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.

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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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