Zoom shares sink as third-quarter net income plummets

The company’s net profit attributable to common stockholders dropped 86 per cent to $48.4m

Zoom's revenue for the August-October period rose 5 per cent on an annual basis to more than $1.10 billion. AP
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ZoomVideo Communications’ shares fell 7 per cent in after-hours trading on Monday after the company reported an 86 per cent yearly drop in its fiscal third-quarter net income.

The company’s net profit attributable to common stockholders in the three months to the end of October plunged to $48.4 million, from $340.3 million in the same period a year earlier, the Nasdaq-listed company said in a statement on Monday.

After seeing its stock price soar during the pandemic, Zoom's share price has been on the decline as economies reopened. Its share price is down more than 56 per cent since the start of this year.

Revenue for the August-October period rose 5 per cent on an annual basis to more than $1.10 billion, matching analysts’ expectations. It was the company’s sixth straight quarter with revenue of more than $1 billion.

“Our customers are increasingly looking to Zoom to help them enable flexible work environments and empower authentic connections and collaboration,” Zoom’s founder and chief executive Eric Yuan said.

“Proactively addressing these needs with Zoom's expanding platform continues to be our focus in this dynamic environment."

FILE - In this April 18, 2019 file photo, Zoom CEO Eric Yuan attends the opening bell at Nasdaq as his company holds its IPO in New York.  Millions of people are now working from home as part of the intensifying fight against the coronavirus outbreak. Beside relying on Zoom, the video conference service, more frequently as part of their jobs, more people are also tapping it to hold virtual happy hours with friends and family banned from gathering in public places.  (AP Photo/Mark Lennihan, File)

The company's enterprise division helped drive revenue in the third quarter, Mr Yuan said.

Zoom shares, which were trading at $80.26 at the close of market on Monday, dropped to $74.36 in extended-hours trading.

The company’s stock has dropped more than 56 per cent since the start of the year.

Its enterprise arm’s revenue increased 20 per cent on an annual basis to $614.3 million, while its online sales dropped 9 per cent to $487.6 million.

Zoom said its third-quarter revenue growth was mainly driven by “acquiring new customers and expanding across existing customers”.

At the end of the third quarter, Zoom had about 209,300 enterprise customers, up 14 per cent on a yearly basis.

The company also lowered its revenue outlook for the current quarter and the full financial year, compared with the previous forecast announced in August.

Fourth-quarter revenue was forecast in the range of $1.09 billion and $1.10 billion, while full-year revenue is expected to be between $4.37 billion and $4.38 billion – about 6.8 per cent more than its financial earnings in the last financial year.

Zoom’s total cash, cash equivalents and marketable securities, excluding restricted cash, stood at $5.2 billion as of October 31.

Quote
Our customers are increasingly looking to Zoom to help them enable flexible work environments and empower authentic connections
Eric Yuan, Zoom’s founder and chief executive

The total net cash provided by operating dropped to $295.3 million for the third quarter, compared to $394.6 million in the same period of last financial year.

The company said its free cash flow, which is net cash provided by operating activities less purchases of property and equipment, dropped 27.2 per cent year on year to $272.6 million.

Zoom, which became an essential service for office meetings and family gatherings during the Covid-19 pandemic, invested $195.9 million in research and development in the three months to October31, almost 98.9 per cent more than the prior year period.

This was more than 17.7 per cent of the total revenue earned during the quarter.

To try to attract new customers, the company announced a range of new products at Zoomtopia 2022, the company’s annual event, this month.

With new Zoom Mail and Calendar Clients, users no longer need to leave the Zoom platform to access their email and calendar.

Email and calendar services will be integrated directly into Zoom, meaning users can quickly access their communications and scheduling.

Updated: November 22, 2022, 4:20 AM
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