Zoom pops 16% on first-quarter results

Zoom shares rose 16% in extended trading on Monday after the provider of video chat software reported better-than-expected first-quarter earnings and issued an upbeat forecast for the second period.

Zoom sailed past analysts’ earnings estimates for the quarter and gave profitability guidance for the second quarter and full year that were well above expectations. That shows the company is able to reduce costs as growth decelerates. Investors are looking for tech companies that can produce earnings as they move into stocks that can better withstand rising inflation and interest rates.

Here’s how the company did:

• Earnings: $1.03 per share, ex-items vs. 87 cents per share as expected by analysts, according to Refinitiv.
• Revenue: $1.07 billion vs $1.07 billion as expected by analysts, according to Refinitiv.

After reporting five straight quarters of triple-digit revenue growth during the pandemic and seeing its stock soar into the stratosphere, Zoom is now reckoning with dramatically slower expansion and a market correction that’s hammered stay-at-home stocks the most.

As of Monday’s close, Zoom shares were down about 85% from their peak in October 2020, including a drop of more than 50% this year.

Revenue growth in the period ended April 30, came in at 12%, down from close to 200% in the same quarter a year earlier.

For the second quarter, Zoom now expects revenue of $1.115 billion to $1.12 billion. Analysts were looking for growth of 8.7% to $1.1 billion, according to Refinitiv. It anticipates Q2 earnings per share in the range of 90 cents to 92 cents, higher than the 87 cents analysts were estimating, according to Refinitiv.

For the full fiscal year, Zoom expects revenue between $4.53 billion and $4.55 billion, versus the $4.55 billion analysts anticipated. It expects EPS between $3.70 and $3.77, versus $3.53 analysts were expecting for the full year, according to Refinitiv.

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