Zoom Cut its Annual Revenue Forecast on Slow Online Business, as Internet Business Declines

(CTN News) – The video-conferencing platform Zoom Video Communications Inc (ZM.O) cut its yearly revenue projection on Monday because it anticipates a blow from the slumping internet market.

In a post-earnings call, Zoom’s chief financial officer Kelly Steckelberg predicted that the company’s online sales would drop by over 8% this year.

Zoom, which competes with WeChat Work, Microsoft Teams (MSFT.O), Cisco (CSCO.O) WebEx, and Slack, saw explosive growth during the epidemic but is now experiencing a downturn as high inflation reduces consumers’ purchasing power.

As individuals began spending less time online, the loosening of pandemic-related restrictions throughout the globe is also hurting its company.

Following the bell, shares of the San Jose, California-based business plummeted 5%, bringing their year-to-date decline to about 56%.

In contrast to a previous forecast of $4.39 billion and $4.40 billion, Zoom anticipates yearly revenue to be between $4.37 billion and $4.38 billion.

“Guidance points to other weaknesses in the web and corporate sectors. Given the slowdown in hiring or layoffs in the technology industry, it is difficult to separate how much of this is macro from how much is competitive, “said Rishi Jaluria, an analyst at RBC.

He said, “Zoom’s capacity to grow into a broader platform remains the emphasis.

However, the business increased its forecasted $3.66 to $3.69 annual adjusted earnings per share to between $3.91 and $3.94.

Due to a 20% growth in high-paying business clients, revenue for the third quarter that ended October 31 increased 5% to $1.1 billion, according to the firm.

According to Refinitiv statistics, the pandemic winner earned $1.07 per share on an adjusted basis during the quarter, above predictions of 84 cents.

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