Zoom Video Communications Inc’s results showed that its transition from an essential Covid-era tool to an enterprise business platform is going to take longer than expected. Zoom’s breakneck growth during the pandemic has cooled considerably as offices reopen and competition intensifies from Microsoft Corp’s Teams video communications platform.
Why Does it Matter
Revenue from the region including Europe declined 8% in the quarter due to the Russia-Ukraine war, the strength of the US dollar and weakness in the consumer segment, the company said. Zoom has responded by intensifying its focus on larger enterprise clients and pitching an expanded line of products such as software for customer contact centres. In June, the company unveiled a new service bundle — Zoom One — to highlight offerings like internet-connected phones and physical conference rooms.
The company also reduced its annual sales forecast to about $4.4 billion from its May projection of as much as $4.55 billion. About $115 million of the cut is due to the “broader economic environment” and $35 million is due to the stronger US dollar. The shares declined to a low of $87 in extended trading after closing at $97.44 in New York. The stock has dropped 47% this year, missing out on the big rally in technology stocks since mid-June.