Zoom shares decline as large client additions fall short
BNN Bloomberg
Zoom shares fell in late trading after the video-conferencing company reported a smaller-than-projected number of large customers for a second straight quarter, stoking concerns about growth as more workplaces and schools open back up.
Zoom Video Communications Inc. shares fell in late trading after the video-conferencing company reported a smaller-than-projected number of large customers for a second straight quarter, stoking concerns about growth as more workplaces and schools open back up.
The company had 512,100 customers with more than 10 employees in the third quarter, an increase of 18 per cent from a year earlier, according to a statement from San Jose, California-based Zoom. said Monday in a statement. That missed the average analyst estimate for 516,174, according to data compiled by Bloomberg.
Gains in this closely watched measure have been narrowing -- last quarter, Zoom also missed predictions for big clients, which increased 36 per cent for that period. The quarter before that, Zoom’s number of large customers jumped 87 per cent, and in last year’s third quarter, still in the height of COVID-19 lockdowns, the increase was 485 per cent.
Zoom’s third-quarter revenue and profit exceeded projections, and it gave an upbeat sales forecast for the current period. Yet questions about post-pandemic growth have dogged the stock, which has dropped almost 30 per cent this year. Investors have been closely monitoring Zoom to see whether its online meeting platform, which became a ubiquitous tool throughout the pandemic, remains widely used with many in-person activities resuming and as the company faces rising competition from companies like Microsoft Corp. and Alphabet Inc.’s Google.
The decline this year in Zoom’s shares caused a planned US$14.7 billion merger agreement with call-center software vendor Five9 Inc. to fall through in September, cutting off another avenue for growth for Zoom.
Zoom shares dropped about 6 per cent in extended trading. The stock initially soared as much as 9 per cent on the forecast, then fluctuated between gains and losses before turning more steeply negative. The shares had closed the New York trading day at US$242.28. While the stock surged almost fivefold in 2020, it has fallen 28 per cent this year.
