Zoom shares plunge despite crushing earnings expectation
By Robert Davis
21:22, 30 August 2021
Video communications behemoth Zoom Communications released its fiscal second quarter 2022 earnings Monday after the markets closed, showing the company has significantly increased revenue but is starting to see business slow down.
Shares of Zoom traded nearly 2% higher on Monday ahead of the earnings call, ending the day at $347.50 per share.
After hours, shares of Zoom plunged by 11%.
Earnings detail
According to the earnings statement, fiscal Q2 2022 marked the first quarter in company history in which Zoom brought in more than $1bn in revenue. This total also represents a 54% increase from the previous quarter.
Zoom brought in $1.02bn in fiscal Q2 2022 compared to analysts’ estimates of just $990m.
At the same time, Zoom saw its GAAP income increase for the first time since fiscal Q4 2021, bringing in $294.6m in fiscal Q2 2022.
Zoom also beat Wall Street’s EPS estimates by 15%, bringing home $1.36 per share against the consensus estimates of $1.16 per share.
The company was also able to increase its cash flow from $401.3m in fiscal Q1 2021 to $468m by fiscal Q2 2022.
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Expanding service
Another positive sign included in the earnings statement is that the company is finding ways to expand its flagship platform.
Zoom CEO Eric Yuan said in a press release that Zoom has integrated more than 50 apps into its products. At the same time, the company acquired a machine transcription company called Kite GmbH and a cloud contact center called Five9 in June. The companies will help expand Zoom’s product offerings and customer service efforts.
Worries ahead
Zoom is one of the largest providers of video-first communications services. The company’s flagship product is Zoom Meetings, which offers a full suite of products that allow users to engage with others in a virtual setting.
Yet, despite its size, Zoom seems to have a customer acquisition problem on its hands.
Throughout the pandemic, the number of Zoom users with 10 or more employees skyrocketed. For example, the company saw a 458% increase in this type of customer during fiscal Q2 2020.
However, this growth slowed during fiscal Q2 2022 to just 36%.