(Bloomberg) — Zoom Video Communications Inc. gave a quarterly sales forecast that topped analysts’ estimates, signaling its video-conferencing platform is still in demand even as offices and schools reopen.
Revenue will be about $1.05 billion in the current period, the San Jose, California-based company said Monday in a statement. Analysts had expected fiscal fourth-quarter revenue of $1.02 billion, according to data compiled by Bloomberg.
Zoom’s third-quarter revenue and profit also exceeded projections, yet concerns are lingering about a slowdown in the number of large clients signing on to use the platform — a metric that fell short. Investors have been closely monitoring Zoom to see whether its online meeting platform, which became a ubiquitous tool throughout the pandemic, remains widely used with many in-person activities resuming and as the company faces rising competition from companies like Microsoft Corp. and Alphabet Inc.’s Google.
Zoom’s shares have slumped almost 30% this year as investors shifted away from pandemic boom stocks. That decline caused Zoom’s planned $14.7 billion merger agreement with call-center software vendor Five9 Inc. to fall through in September, cutting off another avenue for growth for Zoom.
In the three months ended in October, sales rose 35% to $1.05 billion, compared with analysts’ average estimate of $1.02 billion. Profit, excluding some items, was $1.11 a share, also beating projections. Net income was $340.3 million, or $1.11 per share, compared with $198.4 million, or 66 cents in the year-ago period.
Zoom said it had 512,100 customers with more than 10 employees in the third quarter, an increase of 18%, but missing estimates for 516,174. Gains in this closely watched measure have been narrowing. Last quarter, Zoom also missed predictions for large customers, which increased 36% from a year earlier. The quarter before that, Zoom’s number of big customers jumped 87%.
The shares were little changed in extended trading after initially soaring as much as 9%, then dropping about 3%. The stock had closed the New York trading day at $242.28. While the shares surged almost fivefold in 2020, they’ve fallen 28% this year.
(Corrects number of large company customer additions in sixth paragraph.)
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