Zoom’s Sales Growth Slows Even as Enterprise Business Stays Steady


Zoom Video Communications Inc slumped nearly 6% in extended trading after reporting its slowest quarterly sales growth on record and slightly downgrading its full-year revenue forecast.

Revenue rose 5% to $1.1 billion, in line with analysts’ average estimates. For the full year, the software company cut its sales forecast to $4.38 billion, compared to $4.4 billion it had estimated in August.

Chief financial officer Kelly Steckelberg said on a conference call with analysts that full-year sales guidance released Monday assumes Zoom’s enterprise business will grow more than 20%, while revenue from online consumer and small business customers will increase by about There will be a decline of 8%. In a sign the enterprise business remains stable, Zoom reported quarterly profit that surpassed Wall Street estimates and raised its full-year earnings forecast.

Also Read :  Opinion: Elon Musk pumps Tesla stock with ridiculous $4 trillion target. Is a dump coming next?

Zoom, which burst into the public consciousness during the height of the pandemic, is fighting to overcome a slowdown in the growth of its video communications service by expanding its tools for business. At its annual user conference earlier this month, it unveiled email and calendar services that it hopes will hire more workers on the platform.

“We drove revenue above guidance with continued momentum across the enterprise,” Chief Executive Officer Eric Yuan said in a statement, highlighting the better-than-expected profit. But the company is being impacted by currency fluctuations and “increased deal scrutiny for new business,” he said on the call.

Citigroup Inc. Tyler Radke, an analyst at , was skeptical that the company’s growth would return anytime soon. “Despite some modest revenue growth, leading indicators suggest signs of an incremental decline,” he wrote after the results were released.

Also Read :  47 sheriff's deputies moved to desk jobs after audit finds they failed psychological exams | News

Shares of Zoom, which are hovering near pre-pandemic prices, fell as low as $74.73 in extended trading after closing at $80.26 in New York. The stock has dropped 56% this year.

In the period ended October 31, the company said it had 209,300 enterprise customers, up 14% from a year earlier. Analysts, on average, will report an estimated Zoom of 210,105. Large businesses make up a growing share of Zoom’s revenue as it loses consumers and small businesses.

Churn among consumers and small businesses has started to stabilize this quarter. Average monthly churn among those online customers was 3.1% in the fiscal third quarter, up from 3.7% in the same period last year.

The online business is still “having a profound impact on the company’s overall growth rate,” Steckelberg said on the call.

Steckelberg said Zoom is looking “every day” as far as potential acquisitions go. “The compression in valuations is not lost on us.”

Also Read :  Ark's Cathie Wood Continues to Stumble

Zoom said its 3,286 customers contributed more than $100,000 in trailing 12-month revenue, up 31% from the year-ago period. Sales in the Americas region rose 11% while those in Europe, the Middle East and Africa sank 9% due to currency fluctuations and the impact of the war in Ukraine. Steckelberg said revenue declined 3% in the Asia-Pacific region.

Fiscal third-quarter profit, excluding certain items, was $1.07 per share, the San Jose, California-based company said in a statement. Analysts estimated an average of 83 cents per share. Full-year earnings will be as high as $3.94 per share, the company said, an increase from Zoom’s August forecast of $3.69 per share.

(Updated with analyst comments in sixth paragraph.)

More stories like this one are available at bloomberg.com


Leave a Reply

Your email address will not be published.