Shrinking corporate budgets and increased competition are hurting growth at the enterprise software maker, as evidenced by the projected sales and profit for the current quarter. The shares lost ground in the extended trading.
The company said in a statement that revenue will be about $1 billion in the period ending in October. The analysts expected a growth of about 10% from a year ago. Excluding some items, the profit will be between 81 cents and 83 cents a share.
The sales forecast was lowered from as much as $4.55 billion.
As offices reopen and competition increases from Microsoft Corp.'s Teams video communications platform, Zoom's rapid growth has slowed considerably. In remarks prepared for the company's post-earnings conference call, CFO Kelly Steckelberg said that online sales to consumers and small businesses are expected to decline this year.
The company has responded by increasing its focus on larger enterprise clients and pitching an expanded line of products. In June, the company introduced a new service bundle called Zoom One, which featured internet- connected phones and conference rooms. The analysts think that the secondary offerings will take time to pay off. The sales of enterprise customers are expected to grow this year.
Sales growth has slowed over time.
There is a source for this.
The company's new products were expressed by the CEO.
A record number of licenses were sold in the quarter as a result of the new products, according to the statement.
After closing at $97.44 in New York, shares fell to a low of $87. The stock has lost 45% of its value this year and missed out on the big rally in technology stocks.
The fiscal second-quarter sales growth was the lowest on record. The company missed revenue estimates in the first quarter. The profit was higher than the average estimate of 92 cents.
The Russia-Ukraine war, the strength of the US dollar and weakness in the consumer segment led to a decline in revenue from the region.
The revenue results are disappointing and below expectations as the company navigates the current environment.
The post- Covid growth has been constrained even more as companies, particularly small- and medium-sized businesses, tighten their information technology budgets in the face of an uncertain economy. He said that Microsoft's Teams is making a bigger impact on the business.
For more on how to grow corporate customers.
The company said it had 204,100 enterprise customers, an increase of 18% from a year ago. The growth in the previous quarter was higher than in the current one. 205,854 enterprise customers would be reported by analysts.
(Updates with comments from CFO beginning in the fourth paragraph.)
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