Zoom Reduces Yearly Estimate as Revenue Growth Hits Record Low 2022
Zoom cuts annual profit and revenue forecast as demand for video conferencing platform slows
Zoom Video Communications Inc on Monday cut its annual profit and revenue forecasts as demand for the videoconferencing platform plummeted from the height of the pandemic amid fierce competition from Microsoft Teams and Cisco WebEx.
Shares in the beloved pandemic fell 7% in extended trading after reporting their slowest quarterly revenue growth on a record of 8% as people shifted from virtual conversations to in-person meetings.
Chief Financial Officer Kelly Steckelberg told analysts that the company’s online business could decline by 7% to 8% in fiscal 2023.
Founded by a former Cisco executive, Zoom was a little-known company when the pandemic hit in early 2020, but it posted triple-digit revenue growth at the height of the crisis as people stuck at home turned to Connect via video conference.
Zoom now faces the daunting task of recruiting high-paying customers to sustain its growth, and is spending more as inflation rises and more dollars are spent to lure customers who have been limiting spending.
Operating expenses rose 51% to $704 million in the three months through July.
The company expects annual revenue of $4.39 billion to $4.40 billion, compared with a previous forecast of $4.53 billion to $4.55 billion.
It now expects adjusted EPS of $3.66 to $3.69, compared with a previous forecast of $3.70 to $3.77.
Rishi Gloria, managing director of software at RBC Capital Markets, said: “Zoom is still a ‘showroom’ story and the company believes in a lot of potential and higher growth ahead, but Wall Street is clearly not convinced yet.”
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