Zoom Video Communications delivered a sales forecast for the current quarter that failed to impress investors who were expecting big growth from the company’s expanding suite of products.
Zoom said in a statement on Monday that revenue in the period ending in January will be about $1.18 billion (about Rs 15,170 crore). Profit, excluding certain items, will be $1.29 to $1.30 (about Rs 110) per share. Analysts on average had estimated adjusted earnings of $1.28 per share on sales of $1.17 billion (roughly Rs. 9,860 crore), according to data compiled by Bloomberg.
Shares fell about 4.5 percent in extended trading after closing at $89.03 (roughly Rs. 7,503 crore) in New York. While Zoom’s outlook was in line with estimates, optimism about new products led to the stock rising nearly 48 percent since the company’s last earnings report in August.
The software maker best known for videoconferencing has expanded its tools to offer phone systems, a contact center application, and artificial intelligence (AI) assistants. In October, Zoom named former Microsoft executive Michelle Chang as chief financial officer to replace Kelly Stackelberg, who left to join design startup Canva.
Zoom has seen a 59 percent increase in monthly active users of its AI assistant from the previous quarter, the company said in a presentation to supplement its earnings statement. It also tops 1,250 customers for its contact center app.
Tyler Radke, an analyst at Citigroup, wrote that while there were “no major issues” with the results, the huge upside for stocks in Monday’s earnings means the results may not attract new investors.
Separately, the company announced that it has dropped “Video” from its official name and will now be known as Zoom Communications Inc. Chief Executive Officer Eric Yuan wrote, “Our new name more accurately reflects our expanded scope and long-term growth plans.” In a post announcing the change.
Sales rose 3.6 percent to $1.18 billion (roughly Rs. 9,946 crore) in the fiscal third quarter, compared with analysts’ average estimate of $1.16 billion (roughly Rs. 9,777 crore), according to data compiled by Bloomberg. Profit, excluding certain items, was $1.38 (about Rs 116.32) per share in the period ended October 31.
Enterprise revenue rose 5.8 percent to $699 million (roughly Rs. 5,891 crore). Zoom said it had 3,995 customers who contributed more than $100,000 (roughly Rs. 84.2 lakh) in the last year.
The continued loss of consumers and small businesses from Zoom has investors worried, especially because these customers are typically higher margin than corporate customers. Average monthly churn in the segment was 2.7 percent in the quarter, which was better than analysts’ estimates. Sales in the segment were little changed at $479 million (₹4,037 crore). This was Zoom’s lowest online churn ever, Chang said, according to prepared remarks for the company’s earnings conference call.
Zoom said it is adding $1.2 billion (roughly Rs. 10,114 crores) to its existing share buyback program, bringing total repurchase authorization to $2 billion (roughly Rs. 16,857 crores).
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