 EPS to be in the 90c-92c range.

Zoom projects adjusted earnings per share of between $3.70 and $3.77 for the full year. This is an increase of the $3.45-$3.51 consensus estimate of $3.49/share. While analysts expected $4.54 trillion, Zoom anticipates FY revenues in the region of $4.53 billion to 4.55 billion.

“We delivered revenue of over one billion dollars driven by ongoing success in Enterprise, Zoom Rooms, and Zoom Phone, which reached 3 million seats during the quarter,” the company said.

Meta Marshall, a Morgan Stanley analyst, reiterated his Overweight rating for Zoom shares and set a price target of $140.00 per share.

“Zoom’s FQ1 rebutted overwhelmingly negative sentiment going into print, as in-line revenue/earnings upside proved out the attractiveness of the model. With large percentage of COVID timed renewals under the belt for the year, remain OW on attractive model with notably more derisked FY23,” the analyst said in a client note.

RBC analyst Rishi Jaaluria also spoke positively about Zoom stock following the results.

“We continue to like shares of Zoom on the long term and view current valuations (16x our EV/CY23E FCF) as beyond compelling for a best-of-breed enterprise software we expect can structurally deliver 15%+ growth with 30%-40% FCF margins. Valuation alone, however, is never a good reason to buy a stock and, while we do see limited downside to shares from here (ZM is down 32% since F4Q vs NASDAQ down 17%), we’re hesitant to call a bottom considering F1Q setup,” Jaluria wrote in a client note.