BENGALURU (REUTERS) - Zoom Video Communications on Monday (Aug 22) cut its annual profit and revenue forecasts as demand for the videoconferencing platform cools off from pandemic highs amid stiff competition from Microsoft Teams and Cisco WebEx.
Shares of the pandemic darling fell 7 per cent in extended trade after it reported its slowest quarterly revenue growth on record at 8 per cent, as people switched to in-person meetings from virtual conversations.
Finance chief Kelly Steckelberg told analysts that the firm's online business was likely to decline by 7 per cent to 8 per cent in fiscal year 2023.
Founded by a former Cisco executive, Zoom was a little-known company when the Covid-19 pandemic hit in early 2020, but posted triple-digit revenue growth at the peak of the crisis as people stuck at home took to videoconferencing to communicate.
Zoom now faces an uphill task of onboarding high-paying clients to sustain its growth, and has seen expenses rise as it shells out more dollars to attract customers that have been reining in spending amid high inflation.
Operating expenses grew 51 per cent to US$704 million (S$984 million) in the three months to July.
The company forecasts annual revenue of between US$4.39 billion and US$4.40 billion, compared with its earlier outlook of US$4.53 billion to US$4.55 billion.
It now expects an annual adjusted profit per share of between US$3.66 and US$3.69, compared with US$3.70 to US$3.77 forecast earlier.
"Zoom remains a "show-me" story, where the company believes there is a lot of potential and higher growth ahead, but Wall Street clearly does not believe it yet," said Mr Rishi Jaluria, managing director of software at RBC Capital Markets.