Zoom shares tumble after revenue miss and gloomy forecast

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Shares of Zoom fell 16% on Tuesday, a day after the company released second-quarter results that missed revenue estimates.
The video communications company reported $1.10 billion in revenue for the quarter, short of the $1.12 billion expected by analysts, according to Refinitiv.
The company lowered its projections for the full 2023 fiscal year, primarily blaming economic conditions that caused executives to revise their view.

Image Source- Yahoo finance

A day after the firm reported second-quarter earnings that fell short of analyst sales projections, Zoom’s stock price dropped 16%.

According to Refinitiv, the video communications provider reported $1.10 billion in sales for the quarter, falling short of the $1.12 billion analysts had predicted. Revenue was severely impacted by weighted sales, a strong US currency, and the company’s online operations, according to a statement from CFO Kelly Steckelberg.

The business revised its perspective of the economy, which led management to decrease their expectations for the entire 2023 fiscal year.

The stock was downgraded by Citi analysts, who noted that Zoom’s outlook was weaker than they had anticipated.

The corporate forecast is “far worse than we thought,” they added in a note to investors on Tuesday, adding that “Q2 revealed several of our worries that caused our previous downgrade, including SMB/Online pressure+margin risk.”

Zoom’s shares were also downgraded by BTIG analysts, who cited the company’s lowered short-term forecasts.

We are downgrading shares of ZM to Neutral since, overall, the decline in FY23 profitability and FCF is fairly alarming as topline growth slows even further.

On a Zoom call with analysts, Steckelberg stated, “We have undertaken measures focused on driving new online subscribers, which have showed early promise but were not enough to overcome the macro dynamics in the quarter.”

During the Covid-19 outbreak, Zoom’s online video services enabled companies and schools to work remotely. However, when orders from stay-at-home customers decreased, Zoom’s growth stagnated. When compared to the S&P 500 index, Zoom shares have dropped more than 54% so far this year.

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