As the video chat startup announced fiscal fourth-quarter results that surpassed analysts’ expectations and provided upbeat earnings guidance for the year, Zoom shares increased 8% in extended trading on Monday (February 27, 2023).
Here’s how the company did:
- Earnings: $1.22 per share, adjusted, vs. 81 cents as expected by analysts, according to Refinitiv.
- Revenue: $1.12 billion, vs. $1.10 billion as expected by analysts, according to Refinitiv.
According to a release, Zoom’s revenue increased 4% year over year in the three months that concluded on January 31st. Zoom’s revenue quadrupled in 2020 and 2021 as customers and businesses rushed to the video service amid the Covid epidemic, therefore this represents a sharp decline.
The company had its first net loss since 2018 in the quarter, losing $104 million compared with net income of about $491 million in the year-ago period. The loss stems from stock-based compensation costs.
Zoom continued to face issues it had encountered earlier in the 2023 fiscal year during the quarter, including executives looking carefully before agreeing to pay the company for services, CEO Eric Yuan told analysts on a conference call.
As part of our restructuring, we are optimizing our go-to-market strategy to better support our enterprise customers and drive additional productivity.Kelly Steckelberg
Some organizations have decreased the number of seats for which they buy Zoom’s software as part of broader expense pullbacks, Kelly Steckelberg, the company’s finance chief, said on the conference call.
Growth will continue to slow this year. Zoom sees between $4.435 billion to $4.455 billion in revenue, implying 1.1% growth, while analysts were expecting sales of $4.6 billion. The company said adjusted earnings per share will be between $4.11 and $4.18, topping the $3.66 average estimate.
For the fiscal first quarter, adjusted earnings will be 96 cents to 98 cents per share on revenue of $1.080 billion to $1.085 billion. Analysts surveyed by Refinitiv had expected 84 cents in adjusted earnings per share and $1.11 billion in revenue.
Excluding the after-hours move, Zoom’s stock is up 8% for the year, while the S&P 500 has gained 3% over the same period.
During the fiscal fourth quarter, Zoom said it would introduce email and calendar services, along with a virtual agent chatbot for handling customer service inquiries.
Earlier this month Zoom announced that it will cut 1,300 employees, representing 15% of its workforce. “As part of our restructuring, we are optimizing our go-to-market strategy to better support our enterprise customers and drive additional productivity,” Steckelberg said.