Zoom pops 16% on first-quarter earnings beat and strong guidance

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  • Zoom beat narrowly on the top line, but exceeded previous earnings estimates, giving a better-than-expected outlook for the second quarter.
  • Prior to Monday’s earnings report, shares of Zoom had lost nearly 85% of their value since reaching their peak in October 2020.
  • The company posted triple-digit revenue growth for five consecutive quarters during the pandemic, but expansion is much more challenging now.

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Shares of Zoom rose 16% in extended trading on Monday after the provider of video chat software informed of Better-than-expected first quarter earnings and an upbeat forecast for the second period.

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Here’s how the company did it:

  • Earnings: According to Refinitiv, $1.03 per share, ex-item versus 87 cents per share, as expected by analysts.
  • Revenue: According to Refinitiv, $1.07 billion versus $1.07 billion expected by analysts.

Zoom posted previous analyst earnings estimates for the quarter and provided profitability guidance for the current quarter and full year that were well above expectations. This shows that the company has been able to reduce costs as growth slows. Investors are looking for tech companies that can generate earnings as they move to stocks that can better withstand rising inflation and interest rates.

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Going forward in the report, there was a struggle for Zoom shareholders. After five straight quarters of triple-digit revenue growth during the pandemic, Zoom is now reckoning with dramatically slow expansion and a market correction that has hit most of the stay-at-home stocks.

As of Monday’s close, Zoom’s shares were down about 85% from their peak in October 2020, including a drop of more than 50% this year.

Revenue growth came in at 12% for the period ended April 30, up from nearly 200 per cent in the same quarter a year ago.

For the second quarter, Zoom now expects revenue of $1.115 billion to $1.12 billion, representing growth of at least 9.2%. According to Refinitiv, analysts were looking for growth of 8.7% to $1.1 billion. The company estimates earnings per share to be between 90 cents and 92 cents, higher than analysts’ estimates of 87 cents.

For the full fiscal year, Zoom expects revenue between $4.53 billion and $4.55 billion, well above analysts’ estimates of $4.55 billion. According to Refinitiv, it expects earnings between $3.70 and $3.77 per share, versus the $3.53 analysts were expecting.

watch: Zoom CFO says M&A will be a ‘big part’ of company’s strategy in fiscal year 2023

Credit: www.cnbc.com /

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