Zoom (Nasdaq: ZM) shares were 7% lower following the company's disappointing forecast for Q1 and the full year due to more people returning to offices. Overall, Zoom is down nearly 80% from it's all-time highs in October 2020.
The stock had been one of the best performers during the early months of the pandemic but has now become one of the worst-performing ones. It's had a similar outcome as many high-multiple growth stocks which have fallen due to unrealistic expectations about future growth and higher rates and inflation leading to outflows from the group.
Zoom's earnings didn't peak until Q3 of this year, but it's now possible that the company could actually see negative revenue next year as companies decrease the use of the software, and people return to more normal behaviors.
Inside the Numbers
In Q4, Zoom reported $1.29 in earnings per share, better than expectations of $1.06 per share. Revenue came in at $1.07 billion, slightly higher than analysts' expectations of $1.05 billion and a 21% increase from last year. Notably, this continues a deceleration trend.
The company reported 509,800 customers with over 10 employees, down from 512,100 in Q3. It also now has 191,000 enterprise customers, a 35% increase. Spending from enterprise customers grew by 130%. The company is forecasting 20% growth for enterprise revenues, while online revenue is expected to be flat.
For Q1, it sees revenue between $1.05 billion and $1.075 billion, about 12% growth and below expectations of $1.1 billion in revenue. For the full year, it sees $4.53 billion to $4.55 billion in revenue, about 10.7% growth, and below expectations of $4.71 billion.
The combination of earnings and revenue growth in addition to its falling stock price has certainly made Zoom more attractive. Currently, it has about $4 billion in sales and a $37 billion market cap. Given that revenue growth is probably headed to the single digits, shares remain overvalued.