Zoom forecasts annual revenue, profit below estimates

Zoom Video Communications Inc forecast full-year revenue and profit below Wall Street estimates on Monday, signaling a hit from tough competition and lower sign ups for its core Meetings platform.

The video conferencing platform, which derives a large portion of its revenue from smaller organizations, has been hit by slowing growth as schools and workplaces reopen, as well as competition from Cisco‘s conferencing tool Webex, Microsoft’s Teams and Salesforces Slack.

However, Zoom said it would continue to focus on expanding internationally to boost growth.

“The one silver lining from the guidance is there is some implied acceleration in the second half of the fiscal 2023, which suggests that growth rates will trough before reaccelerating,” said RBC Capital Markets analyst Rishi Jaluria.

“The outlook isnt as bad as it looks, especially given how beaten down the stock is.”

Shares of Zoom, which have fallen more than 30% this year, rose 4.4% to $130.99 in extended trading as the companys board authorized a stock repurchase program of up to $1 billion.

Zoom beat estimates for fourth-quarter sales and profit, as revenue from enterprise customers grew by 38%.

The company forecast annual adjusted profit of between $3.45 and $3.51 per share, compared with estimates of $4.41 per share, according to IBES data from Refinitiv.

It also expects full-year revenue to be in the range of $4.53 billion to $4.55 billion, below expectations of $4.71 billion.

Revenue in the fourth quarter rose 21% to $1.07 billion, the companys slowest-ever growth since it went public in 2019. Analysts on average expected $1.05 billion.

Excluding items, the company earned $1.29 per share, beating estimates of $1.06 per share.