Zoom raises full-year profit view on strong enterprise demand

Revenue from Zoom's high-paying enterprise customers jumped 31 per cent in the first quarter. PHOTO: AFP

BENGALURU (REUTERS) - Zoom Video Communications raised its full-year adjusted profit forecast on Monday (May 23), betting on robust demand from large businesses in a hybrid work environment.

The move sent shares of the company up 15 per cent in extended trading.

Revenue from Zoom's high-paying enterprise customers jumped 31 per cent in the first quarter, representing 52 per cent of its total revenue, the company said.

"We expect revenue from enterprise customers to become an increasingly higher percentage of total revenue over time," chief financial officer Kelly Steckelberg said in a post-earnings call with analysts.

The company said adjusted operating margin rose 37.2 per cent in the quarter ended April 30 as efforts to expand its enterprise offerings to customer service contact centres, cloud calling and analytics companies paid off.

Zoom had recently announced the acquisition of Solvvy, an artificial intelligence start-up, and launched Zoom IQ, a call analytics tool for sales departments.

For the full year, Zoom forecast adjusted profit per share to be between US$3.70 (S$5) and US$3.77, compared with earlier expectations of between US$3.45 and US$3.51. However, the company reported that revenue rose 12 per cent to US$1.07 billion in the first quarter, its slowest growth on record.

Over the past few quarters, demand for the company's platform had slowed as Covid-19 lockdowns eased and competition intensified from Microsoft's Teams, Cisco's WebEx and Google's Meet.

Still, the San Francisco-based firm reported first-quarter profit that beat expectations and forecast earnings for the current quarter above estimates.

Shares of Zoom, a pandemic darling, have tumbled 85 per cent since they touched a record high in 2020.

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