Zoom’s sales growth slows as retreat from pandemic high continues | Mint

Zoom’s sales growth slows as retreat from pandemic high continues

REUTERS
REUTERS

Summary

  • The company said sales rose 21% in the latest quarter, its slowest period on record

Zoom Video Communications Inc. sales growth faltered in the fourth quarter, signaling that demand for the company’s videoconferencing application is no longer as entrenched in daily life as more conditions from the Covid-19 pandemic begin to recede.

The San Jose, Calif.-based company said its sales rose to $1.07 billion for the three months ended Jan. 31, compared with $882.5 million a year earlier. Analysts were expecting $1.05 billion in sales for the quarter.

At 21%, the year-over-year sales gain is the company’s slowest on record, according to data from FactSet. In the October quarter, sales increased by roughly 35% year-over-year.

Zoom forecast total revenue between $1.07 billion and $1.08 billion in the first quarter of the 2023 fiscal year, below analysts’ expectations of $1.1 billion. The high-end of its guidance would mean sales growth of roughly 12%.

For the year, the company said it expects revenue to range from $4.53 billion to $4.55 billion, up about 11% for its recently completed fiscal 2022.

In a call with analysts, financial chief Kelly Steckelberg said the guidance calls for its sales to larger companies—its enterprise business—to grow by 20% year-over-year, while its online business—self-service customers—to be mostly flat for the year.

Ms. Steckelberg said the company is looking at the enterprise market being driven largely by existing customers and new services like its recently launched contact-center capabilities.

Shares of Zoom were down less than 2% in after-hours trading. The stock closed at $132.60 on Monday, up 5.8%. It is down nearly 65% over the last 12 months.

Once a pandemic darling, Zoom has fallen from its peak when coronavirus treatments were largely unavailable and much of the world operated on platforms like Zoom’s as people stayed indoors. Questions about Zoom’s future prospects are likely to be amplified as Covid-19 conditions improve and competitors continue to fight for market share.

Microsoft Corp. said in July that its Teams application, which combines videoconferencing and other collaboration features, reached record levels, with nearly 250 million monthly active users. Microsoft also intends to bring Teams to every Window user as part of its next-generation operating system currently being rolled out.

Meta Platforms Inc., formerly called Facebook, is also in the mix as it intends to create other remote-collaboration workspaces opportunities through virtual worlds known as the metaverse.

Zoom has been looking for ways to augment its growth. Its nearly $15 billion attempted acquisition of contact center company Five9 Inc. in September was blocked by the selling shareholders.

In November, Zoom said it would start displaying ads in its applications for users of the free basic services. Its cloud-based phone business Zoom Phone is another area the company is exploring to find new growth.

The company said it had 2,725 customers contributing more than $100,000 over the prior 12 months, a 66% increase from the year-ago period. Zoom said it had approximately 509,800 customers with more than 10 employees, up about 9% from the prior-year quarter.

Zoom posted $490.5 million in net income attributable to common stockholders for the fiscal fourth quarter, up from $260.4 million in the year-ago period. Adjusted earnings of $1.29 a share were ahead of analysts’ expectations of $1.07.

The company said it appointed Bill McDermott to its board, effective Tuesday. Mr. McDermott, the president, CEO and director of software company ServiceNow, succeeds Bart Swanson. Additionally, the board authorized a stock repurchase program of up to $1 billion of Zoom’s shares outstanding.

This story has been published from a wire agency feed without modifications to the text

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