Zoom forecasts are not good sales

Zoom Video Communications Inc. projected sales for the current quarter that fell short of Wall Street estimates, increasing pressure on software vendors to show that it could continue to grow beyond the pandemic boom.

The shares were little changed in extended trading, after an earlier decline of up to 15%.

Sales will be approximately $ 1.07 billion by the time it ends in April, the San Jose, California-based company said Monday in a statement.

Analysts, on average, estimated $ 1.1 billion, or growth of about 15% from the quarter last year, according to data compiled by Bloomberg.

For the full year, Zoom expects revenue as high as $ 4.55 billion, which is also lower than Wall Street’s estimate of $ 4.75 billion.

“We are responding to a huge opportunity because we expect customers to continue to change how they work and interact with their customers,” Chief Executive Officer Eric Yuan said in the statement.

“We plan to build our platform to further enrich the customer experience with new cloud -based technologies and expand our moves to go to market.”

Zoom struggled to sustain the tremendous growth it experienced during the pandemic when its video conferencing platform served as a critical tool to enable businesses to connect with a disparate workforce, teachers reaching out to students. students and family members to stay in touch.

As more employees return to work in their offices, investors are skeptical about Zoom’s future potential, emphasizing the more than 75% drop in the stock price from the October 2020 high to closing Monday of $ 132.60 in New York.

Notably, the company adjusts some of the key metrics it reports to investors.

It will no longer disclose on a quarterly basis the number of customers with more than 10 employees, as well as the following cohort 12-month net dollar expansion rate-an indicator of how much money current buyers are spending.

At the end of the most recent quarter, Zoom had 509,800 customers within that threshold as of Jan. 31, less than Wall Street’s 572,303 expectations, with an expansion rate of 129%, indicating that current users are buying of more services.

Instead, the company said it would begin reporting the number of “enterprise” customers, defined as users buying through the direct sales team or through one of its partners, and the net dollar expansion rate of segment.

In the fourth quarter, Zoom had 191,000 business customers. The net dollar expansion rate is 130%.

Zoom also launched a $ 1 billion stock repurchase plan that will run through February 2024 and appointed ServiceNow Inc. CEO Bill McDermott on board. He will replace outgoing member and early investor Bart Swanson.

The company expanded its range of products in a bid to expand its business and reduce investor apprehension. Last week, Zoom released a new cloud contact center product.

The company also sells an Internet-enabled replacement for landline phones and technology to help organizations improve meetings involving remote and in-office workers.

Despite progress in expanding its product portfolio, Zoom continues to face stiff competition, particularly from Microsoft Corp.

However, analysts expect the market potential to be large enough for both companies to thrive.

“While Teams has improved its product significantly, Zoom remains a great product and, above all, we believe there is room for the two to succeed, especially given the large enterprise installation base of legacy Webex,” it wrote of RBC Capital Market analysts in a research note. published before Monday’s earnings.

Zoom said revenue in the fourth fiscal quarter rose 21% to $ 1.07 billion and revenue, excluding some items, was $ 1.29 per share. Analysts, on average, estimated sales of $ 1.05 billion and revenues of $ 1.07.

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