Zoom warns of slowing growth

You’re not the only one getting tired of Zoom.

Investors soured the videoconferencing giant on Tuesday, sending its shares plummeting after the company warned investors that growth is slowing.

Zoom shares fell 15.8 percent to $272.80 around noon Tuesday, according to data from MarketWatch.

The decline came after the company posted second-quarter revenue of $1.02 billion, marking its first quarter of a billion dollars and exceeding analyst expectations.

But investors seemed more focused on the company’s bleaker forecast for the third quarter than on its second quarter results.

Zoom said it expected to bring in $1.015 billion and $1.02 billion during the quarter ended Sept. 30. That means revenue growth would either remain unchanged or decline in the second and third quarters, deterring investors who have become accustomed to quarter-on-quarter blockbuster growth during the pandemic.

“By the end of the year we had[een vertraging] expected, but it just happened a little faster than we expected,” Chief Financial Officer Kelly Steckelberg told investors in an earnings call.

The decline came after the company posted second-quarter revenue of $1.02 billion, marking its first quarter of a billion dollars and exceeding analyst expectations.

San Jose, California-based Zoom has experienced lightning-fast growth during the pandemic, moving from an obscure company to a household name in early 2020 just months later.

The company’s stock rose from just $67.28 at the start of 2020 to $559 in October last year. It has since declined by nearly half due to vaccinations and reopening.

Competition from legacy platforms like Cisco’s Webex and Microsoft Teams has also dented Zoom’s efforts to grow by winning larger contracts from companies.

Investors have become accustomed to blockbuster growth from Zoom quarter after quarter during the pandemic.
Corbis via Getty Images
Analysts said the company would try to boost growth by spending aggressively on expanding and ramping up its platform and Zoom Phone – the cloud-calling product for businesses.

Zoom recently announced the acquisition of call center software maker Five9 for $14.7 billion in its largest deal, as well as Kites GmbH, a company that assists in real-time language translation.

“By the end of the year we had[een vertraging] expected, but it just happened a little faster than we expected,” Zoom’s Chief Financial Officer Kelly Steckelberg told investors in an earnings call.

Source: nypost

zoom shares tank
Published on
Sep 1, 2021
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