Zoom boosts outlook with move beyond video calls
ZOOM Video Communications raised its profit and sales forecast for the fiscal year, a positive sign for the software maker’s plan to expand products beyond its namesake videoconferencing software. Shares gained about 5 per cent in extended trading.
Revenue for the year ending in January 2024 will be as much as US$4.5 billion, the company said on Monday (Aug 21) in a statement. In May, Zoom projected annual sales of about US$4.48 billion. Annual earnings, excluding some items, will be US$4.63 to US$4.67 a share, compared with a previous forecast of US$4.25 to US$4.31.
Investors have been concerned about the stagnation of Zoom’s once-explosive sales as the company is challenged by major rivals, such as Microsoft, for its central product. Zoom’s plan to resuscitate growth hinges on expanding its tools for large businesses, such as phone platforms, customer service systems, calendar applications and chat features, fuelled by advancements in artificial intelligence (AI). It has invested in AI startup Anthropic and announced it would acquire workplace communication tool Workvivo.
The San Jose, California-based company said it had 218,100 enterprise customers in the period ended Jul 31, an increase of 6.9 per cent from a year earlier. Of those customers, 3,672 contributed more than US$100,000 in trailing 12-month revenue, a gain of almost 18 per cent from a year earlier.
Fiscal second-quarter enterprise revenue increased 10 per cent to US$659.5 million. Online sales to consumers and small business declined 4.3 per cent to US$479.2 million.
“Our increased total revenue guidance reflects a consistent view on Enterprise, with tempered expectations for Online for the remainder of the year,” chief financial officer Kelly Steckelberg said in remarks prepared for a conference call on the results.
Steckelberg also touted traction with Zoom’s new non-video products. Zoom Phone reached roughly US$500 million in annualised run rate revenue while its contact centre tool passed 500 customers, she said in the remarks.
In the fiscal second quarter, Zoom reported total revenue increased 3.6 per cent to US$1.14 billion. Profit, excluding some items, was US$1.34 a share. Both topped analysts’ average estimate, according to data compiled by Bloomberg.
Shares jumped to a high of US$74.50 in extended trading after closing at US$67.27 in New York. The company has missed out on a major tech rally, with the stock declining about 1 per cent this year. BLOOMBERG
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