Zoom cuts annual profit and revenue outlook on lower demand
Zoom Video Communications Inc on Monday cut its annual profit and revenue forecasts as demand for its video conferencing platform cooled from pandemic highs, sending its shares down more than 7% in extended trading.
Analysts expressed concern about the company's prospects as rival platforms such as Microsoft (NASDAQ:MSFT)'s Teams, Cisco (NASDAQ:CSCO)'s WebEx and Google (NASDAQ:GOOGL)'s Meet battle for video conferencing market share.
Zoom has the challenging task of acquiring large customers contributing more than $100,000 in revenue to sustain its pandemic-level growth at a time when companies are struggling with the highest inflation in decades.
The company forecast revenue of $4.39 billion to $4.40 billion, compared with its previous outlook of $4.53 billion to $4.55 billion.
San-Francisco-based Zoom now expects annual adjusted earnings per share of $3.66 to $3.69, compared with its previous forecast of $3.70 to $3.77.
Zoom, founded by former Cisco executive Eric Yuan, posted an 8% increase in the second quarter to $1.1 billion, a streak of beating estimates since going public.
Chief financial officer Kelly Steckelberg said revenue was hurt by a stronger dollar, the performance of the online business and declining sales toward the closing half of the quarter.
The company's adjusted earnings per share of $1.05 beat market expectations even though quarterly operating expenses rose 51% to $704 million as it invested in products to sustain demand.