Zoom Video Communications reported April-quarter earnings and revenue that topped estimates as enterprise sales growth beat views. Revenue guidance for Zoom Video stock came in slightly below expectations as Wall Street analysts look for a bottom amid decelerating growth.
The company reported first quarter earnings after the market close on Monday.
Zoom earnings for the first quarter were $1.35 per share on an adjusted basis, up 16% from a year earlier. Revenue rose 3.2% to $1.14 billion.
In addition, Zoom stock analysts had projected earnings of $1.19 a share on sales of $1.13 billion.
ZM Stock: Enterprise A Bright Spot
In the enterprise market for business customers, revenue rose 5.3% to $665.7 million, topping estimates of $659 million.
"Strength was driven by emerging products such as Contact Center, which management described as 'ready for prime time,' as it crossed 90 customers with $100,000-plus in annual recurring revenue," said RBC Capital analyst Rishi Jaluria in a report.
Bearish views on Zoom Video stock note that sales growth slowed for the tenth-straight quarter as the company adjusts to slower product demand in the post-coronavirus emergency era. Amid the Covid-19 emergency, demand for Zoom videoconferencing software surged as businesses told employees to work from home.
Revenue Growth To Re-Accelerate?
On the stock market today, Zoom stock fell 2% to 62.79 in early trading. ZM stock had retreated nearly 11% before the earnings report.
For the July quarter, Zoom said it expects revenue in a range of $1.145 billion to $1.15 billion, just below estimates of $1.15 billion.
"While Q2 guidance fell slightly shy of consensus expectations, Q2 is expected to be the trough and revenue growth should reaccelerate in the second half with some encouraging momentum, particularly with its emerging products (such as Contact Center)," said Mizuho Securities analyst Siti Panigrahi in a report.
Zoom's cloud-based software sets up video calls, with chat tools available. Zoom Video aims to morph into a broader communications platform for business customers.
Further, heading into the Zoom earnings report, shares traded near their 50-day moving average.
Meanwhile, Microsoft and its Teams communication platform is a big competitor.
Also, Zoom stock holds a weak Relative Strength Rating of 28 out of a best-possible 99, according to IBD Stock Checkup.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
