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Zoom beats expectations and lifts full-year guidance on enterprise business strength

Babyna

Zoom’s shares experienced an 8% rise in after-hours trading following the announcement of its fiscal second-quarter results, which exceeded analysts’ expectations. Here’s a breakdown of how the company performed:

Earnings: $1.34 per share (adjusted), surpassing the expected $1.05 per share.
Revenue: $1.14 billion, higher than the anticipated $1.12 billion.
In the quarter ending on July 31, Zoom’s revenue increased by 3.6% compared to the previous year. The company’s net income also saw significant growth, reaching $182 million, or 59 cents per share, compared to $45.7 million, or 15 cents per share, in the same quarter the previous year.

However, Zoom’s growth rate has slowed down since its peak during the early stages of the COVID-19 pandemic. Two years ago, the company saw substantial revenue growth due to the increased demand for remote collaboration tools as companies and schools adopted premium accounts to facilitate remote work and learning.

Despite the growth, Zoom’s quarterly guidance slightly fell short of expectations. The company projected adjusted earnings per share of $1.07 to $1.09 on revenue of $1.115 billion to $1.120 billion for the fiscal third quarter. Analysts had anticipated $1.03 in adjusted earnings per share and $1.13 billion in revenue.

Zoom’s management raised the full-year forecast, expecting adjusted earnings per share of $4.63 to $4.67 and revenue of $4.485 billion to $4.495 billion for the full 2024 fiscal year. This represents a 2% growth rate at the midpoint of the range.

Zoom’s contact center software for customer service is expanding rapidly, with over 500 customers currently. The company’s CEO, Eric Yuan, emphasized that unlike competitors, Zoom will not charge exorbitant prices for artificial intelligence features on top of existing software. Instead, Zoom plans to integrate AI capabilities directly into its existing services.

While Zoom’s stock has experienced a 1% decline over the year, the S&P 500 index has risen by 15% over the same period. Despite the challenges, the company remains a significant player in the video communication and collaboration space.