The woes of the pandemic Zoom in on video connections (ZM) continued as the company reported mixed July-quarter results. ZM stock fell on Tuesday as third-quarter guidance beat Wall Street estimates.
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Zoom Video reported second-quarter earnings after the market closed on Monday. The updated fiscal 2023 revenue guidance now calls for 7% year-over-year growth
11% growth from previous guidance.
Zoom’s earnings fell 23 percent from an adjusted $1.05 per share a year earlier but topped expectations.
Revenue rose 8% to $1.09 billion, down from 54% growth in the previous quarter. A year ago, Zoom earned $1.36 billion on sales of $1.02 billion.
Zoom Stock: Is the Enterprise Business Lasting?
Zoom Stock Analysts
Mizuho Securities analyst Citi Panigrahi said in a report, “While enterprise remains strong, online continues to be disappointing due to slow customer growth. “We continue to view fiscal 2023 as a transition year as Zoom works to build a sustainable, post-pandemic growth profile.”
Zoom shares fell 12.4% to 85.40 in early trading on the stock market today.
“Boosting argued that the macroeconomic impact was largely limited to the online (consumer and small business) segment, and that the enterprise segment (54% of revenue) appeared to be ‘resilient’, with no delayed deals or Microsoft teams sharing losses,” UBS analyst Carl Kierstedt said in a report.
Zoom Video reaffirmed its 20 to 25 percent growth guidance for its enterprise business.
ZM stock: great customer growth
The San Jose, Calif.-based software maker said it has 3,116 customers contributing more than $100,000 annually, up 37 percent from a year ago.
For the quarter ending in September, Zoom Video forecast earnings of 82 cents to 83 cents per share, compared with analysts’ estimates of 92 cents. Zoom Video said it expects revenue of $1.095 billion to $1.1 billion, versus estimates of $1.15 billion.
On the plus side, Zoom Video had $5.5 billion in cash on its balance sheet as of July 31.
Magnification stock By 2022, it has declined to 27 percent. While the coronavirus pandemic has boosted demand for video conferencing software, investors now expect a higher turnover of small business customers as the economy normalizes and more in-person meetings and events continue.
Heading into the earnings report, ZM stock had an IBD Relative Strength Rating of just 15 with an excellent -99 according to IBD’s Stock Check.
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Follow Reinhardt Krause on Twitter @reinhardtk_tech For updates on 5G wireless, artificial intelligence, cyber security and cloud computing.
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