Zoom Posts Slow Q3 Revenue Growth Due to Ease in Demand for Video-Conferencing Tools

Stiff competition posed by Webex and Teams has made it challenging for Zoom to win over enterprise customers.

By Reuters | Updated: 23 November 2021 10:38 IST

Zoom Posts Slow Q3 Revenue Growth Due to Ease in Demand for Video-Conferencing Tools

Zoom said revenue was at $1.05 billion (roughly Rs. 7,830 crore) in the quarter ended October 31

Highlights

Zoom launched a variety of new offerings such as Events platform
Investment bankers and analysts warned that Zoom faces several hurdles
Zoom reported an adjusted profit of $1.11 (roughly Rs. 82) per share

Zoom Video Communications Inc's third-quarter revenue growth rate slowed to 35 percent as demand for its video-conferencing tools eased from the pandemic-fuelled heights last year, sending its shares down about 6 percent on Monday.

Revenue was at $1.05 billion (roughly Rs. 7,830 crore) in the quarter ended October 31, Zoom said, after rising 54 percent in the previous quarter and surging 360 percent a year earlier.

The stock, a pandemic winner, fell to $227.5 (roughly Rs. 17,000) in extended trading, after having lost about 28 percent this year.

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Moreover, stiff competition posed by Cisco's conferencing tool Webex and Microsoft's Teams has made it challenging for Zoom to win over enterprise customers.

To retain its users, the company launched a variety of new offerings such as Events platform, where businesses can host large-scale conferences, cloud-calling service Zoom Phone and in-office meetings feature Zoom Rooms.

"Their Rooms and Phone businesses are 5 percent penetrated or below and that seems to imply plenty of remaining runway for growth even within their existing capabilities only," said Joe McCormack, senior analyst at Third Bridge said.

Zoom's Abandoned Five9 Deal Shows Hurdles to Expansion

Investment bankers and analysts have warned that Zoom faces several hurdles in sustaining growth after its $14.7 billion (roughly Rs. 1,09,560 crore) bid to buy call centre software firm Five9 fell through.

Still, Zoom reported an adjusted profit of $1.11 (roughly Rs. 82) per share, beating Wall Street's estimates $1.09 (roughly Rs. 81) per share, according to Refinitiv data.

The company also forecast current-quarter revenue and earnings above expectations, and raised its full-year revenue estimate to around $4.08 billion (roughly Rs. 30,420 crore) from about $4.01 billion (roughly Rs. 29,900 crore) earlier.

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