Zoom shares plummet in after-hours trading despite beating earnings expectations

Video communications giant Zoom (ZM) reported its fiscal Q2 2022 earnings after the bell on Monday, beating analysts’ expectations on the top and bottom line. But the company’s growth has slowed as businesses and schools reopen. 

The company’s stock was down over 10% in after-hours trading.

Here are the most important numbers from the report compared to what Wall Street expected of the company, as compiled by Bloomberg.

  • Revenue: $1.02 billion versus $990 million expected.

  • Earnings per share: $1.36 versus $1.16 expected.

The company also issued guidance for the third quarter that fell just below expectations, with guidance of revenue of between $1.015 billion and $1.020 billion and earnings per share of between $1.07 and $1.08. Analysts polled by Refinitiv had predicted $1.013 billion in revenue and earnings per share of $1.09.

Zoom has been the epitome of coronavirus growth stocks. The company’s video communication software served as a lifeline for students learning remotely and businesses trying to stay in touch with customers and employees amid a global pandemic. It also provided everyday people around the world with the means to see family and friends, earning it the distinction of Yahoo Finance’s Company of the Year in 2020.

User growth exploded for Zoom throughout the pandemic, with the number of customers with 10 or more employees skyrocketing 458% from 66,300 in fiscal Q2 2020 to 370,200 during the company’s fiscal Q2 2021. That growth, however, slowed in Q2 2022 to 36%, with the company reporting 504,900 such customers.

Customers paying more than $100,000 in the trailing 12 months, though, continues to grow. The number of such customers shot up 112% from 466 in fiscal Q2 2020 to 988 in fiscal Q2 2021. In fiscal Q2 2022, the company saw 131% growth in the category, topping out at 2,278 customers.

But the company is entering a time of tough comparisons to its performance last year when so many businesses were looking for ways to quickly build out their video chat capabilities.

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