September 30, 2023

zoom Shares rose 8% in extended trading Monday after the video chat company reported fiscal fourth-quarter results that topped analyst estimates and offered optimistic earnings guidance for the year.

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Here’s how the company did:

  • Earning: $1.22 per share, adjusted, versus 81 cents as analysts were expecting, according to Refinitiv.
  • Income: $1.12 billion, versus the $1.10 billion expected by analysts, according to Refinitiv.

Zoom’s revenue grew 4% year-on-year in the quarter ended January 31 statement, That’s a dramatic deceleration from the quadrupling of Zoom’s revenue in 2020 and 2021, when consumers and businesses flocked to the video service during the Covid pandemic.

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The company reported its first net loss since 2018 in the quarter, posting a loss of $104 million compared to net income of nearly $491 million in the year-ago period. The loss stems from the cost of stock-based compensation.

CEO Eric Yuan told analysts on a conference call that Zoom continued to face issues it previously faced in its 2023 fiscal year during the quarter, with executives looking carefully at the company before paying for services .

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Some organizations have reduced the number of seats for which they purchase Zoom’s software as part of a broader spending pullback, Kelly Steckelberg, the company’s finance chief, said on the conference call.

Growth will be slow this year. Zoom sees between $4.435 billion and $4.455 billion in revenue, indicating growth of 1.1%, while analysts were expecting sales of $4.6 billion. The company said adjusted earnings per share would be between $4.11 and $4.18, above the average estimate of $3.66.

For the fiscal first quarter, adjusted earnings will be 96 cents to 98 cents per share on revenue of $1.080 billion to $1.085 billion. Analysts polled by Refinitiv had expected 84 cents in adjusted earnings per share and $1.11 billion in revenue.

Excluding the after-hours move, Zoom stock is up 8% for the year, while the S&P 500 is up 3% over the same period.

During the fiscal fourth quarter, Zoom Said It will offer email and calendar services along with a virtual agent chatbot to handle customer service enquiries.

Earlier this month, Zoom announced that it would cut 1,300 employees, representing 15% of its workforce. “As part of our restructuring, we are optimizing our go-to-market strategy to better support our enterprise customers and drive additional productivity,” Steckelberg said.

Watch: Cramer’s lightning round: Zoom video needs a merger