Zoom provides disappointing revenue forecast for first quarter and full year

Zoom shares fell as much as 13% in extended trading on Monday after the video-calling software maker issued full-year guidance that fell below what analysts had predicted.

Here’s how the company did:

• Earnings: $1.29 per share, adjusted, vs. $1.06 per share as expected by analysts, according to Refinitiv.
• Revenue: $1.07 billion, vs. $1.05 billion as expected by analysts, according to Refinitiv.

Zoom’s revenue increased 21% from a year earlier in the period that ended on Jan. 31. That’s a deceleration from 35% growth in the prior quarter, according to a statement.

Zoom said it had 509,800 customers with over 10 employees at the end of January, down from 512,100 in October. The company showed new figures to better reflect the evolution of its business following the pandemic growth. It now boasts 191,000 enterprise customers, which have been engaged by the company’s salespeople, channel partners or software vendor partners. That number is up 35% year over year.

“What’s happened over time as we see this tremendous growth in online as a channel, it started to kind of overlap there, which is why we don’t think it’s really the appropriate metric to use any longer going forward,” said Kelly Steckelberg, Zoom’s finance chief, on a Zoom video call with analysts.

The enterprise business should grow about 20% year over year in the current fiscal year, while the online business will be roughly flat, Steckelberg said.

Net income rose 88% in the quarter to $490.5 million as gross margin widened to 76% from 74.2% in the prior period.

However, in the first quarter and for the full year Zoom is projecting revenue that’s below what analysts were expecting. Sales in the current quarter will be $1.07 billion to $1.075 billion, representing growth of about 12%. Analysts polled by Refinitiv had expected $1.1 billion in revenue.

For the current fiscal year, the company sees $4.53 billion to $4.55 billion in revenue, implying 10.7% growth. Analysts polled by Refinitiv had been looking for $4.71 billion in revenue.

Zoom’s business took off in the early months of the pandemic as businesses, universities and consumers adjusted to life at home and communications over video. The company’s market cap peaked in October 2020 at about $159 billion. At the time, it was worth almost as much as Cisco, whose market cap sat at around $170 billion. Zoom is led by its founder, Eric Yuan, an early creator of Webex, which Cisco acquired in 2007.Since its stock hit a high, Zoom has lost over three-quarters of its value, while Cisco has gained almost 40%. The companies are now separate in market cap by about $190 billion.

Zoom said Bill McDermott, CEO of service-desk software maker ServiceNow and formerly CEO of enterprise software developer SAP, will replace investor Bart Swanson on the Zoom board.

Prior to the after-hours move, shares of Zoom were down almost 29% for the year, underperforming the S&P 500 index, which is down about 9% over the same period.

—CNBC’s Ari Levy contributed to this report.

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