Zoom shares drop on light forecast as company faces 'heightened deal scrutiny'

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'For the future of the company, the platform strategy is really it,' Zoom CFO Kelly Steckelberg says after the company issued weaker-than-expected revenue guidance for its full fiscal year.

$1.07 per share, adjusted, vs. 84 cents per share as expected by analysts, according to Refinitiv.Two years ago, Zoom's challenge was in keeping up with demand, as pandemic-driven usage drove revenue upSince then, though, Zoom's has struggled to adapt to a non-pandemic reality. The stock has lost more than 85% of its value since peaking in October 2020, including a decline of over 50% year to date.

Revenue in the latest quarter, which ended Oct. 31, increased by 5% from a year earlier, according to a statement. In the previous quarter. Net income plummeted to $48.4 million from $340.3 million in the year-earlier quarter. After the stock soared in 2020, Zoom faced the twin problems of a reopening economy and increased competition, most notably from, which was pouring money into its Teams video and collaboration service. Now, more business and personal meetings are happening in real life, and those that are occurring online aren't necessarily over Zoom.

The company is seeing "heightened deal scrutiny for new business," CEO Eric Yuan said during the earnings call. Rivals aren't winning the deals Zoom discusses with prospective clients, but they are taking longer to close, said Kelly Steckelberg, the company's finance chief. Zoom is still adding big corporate clients, however. At the end of the quarter, the company had 209,300 enterprise customers, up from 204,100 during the previous quarter. The company said its online business — including customers that subscribe directly through its website — declined by 9%.The company expects sales this fiscal year of $4.37 billion to $4.38 billion, a slight reduction from its forecast in August and below the $4.4 billion average analyst estimate.

 

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