Zoom Video Guidance Disappoints Amid Q3 Beat; ZM Stock Falls

Zoom Video Communications (ZM)  reported October-quarter revenue and earnings that topped estimates amid lowered expectations. But guidance for ZM stock came in below Wall Street's targets, sending shares down.

The company reported third quarter results after the market close on Monday. Zoom earnings for its fiscal third quarter fell 3% from a year earlier to an adjusted $1.07 per share. Revenue rose 5% to $1.102 billion.

Sales growth slowed for the seventh straight quarter as the company adjusts to product demand post-coronavirus emergency.

A year earlier, Zoom earned $1.11 a share on sales of $1.05 billion.

ZM Stock: Guidance Light

Zoom stock analysts had projected earnings of 83 cents a share on sales of $1.094 billion for the period ended Oct. 31.

In August, Zoom Video lowered guidance for fiscal 2023.

For the current quarter ending in January, Zoom said it expects earnings in a range of 75 cents to 78 cents vs. estimates of 81 cents. The company said it expects revenue in a range of $1.095 billion to $1.105 billion vs. estimates of $1.115 billion.

"Overall top-line results were in line and operating margins beat guidance, but the closely watched Online segment (consumer and small business) stayed challenging in Q3 despite improving churn," said Credit Suisse analyst Fred Lee in a report. "Volatility around Online results will likely cause incremental concern, as visibility and stabilization are not improving as quickly as some had hoped."

Zoom stock fell 3.9% to close at 77.15 on the stock market today.

Zoom Stock Pressured As In-Person Meetings Resume

The San Jose, Calif.-based software maker said it had 3,286 customers contributing more than $100,000 each annually, up 31 from a year earlier.

In a bright spot, Zoom Video had $5.2 billion in cash on its balance sheet at the end of October. That gives it ammunition to make acquisitions.

Zoom stock has retreated 55% in 2022. While the coronavirus pandemic sparked demand for its videoconferencing software, investors now expect elevated turnover of small-business customers as the economy normalizes and more in-person meetings and events resume.

Heading into its earnings report, ZM stock owned an IBD Relative Strength Rating of only 18 vs. a best-possible 99, according to IBD Stock Checkup.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.

Post a Comment

Previous Post Next Post