Zoom Video Communications has cut its annual profit and revenue forecasts as demand for the video-conferencing platform cools off from pandemic highs amid stiff competition from Microsoft Teams and Cisco WebEx.
Zoom Video Communications reported its slowest quarterly revenue growth on record at 8 percent, as people switched to in-person meetings from virtual conversations.
Zoom Video Communications Finance chief Kelly Steckelberg told analysts the firm’s online business was likely to decline by 7 percent to 8 percent in fiscal 2023.
The company said its recently launched Zoom Contact Center and Zoom IQ for Sales products saw some great early wins while Zoom Phone delivered milestone results, hitting a record number of licenses sold in the quarter and reaching nearly 4 million seats, up more than 100 percent year over year.
Drivers of total revenue included acquiring new customers and expanding across existing customers. At the end of the second quarter of fiscal year 2023, Zoom had 204,100 Enterprise customers, up 18 percent from the same quarter last fiscal year.
3,116 customers contributed more than $100,000 in trailing 12 months revenue, up approximately 37 percent from the same quarter last fiscal year.
Founded by a former Cisco executive, Zoom was a little-known company when the pandemic hit in early 2020, but posted triple-digit revenue growth at the peak of the crisis as people stuck at home took to video-conferencing 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 which have been reining in spending amid high inflation.
Operating expenses grew 51 percent to $704 million in the three months to July.
The company forecast annual revenue between $4.39 billion and $4.40 billion, compared with its earlier outlook of $4.53 billion to $4.55 billion.
It now expects annual adjusted profit per share between $3.66 and $3.69, compared with $3.70 to $3.77 forecast earlier.
Zoom provided revenue guidance of $1.095-$1.100 billion for the third quarter fiscal year 2023 and $4.385 billion and $4.395 billion.