Zoom sales growth slowed due to a slowdown in online business in the post-pandemic era

Zoom’s third-quarter results show the big question for the company is whether sales to enterprises will be strong enough to compensate for a slowdown in online, or consumer, revenue as businesses bring workers back to the office in the wake of the pandemic.

Zoom’s third-quarter 2022 revenue, announced Monday, rose 5% year over year to $1.1 billion, but in the previous quarter, total revenue rose 8%.

Third quarter enterprise revenue was $614.3 million, up 20% year over year. However, online revenue fell 9% year over year, totaling $487.6 million. Net income from operations fell 23%, to $66.5 million, as a result of declining online sales coupled with rising costs.

Zoom cut its sales forecast for the full year to a high of $4.38 billion, down from its previous estimate of $4.4 billion. Zoom shares fell 7.7% in early morning trading on Tuesday.

Speaking to analysts on a conference call after posting the results, Zoom CFO Kelly Steckelberg said the company had strong growth in Zoom Phone, with contributions from Zoom Room and other products, and that enterprise customers are expected to comprise an increasingly high percentage of total revenue. Over time

In a transcript posted to Seeking Alpha, Steckelberg said Zoom had “about 209,300 enterprise customers, up 14% from the same quarter last fiscal year.”

In the first year of the COVID-19 pandemic, Zoom’s revenue grew 300%, as workers around the world were forced to abandon their offices and communicate with colleagues via video calls. While hybrid and remote work remains a reality for a large percentage of workers, the return to in-person working saw Zoom stock lose more than 85% of its value in October 2020.

As a result, the company has tried to move away from being defined exclusively as a video conferencing platform, with founder and CEO Eric Yuan telling analysts on a third-quarter conference call that the company “launched more than 1,500 features and enhancements to Zoom. This year, the platform, how people interact with each other Together, they advance it by connecting with their organization and their customers.”

However, he cautioned that although the company is celebrating its innovations, it faces a backdrop of a “challenging macroeconomic environment” in addition to “FX”. [foreign exchange] Push for new business and investigate extended contracts.”

A stronger dollar this year has reduced the cost of selling goods in euros and other currencies for US-based technology companies, which has had a negative impact on their financial 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. While Zoom hasn’t announced any job cuts, on the same call with analysts, Steckelberg said the company will hire less if it looks ahead to fiscal 2024.

“We’ve increased our spending and we’ve hired a lot this year, and so on [Zoom is] Being very thoughtful about making sure [those resources] Focusing on the right things,” he said.

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