Despite the sustenance of its performance quarter on quarter, Zoom remains cautious and refused to give a forecast for the 2024 fiscal year as it continues to battle unique headwinds that have continued to weigh down on its operations.
American communications technology company Zoom Video Communications Inc (NASDAQ: ZM) has released its third-quarter financial results, and despite its impressive performance, investors are rather focused on the conservative fiscal year guidance it released to push shares lower.
What Influences Zoom Shares Price
The company said its revenue came in at $1.10 billion, a figure that aligns perfectly with analysts’ expectations according to Refinitiv. The company beat expectations in its Earnings Per Share (EPS) came in at $1.07 per share, adjusted, as against the 84 cents per share that was projected by analysts profiled by Refinitiv.
Zoom has had its best days which were mostly during the COVID-19 pandemic year. With lockdowns and exploration of virtual meeting style, many corporate workers flocked to hold meetings online and Zoom Communications took the center stage at the time. Its revenue at the time soared by up to 300%, a growth rate it has not been able to keep up with.
Today, Zoom is still relevant for virtual meetings, however, growing competition from core competitors like Microsoft Teams took a significant portion of the market share from Zoom. The fact that workers have also resumed back to work has generally reduced the need for online meetings, and a slumping number of subscribers in general.
This reduced momentum in subscribers was made manifest in the company’s record for the quarter that ended October 31. The firm said its online subscribers declined by 9%, however, there was an overall growth in its enterprise customers which came in at 209,300 for the quarter, up from 204,100 during the previous quarter.
Considering the strengthening US Dollar, the company forecasts its fiscal sales will probably range from $4.37 billion to $4.38 billion. This estimation pushed the investor’s selloff in the Pre-market with Zoom shares dropping 8.81% at the time of writing to $72.70.
Other Key Zoom Operational Headwinds
Despite the sustenance of its performance quarter on quarter, Zoom remains cautious and refused to give a forecast for the 2024 fiscal year as it continues to battle unique headwinds that have continued to weigh down on its operations.
One of these headwinds is the slowing down of deals which has continued to receive more intense scrutiny before closing. Zoom Communications is seeing “heightened deal scrutiny for new business,” CEO Eric Yuan said during the earnings call. However, he said that its rivals are not beating it to stacking up these new businesses, but that their influence helps delay the push in general.
Zoom has seen a very massive decline in its share price which has fallen by close to 80% with as much as 50% coming this year alone. Besides the competition in the space, the growing inflationary pressures, rising interest rates, and the push by companies to reduce their expenses, in general, have continued to serve as a major headwind that the company must navigate in order to stay profitable.
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