Zoom Struggles to Find Direction After Pandemic Boom... Stock Drops 8% Following Earnings Report

by Jeong Hyunjin

Published 23 Aug.2022 09:22(KST)

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Zoom Video Communications, a global video conferencing platform company that experienced explosive growth during the COVID-19 pandemic, is struggling to find momentum as its growth rate slows down. The revenue growth rate has decreased, and the annual revenue forecast has been revised downward. Following the earnings announcement, the stock price plummeted by more than 8%.

According to CNBC and other sources on the 22nd (local time), Zoom announced its Q2 2023 fiscal year (May to July) earnings, reporting revenue of $1.1 billion (approximately 1.5 trillion KRW), an 8% increase compared to the same period last year. This figure fell short of the market expectation of $1.12 billion, and the revenue growth rate decreased from 12% in Q1. During Q2, Zoom recorded a net loss of $45.7 million, with the loss widening compared to the same period last year.

Zoom explained that a strong dollar, sluggish online business, and weak sales affected its performance. Kelly Steckelberg, Zoom’s Chief Financial Officer (CFO), said, "We focused on driving new online subscriptions and confirmed early potential, but it was not enough to overcome the macroeconomic trends."

Zoom stated that as of the end of July, the number of enterprise customers was 204,100, representing a 2.6% increase compared to Q1. Zoom generates 54% of its total revenue from enterprise customers.

Zoom revised its full-year revenue forecast for the 2023 fiscal year downward. Three months ago, it predicted annual revenue of $4.53 billion to $4.55 billion and earnings per share of $3.70 to $3.77, but on this day, it lowered the revenue forecast to $4.385 billion to $4.395 billion and earnings per share to $3.66 to $3.69.