Zoom Video Communications shares fell as much as 9% in extended trading Monday after the video calling software maker lowered its full-year forecast for earnings and earnings.
This is how the company did it:
- Income: $1.05 per share, adjusted, versus 94 cents per share as expected by analysts, according to Refinitiv.
- Revenue: $1.10 billion, versus $1.12 billion as expected by analysts, according to Refinitiv.
Zoom’s second fiscal quarter revenue grew 8% year-over-year, a 12% slowdown in the previous quarter, according to a statement. The second fiscal quarter ended on July 31. Zoom’s net income fell to $45.7 million in the quarter from $316.9 million in the same quarter a year ago as the company increased sales and marketing spending.
The strong US dollar, the performance of the company’s online business and sales weighted toward the end of the quarter negatively impacted revenue in the quarter, Kelly Steckelberg, Zoom’s head of finance, said in the statement. .
“We implemented initiatives aimed at driving new online subscriptions, which showed promise but were not enough to overcome macro dynamics in the quarter,” Steckelberg said during a Zoom interview with analysts.
The company said at the end of the quarter it had approximately 204,100 enterprise customers, which are business units that Zoom’s direct sales teams, resellers or partners work with. That’s less than 3% more than 198,900 three months earlier. Enterprise customers provide 54% of total revenue. Online business customers are Zoom customers who do not work directly with Zoom sellers, resellers, or partners.
As for guidance, Zoom called for adjusted fiscal earnings for the third quarter of 82 cents per share to 83 cents per share on revenue of $1.095 billion to $1.100 billion. Analysts polled by Refinitiv were looking for adjusted earnings per share of 91 cents and revenue of $1.15 billion.
Management lowered its forecasts for the full fiscal year 2023, calling for $3.66 to $3.69 in adjusted earnings per share and $4.385 billion to $4.395 billion in revenue, marking 7% growth in the middle of the year. the turnover range. Analysts surveyed by Refinitiv had expected adjusted earnings of $3.76 per share and revenue of $4.54 billion. Three months ago, the outlook was $3.70 and $3.77 in adjusted earnings per share and revenue ranging from $4.530 billion to $4.550 billion. The economic conditions mainly caused executives to change their minds.
“As most of our revenue has shifted back to the business and we have moved past the pandemic buying patterns, we are returning to more normalized business sales cycles with linearity weighted to the back of the quarter,” Steckelberg said during the Zoom call. “This contributed to higher-than-expected deferred revenue in the second quarter and as we believe this customer behavior will continue, we’ve factored this into our outlook.”
The company expects its online business to fall 7% to 8% in the full fiscal year, compared to forecasting that part of the business would previously not grow. Zoom has changed its spending expectations for the second half to prioritize areas of high return on investment, such as research and development and sales activities, Steckelberg said.
In the quarter, Zoom announced a new pricing structure called Zoom One and said it agreed to acquire Solvvy, an artificial intelligence conversational software startup. Citi last week lowered its rating for Zoom stock to sell the equivalent of hold, citing increasing competition and economic pressure on small and medium-sized businesses and spending on less essential categories.
Excluding the after-hours move, Zoom stocks are down 47% so far this year, while the S&P 500 index is down 13% over the same period.
This story is evolving. Come back for updates.
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