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Earnings Results: Zoom shares tumble despite solid results

Zoom Video Communications Inc. tumbled 7% in after-hours trading Wednesday after it reported better-than-expected results that did not meet lofty expectations. Read More...

Zoom Video Communications Inc. shares initially tumbled as much as 10% in after-hours trading Wednesday after it reported better-than-expected results and guidance that did not meet lofty expectations. The stock has since rebounded to a 4% dip.

Thus may end the teleconferencing company’s ZM, -0.57%  recent spectacular stock run as one of the few tech companies to benefit from the coronavirus fears.

Zoom reported net income of $15.3 million, or 5 cents a share, in the fourth quarter, compared with net income of $1.2 million, or 1 cent a share, in the year-ago fourth quarter.

Revenue soared 78% to $188.3 million from $105.8 million a year ago. Total revenue was $622.7 million, up 88% year-over-year.

Analysts surveyed by FactSet had expected a loss of 1 cent a share on sales of $176.5 million.

“It was a strong finish to our fiscal year,” Zoom Chief Executive Eric Yuan said in a video webinar following the quarterly results. He pointed to 81,900 customers with at least 10 employees, a 61% improvement from the same quarter a year ago. VMware Inc. VMW, +4.13%  and Johnson & Johnson JNJ, +5.82%  are among Zoom’s larger customers, he said.

Zoom offered first-quarter revenue guidance of between $199 million and $201 million, exceeding FactSet’s projection of $185.6 million. For fiscal 2021, Zoom expects between $905 million and $915 million, topping the $869.5 million forecast by FactSet.

If there has been a tech stock immune to coronavirus, it’s been Zoom. In fact, it has thrived as more people are flock to its remote-work tools like videoconferencing as the virus continues to spread. A flood of tech shows, ranging from Alphabet Inc.’s GOOGL, +3.28% GOOG, +3.36%  Google I/O 2020 to Adobe Inc.’s ADBE, +4.45%  Summit have been revamped from in-person confabs to online forums.

See also: Tech shows go digital route amid coronavirus risks

In the video webinar, Yuan deemed the impact of COVID-19 on Zoom’s business as more than a temporary event. “This will dramatically change the landscape of workers collaborating remotely,” he said, although he added it was too early to measure its financial impact. So far, a recent surge in Zoom use has been of its free application, as noted by financial analysts.

“In the last 30 days alone, average daily downloads are up 90% versus the prior 30-day period, with greater user engagement as evidenced by a 17% increase in user session per day and a 3% increase in average session length,” Bernstein analyst Zane Chrane wrote in a note to clients last week. Zoom has already added more new active users this year than it did in 2019, he added.

See also: Zoom Video is seeing a surge in downloads amid coronavirus panic, analyst says

Shares of Zoom, which went public on April 18, 2019, are up 89% since then. The broader S&P 500 index SPX, +4.22%   is up 12.9% in the past year.

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