The San-Francisco-based Zoom Video Communications Inc on Monday, August 22, 2022 expurgated its annual profit and revenue forecasts as demand for the video-conferencing app drops from pandemic highs amid head-to-head sprint from the online working collaboration platforms- Microsoft Teams and Cisco WebEx.
Responding to analysts, Kelly Steckelberg, Chief Financial Officer, Zoom Video Communications Inc stated, “The firm’s online business is likely to decline by 7 per cent to 8 per cent in fiscal 2023.”
According to sources, shares of one of the pandemic darlings and a definite tech solution for online connectivity fell seven-per cent in extended trade after it reported its slowest quarterly revenue growth on record at eight per cent, as people switched to in-person meetings from virtual conversations.
The emerging circumstances established that Zoom is facing an uphill task of onboarding high-paying clients to sustain its growth, and has seen expenses rise as it shells out more dollars to attract customers, which have been reining in spending amid high inflation.
The company’s operating expenses grew 51 per cent to USD 704 million in the three months till July this year.
As per the estimates, its annual revenue ranges between USD 4.39 billion to USD 4.40 billion, in comparison with its earlier outlook of USD 4.53 billion to USD 4.55 billion.
The work-from-home staple, Zoom Video Communications now expects an annual adjusted profit per share between USD 3.66 and USD 3.69, as compared to USD 3.70 to USD 3.77 forecast earlier.
“Zoom remains a ‘show-me’ story, where the company believes there’s a lot of potential and higher growth ahead, but Wall Street clearly doesn’t believe it yet,” Rishi Jaluria, Managing Director, Software Equity Research at RBC Capital Markets said.
Founded by a former Cisco executive, Zoom was hardly a little-known set-up when the COVID-pandemic hit in early 2020, but unexpectedly posted triple-digit revenue growth at the peak of the crisis, as people stuck at home took to video-conferencing to communicate worldwide.