Zoom's third-quarter results show that the big question for the company is whether business sales will be strong enough to offset slower growth in online, or consumer, revenue as businesses bring customers back. workers in the office after the pandemic.

Zoom's third-quarter 2022 revenue, reported Monday, rose 5% year-over-year to $1100 billion, but in the prior quarter, total revenue rose 8%.

The company's third-quarter revenue was $614,3 million, up 20% year-over-year. However, online revenue fell 9% year-over-year, totaling €487,6 million. Lower online sales coupled with increased expenses resulted in a 23% drop in net operating income to €66,5 million.

Zoom lowered its full-year sales forecast to a high of €4,38 billion, down from its previous estimate of €4,4 billion. Zoom's stock price was down 7,7% in Tuesday morning trading.

Speaking to analysts on a conference call after the earnings release, Zoom CFO Kelly Steckelberg said the company saw strong growth from Zoom Phone, along with contributions from Zoom Rooms and other products, and expected that corporate clients accounted for an increasing percentage of total revenue. extra hours.

In the transcript published to Seeking Alpha, Steckelberg said Zoom had "approximately 209,300 enterprise customers, up 14% from the same quarter last year."

In the first year of the COVID-19 pandemic, Zoom saw its revenue increase by 300% as workers around the world were forced to leave their desks and communicate with colleagues via video calls. While hybrid and remote work are still a reality for a large percentage of workers, the return to in-person work has caused Zoom shares to lose more than 85% of their value since their peak in October 2020.

As a result, the company has sought to move away from being defined solely as a video conferencing platform, with founder and CEO Eric Yuan telling analysts on a third-quarter conference call that the company had "launched more than 1500 features and improvements in Zoom. ”. platform this year, improving the way people connect with each other, with their organization and with their customers. »

However, he cautioned that while the company celebrates its innovations, it still faces a "challenging macro environment" in addition to "FX." [foreign exchange] increased transaction and control pressure for new business.

The strength of the dollar this year has reduced the value of product sales in euros and other currencies for US-based technology companies, negatively affecting their results.

In recent months, other tech companies have tried to cut operating costs after posting poor financial results by laying off large numbers of employees. Although Zoom did not announce any job cuts, on the same call with analysts, Steckelberg said that if the company were to look to fiscal 2024, it would make fewer hiring.

“We've increased our spending and hired a lot this year, so [Zoom is] being very careful to make sure [those resources] focus on the good stuff,” he said.

Copyright © 2022 IDG Communications, Inc.

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