In extended trading on Monday, shares of Zoom Video Communications Inc. fell 6% after reporting record low quarterly earnings growth. In addition, the company slightly lowered its annual revenue forecast, which also affected the results.
Zoom’s fiscal third-quarter revenue increased 5% to $1.1 billion, according to Bloomberg, in line with analysts’ forecasts. For the year, the company lowered its sales forecast to $4.38 billion, for comparison – in August it expected $4.4 billion.
The full-year sales forecast released on Monday suggests that Zoom’s enterprise business will grow by more than 20%, while its small business and online consumer segments are expected to decline by 8%. As a result, Zoom reported a quarterly profit that exceeded the forecasts of Wall Street experts.
The company, which gained popularity during the peak of the pandemic, is trying to cope with the slowdown in its business growth by expanding the list of tools on offer. Earlier this month, Zoom’s integration of calendar and email was reported, which is expected to help keep more customers on the platform.
According to Zoom, the company continues to be affected by currency fluctuations and other issues. According to an expert from Citigroup Inc. Tyler Radke, it’s unlikely that Zoom will return to growth in the foreseeable future. “Despite modest income growth, key indicators show signs of a gradual deterioration,” he said after the publication of financial results.
Zoom shares, hovering close to pre-pandemic levels, fell to $74.73 in extended trading after the main session closed at $80.26 in New York. In total, the share price has fallen by 56% this year.
As of October 31, the company said it had 209,300 customers, up 14% from a year earlier. Experts on average predicted 210,105 clients. As the company loses consumer and small business customers, the number of corporate customers is growing. The outflow of small customers in the third fiscal quarter was 3.1% – in the same period last year it was about 3.7%.
Zoom says 3,286 customers bring in more than $100,000 in revenue in 12 months, up 31% from a year earlier. Sales in the Americas increased by 11%, while sales in Europe, the Middle East and Africa fell by 9% due to currency fluctuations and political instability. Revenues in the Asia-Pacific region decreased by 3%.
Fiscal third quarter earnings, excluding certain items, were $1.07 per share. Analysts were forecasting 83 cents per share on average. Annual profit should be $3.94 per share – in August the company expected $3.69 per share.
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