Zoom Video Communications Inc on Monday cut its annual profit and revenue forecasts as demand for the video-conferencing platform cools off from pandemic highs amid stiff competition from Microsoft Teams and Cisco WebEx.
Shares of the pandemic darling fell 7% in extended trade after it reported its slowest quarterly revenue growth on record at 8%, as people switched to in-person meetings from virtual conversations.
Finance chief Kelly Steckelberg told analysts the firm’s online business was likely to decline by 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 peak of the crisis as people stuck at home took to video-conferencing to communicate.
Zoom now faces an uphill task of onboarding high-paying clients to sustain its growth, and has seen expenses rise as it shells out more dollars to attract customers which have been reining in spending amid high inflation.
Operating expenses grew 51% to $704 million in the three months to July.
The company forecast annual revenue between $4.39 billion and $4.40 billion, compared with its earlier outlook of $4.53 billion to $4.55 billion.
It now expects annual adjusted profit per share between $3.66 and $3.69, compared with $3.70 to $3.77 forecast earlier.
“Zoom remains a “show-me” story, where the company believes there’s a lot of potential and higher growth ahead, but Wall Street clearly doesn’t believe it yet,” Rishi Jaluria, managing director of software at RBC Capital Markets said.