Zoom Video Communications (ZM) shares slumped lower Tuesday after the video conferencing specialists cut their full-year sales and profit guidance following softer-than-expected second quarter sales amid a slowdown in individual subscribers and intensifying competition in its enterprise division.
Zoom said adjusted profits for the three months ending in July were pegged at $1.05 per share, down 22.8% from last year but firmly ahead of the Street forecast of 94 cents. Revenues rose 8% to 1.1 billion but missed Street forecasts of a $1.12 billion tally amid the slowest growth rate on record for the ten-year old company.
Looking ahead, Zoom said it sees adjusted profits in the region of $3.66 to $3.69 per share, down from a prior forecast of $3.70 to $3.77 per share with revenues of around $4.395 billion thanks in part to fewer 'online' subscriptions as individual customers switch to in-person meetings over video-conferencing options.
Zoom said the $150 million reduction to its profit forecast comprised of around $35 million in currency headwinds from the surging U.S. dollar and a further $115 million that was "attributable to the broader macroeconomic environment."
"The headwinds we saw mainly relate to the strengthening dollar, new Online subscriptions and to a lesser extent, bookings linearity," CFO Kelly Steckelberg told investors on a conference call late Monday. "We have implemented initiatives focused on driving new Online subscriptions, which have shown early promise, but were not enough to overcome the macro dynamics in the quarter."
“As the majority of our revenue has shifted back to the enterprise, and we have moved beyond the pandemic buying patterns, we are returning to more normalized enterprise sales cycles with linearity weighted towards the back end of the quarter," she added. "This contributed to higher-than-expected deferred revenue in Q2. And as we believe this customer behavior will persist, we have factored it into our outlook.”
Zoom shares were marked 12.4% lower in early Tuesday trading to change hands at $85.50 each, extending the stock's year-to-date decline to around 54%.
