Zoom Stock tumbles as second-quarter sales growth, earnings outlook disappoints

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Updated at 9:39 a.m. EST

Focus on video communications (ZM) Shares fell on Tuesday after video conferencing specialists cut their full-year sales and profit forecasts following weaker-than-expected second-quarter sales amid slowing individual subscriber numbers and increased competition in its business division.

Zoom said adjusted earnings for the three months ending July were pegged at $1.05 per share, down 22.8% from a year ago but well ahead of Street’s forecast of 94 cents. Revenue rose 8% to 1.1 billion, but missed Street’s forecast of a total of $1.12 billion amid the slowest growth rate ever for the ten-year-old company.

Looking ahead, Zoom said it expects adjusted earnings in the range of $3.66 to $3.69 per share, down from a previous forecast of $3.70 to $3.77. per share with revenue of about $4.395 billion thanks in part to fewer “online” subscriptions as individual customers shift to in-person meetings over video conferencing options.

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Zoom said the $150 million cut to its earnings forecast included about $35 million in headwinds from the stronger US dollar and an additional $115 million that was “attributable to the broader macroeconomic environment.” .

“The headwinds we’ve seen are mostly related to the strengthening dollar, new online subscriptions and, to a lesser extent, the linearity of bookings,” chief financial officer Kelly Steckelberg told investors on a conference call. Monday evening. “We have put in place initiatives focused on creating new online subscriptions, which showed promise at first, but were not enough to overcome the macroeconomic dynamics of the quarter.”

“While the majority of our revenue has returned to the business and we have moved beyond pandemic buying patterns, we are returning to more normalized business selling cycles with weighted linearity towards the end of the quarter. “, she added. contributed to higher than expected deferred revenue in the second quarter. And since we believe this customer behavior will persist, we have factored it into our outlook.

Zoom shares fell 12.4% in Tuesday morning trading to change hands at $85.50 apiece, extending the stock’s year-to-date decline to around 54%.

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