Zoom Video Communications (ZM) - Get Zoom Video Communications (ZM) Report said it expects third-quarter revenue of between $1.015 billion and $1.020 billion, disappointing investors even as it beat second-quarter estimates from Wall Street.
The video conferencing company saw massive growth in the last year as the coronavirus pandemic spurred demand for its services from office employees and students who were forced to work and learn from home because of economic shutdowns and stay-at-home orders. But the pace of that quarter-to-quarter growth now appears to be flattening.
In the just completed quarter, Zoom reported non-GAAP earnings of $1.36 a share on revenue of $1.02 billion. Analysts on Wall Street had been forecasting earnings of $1.16 a share on sales of $991 million according to Refinitiv. In the same period a year ago, Zoom reported non-GAAP diluted net income of 92 cents a share on revenue of $664 million.
“In Q2, we achieved our first billion dollar revenue quarter while delivering strong profitability and cash flow,” said Zoom founder and CEO Eric S. Yuan in a statement. “We launched Zoom Apps, bringing over 50 apps directly into the Zoom experience, and Zoom Events, an all-in-one digital events service.”
In addition to slowing revenue growth, Zoom is facing additional competition from the likes of Alphabet (GOOGL) - Get Alphabet Inc. Class A Report and Microsoft (MSFT) - Get Microsoft Corporation (MSFT) Report, Bloomberg noted.
Shares of Zoom fell sharply in after-hours trading on Monday. The stock slid $42.51, or 12.2%, to $304.99 in recent action. That puts it well below where it began the year. In the regular session the stock had gained 2%.