By Dhirendra Tripathi
Investing.com – Zoom Video Communications, Inc. (NASDAQ:ZM) stock traded 4.6% lower in premarket Tuesday after the video conferencing company posted a disappointing outlook.
The company was the most visible winner of the pandemic-induced need for services that helped people and corporates connect. As offices, schools and colleges reopen, and people return to work, the need for the services is being felt less and less. To add to the challenges, competition is also getting stronger with more features in their applications.
The fact that rivals like Microsoft Teams (NASDAQ:MSFT) and Google Meet (NASDAQ:GOOGL) are more integrated with their respective broader ecosystems also poses a challenge to Zoom’s growth.
The company beat estimates for fourth quarter sales and profit, but the current quarter projection of $1.07 billion in sales fell short. For the full year, Zoom anticipates revenue of $4.55 billion at the top end, which was also lower than Wall Street’s estimate of $4.75 billion, according to Bloomberg. On the lower side, revenue is seen at $4.53 billion.
Revenue in the fourth quarter rose 21% to $1.07 billion, the slowest ever quarterly growth since it went public in 2019.
At the end of January 31, Zoom had 509,800 customers with more than 10 employees, up around 9% year-on-year. Adjusted profit per share was $1.29.
The company will also buy back shares worth up to $1 billion, it said. The program will run through February 2024. It has appointed ServiceNow (NYSE:NOW) CEO Bill McDermott to the board. He will replace departing member and early investor Bart Swanson.