Zoom (ZM) earnings for the second quarter of 2023

Zoom video communication Shares fell 9% in extended trading Monday after the video calling software maker trimmed its full-year forecast for earnings and revenue.

Here’s how the company did:

• gains: $1.05 per share, adjusted, versus 94 cents per share as expected by analysts, according to Refinitiv.
• he won: $1.10 billion, versus $1.12 billion as analysts had expected, according to Refinitiv.

Zoom revenue in the second fiscal quarter grew 8% year over year, slowing from 12% growth in previous quarteraccording to statement. The second fiscal quarter ended on July 31. Zoom’s net income fell to $45.7 million in the quarter from $316.9 million in the previous quarter as the company’s spending on sales and marketing increased.

The strong U.S. dollar and performance in the company’s online business and weighted sales at the end of the quarter negatively impacted revenue in the quarter, Zoom chief financial officer Kelly Stekelberg said in the statement.

“We have implemented initiatives focused on paying new online subscriptions, which showed early promise but were not sufficient to overcome the macro dynamics in the quarter,” Steckelberg said in a Zoom call with analysts.

At the end of the quarter, the company said it had about 204,100 enterprise customers, which are business units with which direct sales teams, distributors or partners work with Zoom. This is less than 3% from 198,900 three months ago. Enterprise customers generate 54% of total revenue. Online business customers are Zoom customers who do not work directly with Zoom sales representatives, distributors, or partners.

In terms of guidance, Zoom called for an adjustment in fiscal third-quarter earnings from 82 cents per share to 83 cents per share on $1.095 billion to $1.100 billion in revenue. Analysts had polled Refinitiv, looking for 91 cents in adjusted earnings per share and $1.15 billion in revenue.

Management lowered its forecast for the full fiscal year 2023, calling for $3.66 to $3.69 in adjusted earnings per share and $4.385 billion to $4.395 billion in revenue, which means 7% growth in the middle of the revenue range. Analysts included in the Refinitiv study expected $3.76 per share in earnings and adjusted revenue of $4.54 billion. The bid three months ago was $3.70 and $3.77 in adjusted earnings per share and revenue ranging from $4,530 billion to $4,550 billion. Economic conditions primarily caused executives to revise their views.

“As the majority of our revenue has shifted back to enterprise and we have outgrown pandemic buying patterns, we are returning to more of the usual enterprise sales cycles with linear weighting toward the back end of the quarter,” Steckelberg said on the Zoom call. “This contributed to higher-than-expected deferred revenue in the second quarter, and since we believe this customer behavior will continue, we have factored it into our outlook.”

The company expects online business to decline 7% to 8% in the full fiscal year, compared to its forecast of no growth in this segment of the business earlier. Steckelberg said Zoom has changed its spending forecast for the second half to prioritize areas with high return on investment, such as research and development and sales operations.

This quarter, Zoom announced a new pricing structure called single zoom She said she had agreed to acquire a conversational artificial intelligence software startup Solve. Citi downgraded Zoom shares for sale from its equivalent last week, citing increased competition and economic pressure on small and medium-sized businesses and spending in less important categories.

Excluding after-hours movement, Zoom shares are down 47% so far this year, while the S&P 500 is down 13% over the same period.

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