Zoom Video Communications
Notably, the company experienced a larger slowdown in revenue growth than expected, falling to a single-digit growth rate, and it disappointed in terms of its outlook. The company attributed the weakness to U.S. dollar strength at least in part.
Overall, Zoom shares are down 54% YTD. This follows a 45% decline in 2021. And from its peak in late 2020, shares are down 86%. Of course, this is a major change from the post-pandemic period when Zoom was one of the premier growth stocks. Now, Zoom is below its March 2020 levels.
Inside the Numbers
In Q2, Zoom reported $1.05 in earnings per share which exceeded analysts' estimates of $0.94 per share. Revenue fell short at $1.10 billion vs expectations of $1.12 billion which was 8% higher than last year, a continued deceleration from 12% growth in the previous quarter. Additionally, due to higher costs, net income declined to $45.7 million from $316.9 million last year.
The company attributed the weakness to strength in the U.S. dollar and a slower sales cycle as enterprises pull back on spending. At the end of the quarter, Zoom had 204,100 enterprise customers and account for 54% of total revenue.
Next quarter, Zoom sees earnings between $0.82 and $0.83 on $1.1 billion of revenue. This was below analysts' estimates of $1.15 billion in revenue and $0.91 in earnings per share.
It also trimmed its full-year forecast as it now sees EPS between $3.66 and $3.69 and between $4.385 billion and $4.395 billion in revenue. This equates to about 7% revenue growth. It was also about 10% below analysts' estimates on the bottom line and 5% below the top line forecast. The company said that a deteriorating macro environment was the main contributor to its reduced forecast.
The company's major focus is on enterprise customers and better pricing. It recently introduced Zoom One, a new pricing structure. The company also announced the acquisition of conversational artificial intelligence software startup Solvvy.
