Zoom shares experienced a significant surge, climbing up to 13% in after-hours trading on Monday following the announcement of its fiscal fourth-quarter results. The company managed to surpass analysts’ expectations on several key metrics, with adjusted earnings per share coming in at $1.22 compared to the anticipated $1.15, and revenue reaching $1.15 billion versus the expected $1.13 billion.
While these results may seem impressive at first glance, a closer look reveals that Zoom’s revenue only saw a marginal increase of less than 3% from the previous year, reaching $1.12 billion. The company reported a net income of $298.8 million, translating to 98 cents per share for the quarter ending on January 31. This marks a significant improvement from the net loss of $104.1 million, or 36 cents per share, reported in the same quarter a year ago.
Zoom’s meteoric rise during the Covid-19 pandemic, fueled by a massive influx of remote workers, has now come to an abrupt halt. The company is currently grappling with single-digit revenue growth, a stark contrast from the soaring figures witnessed during the peak of the pandemic. For the upcoming fiscal first quarter, Zoom has forecasted adjusted earnings per share ranging from $1.18 to $1.20 on revenue of $1.125 billion, indicating growth of less than 2% compared to the previous year.
Looking ahead to the 2025 fiscal year, Zoom anticipates adjusted earnings per share between $4.85 to $4.88, alongside $4.60 billion in revenue, hinting at a modest 1.7% revenue growth. Despite these projections, the company’s performance fell short of LSEG consensus estimates, with analysts expecting adjusted earnings of $4.71 per share and revenue of $4.65 billion.
Prior to the positive momentum seen in after-hours trading, Zoom shares had endured a 12% decline since the beginning of the year, while the S&P 500 stock index recorded a 6% gain within the same period. The disparity in performance highlights the challenges that Zoom is currently facing, with investor sentiment likely to be influenced by the company’s ability to sustain growth in the face of evolving market dynamics. Zoom executives are set to engage in discussions with analysts during a scheduled conference call at 5 p.m. ET to delve deeper into the results. As this story continues to unfold, it is recommended to stay tuned for further updates to gain a comprehensive understanding of Zoom’s trajectory in the coming quarters.
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