Zoom slashes full-year forecast as revenue growth hits record high

(Reuters) – Zoom Video Communications Inc slashed its full-year profit and revenue forecast on Monday as demand for the video conferencing platform cools after pandemic highs amid fierce competition from Microsoft Teams and Cisco WebEx.

Shares of the pandemic darling fell 7% in extended trade after reporting its weakest quarterly revenue growth ever at 8%, as people shifted to in-person meetings from virtual chats.

Chief Financial Officer Kelly Steckelberg told analysts the company’s online business is expected to decline 7% to 8% in fiscal 2023.

Founded by a former Cisco executive, Zoom was a little-known company when the pandemic hit in early 2020, but posted triple-digit revenue growth at the height of the crisis as people stuck at home turned to videoconferencing to communicate.

Zoom now faces the daunting task of onboarding high-paying customers to sustain its growth, and has seen spending surge as it shells out more dollars to attract customers who have curbed spending amid high inflation. .

Operating expenses rose 51% to $704 million in the three months to July.

The company forecast annual revenue of between $4.39 billion and $4.40 billion, compared to its earlier forecast of $4.53 billion to $4.55 billion.

It now expects adjusted annual earnings per share to be between $3.66 and $3.69, down from the $3.70 to $3.77 forecast earlier.

“Zoom remains a ‘show me’ story, where the company thinks there’s a lot of potential and higher growth ahead, but Wall Street clearly doesn’t believe it yet,” said Rishi Jaluria, chief executive. software at RBC Capital Markets.

(Reporting by Eva Mathews in Bengaluru; Editing by Vinay Dwivedi)