Zoom shares rise after company raises sales and profit forecast

By Bill Peters

Videoconferencing platform reports seeing more usage of new AI capabilities

Shares of Zoom Video Communications Inc. moved higher in after-hours trading on Monday after the videoconferencing platform raised its full-year sales and profit outlook.

The upbeat forecast followed third-quarter results that beat expectations, helped by a jump in deeper-pocketed customers and AI offerings.

Zoom (ZM) said it expected full-year sales of between $4.506 billion and $4.511 billion, with adjusted earnings per share of $4.93 to $4.95. In August, the company forecast full-year sales of $4.485 billion to $4.495 billion, with adjusted earnings per share of $4.63 to $4.67.

After initially surging more than 8% after hours on Monday, shares ended the extended session up just 0.5%.

For its third quarter, Zoom reported net income of $141.2 million, or 45 cents a share, compared with $48.4 million, or 16 cents a share, in the same quarter last year. Adjusted for one-time items, Zoom (ZM) earned $1.29 a share.

Revenue rose 3.2% to $1.136 billion.

Analysts polled by FactSet expected Zoom to report adjusted earnings of $1.09 a share on revenue of $1.12 billion.

"In Q3, revenue came in ahead of guidance as we bolstered Zoom's all-in-one intelligent collaboration platform, with advanced new capabilities like Zoom AI Companion, and continued to evolve our customer- and employee-engagement solutions," Chief Executive Eric Yuan said in a statement.

"We are also pleased with our online business, where we drove higher retention and saw usage of our new AI capabilities, enhancing the value of our platform," he continued.

The number of paying customers that contributed more than $100,000 in revenue over the past 12 months rose around 13.5%. The company finished the quarter with around 219,700 business customers, up 5%.

Zoom reported earnings as sales growth has slowed following widespread adoption during the pandemic's remote-work boom. The company has tried to expand beyond videoconferencing, rolling out phone and AI technology with the intention of facilitating hybrid-workplace collaboration.

Benchmark Research analyst Matthew Harrigan, in a research note last week, said "we do not expect much instant gratification on share price performance until revenue growth accelerates," but said the stock's current valuation was too low. Still, he said that some of Zoom's AI offerings were similar to those of bigger competitors, like Microsoft Corp. (MSFT) and Alphabet's (GOOGL) (GOOG) Google.

Shares of Zoom are down around 1% so far this year.

-Bill Peters

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11-20-23 2022ET

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