ZOOM Video Communications gave a sales forecast for the current quarter that failed to impress investors who were expecting a bigger boost from the company’s expanded suite of products.
Revenue will be about US$1.18 billion in the period ending in January, Zoom said on Monday (Nov 25). Profit, excluding some items, will be US$1.29 to US$1.30 a share. Analysts, on average, projected adjusted earnings of US$1.28 a share on sales of US$1.17 billion, according to data compiled by Bloomberg.
The shares, which initially declined about 9 per cent in extended trading, had recovered and were little changed at 5 pm in New York. While Zoom’s outlook met estimates, the stock had gained about 48 per cent to close at US$89.03 since the company’s last earnings report in August on optimism about the new products.
The software maker known for videoconferencing has expanded its suite of tools to offer phone systems, a contact centre application and artificial intelligence (AI) assistants. In October, Zoom named former Microsoft executive Michelle Chang as chief financial officer to replace Kelly Steckelberg, who left to join design startup Canva.
Zoom has seen a 59 per cent increase in monthly active users of its AI assistant since the prior quarter, the company said in a presentation to supplement its earnings statement. It also topped 1,250 customers of its contact centre application.
Separately, the company announced it has dropped “video” from its official name and would now be known as Zoom Communications. “Our new name more accurately reflects our expanding scope and plans for long-term growth,” chief executive officer Eric Yuan wrote in a post announcing the change.
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In the fiscal third quarter, sales increased 3.6 per cent to US$1.18 billion, compared with analysts’ average estimate of US$1.16 billion, according to data compiled by Bloomberg. Profit, excluding some items, was US$1.38 a share in the period ended Oct 31.
Enterprise revenue increased 5.8 per cent to US$699 million. Zoom said it had 3,995 customers who contributed more than US$100,000 over the past year.
An ongoing loss of consumers and small businesses from Zoom has concerned investors, particularly since these customers are typically higher-margin than corporate clients. Average monthly churn in this segment was 2.7 per cent in the quarter, which was better than analysts’ estimates. Sales in the segment was little changed at US$479 million. That was Zoom’s lowest-ever online churn, Chang said, according to remarks prepared for the company’s earnings conference call.
Zoom said it’s adding US$1.2 billion to its existing share buyback programme, raising the total repurchase authorisation to US$2 billion. BLOOMBERG
