Zoom loses traction in the stock market despite an upbeat performance report

Zoom loses traction in the stock market despite an upbeat performance report
Written by:
Michael Harris
5th March, 11:54
Updated: 11th March, 08:53
  • Zoom loses traction in the stock market despite an upbeat performance report.
  • Zoom posts $188.3 million in revenue in the fourth quarter versus $176.6 million expected.
  • Zoom makes 15 cents of earnings per share in the fourth quarter versus 7 cents expected.

Despite topping analysts’ estimates for earnings and revenue, the U.S-based video communications company, Zoom, was seen trading 10% down on Wednesday following the release of its quarterly financial results. Part of the loss, however, was recovered later in after-hours trading.

Zoom saw a massive growth ascribed to the Coronavirus outbreak that pushed businesses to resort to remote work. Excluding Wednesday’s price fluctuations, the video communication company boasted an over 70% growth in the stock market in 2020 so far. At the time of the initial public offering IPO, the company priced its shares at $62 in April 2019. Currently, the stock is exchanging hands at around $110 per share.

Zoom’s Q4 Performance Results Versus Analysts’ Estimates

According to Refinitiv, analysts were expecting Zoom to print $176.6 million in revenue in the fourth quarter. In terms of earnings per share (EPS), their estimate was capped at 7 cents. In its performance report on Wednesday, the company announced to have generated a much higher $188.3 million in revenue in the recent quarter while its EPS was recorded twice as high as the expectations at 15 cents.

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In the quarter that ended on 31st January, Zoom boasted a massive 78% increase in its revenue on an annualized basis. In the previous quarter, the annualized growth in its revenue was noted at an even higher 85%.

The company also said that it had a total of 641 customers at the end of the recent quarter which according to Zoom, paid more than $100,000 to the company. This marked a sharp 86% growth on a year over year basis. The aforementioned growth rate, however, printed at an even higher 97% in the third quarter.

Zoom’s Guidance For The Fiscal First Quarter

The total count of customers in the fourth quarter came out at 81,900 on an employee count of 10 that translated to a 61% increase year over year. In Q3, a greater 67% increase was registered on this front.

In its guidance for the fiscal first quarter, Zoom said that it now expects to generate $199 million to $201 million in the current quarter and make 10 cents of earnings per share. Hitting the aforementioned target will imply a 64% growth in its quarterly revenue.

Analysts have forecast $185.7 million in revenue for Zoom in Q1 while their estimate for EPS was reported at 6 cents. Zoom also forecast 42 cents to 45 cents of adjusted earnings per share in fiscal 2021 on revenue of $905 – $915 million (79% growth). Experts estimate its 2021 revenue at $868.4 million and its EPS at 30 cents.

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