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Zoom Video Communications Inc. shares rose in extended trading Monday after the videoconferencing company beat expectations for its earnings as well as its forecast for the year ahead, calming nerves about a company that recently laid off 15% of staff as a pandemic-era boom calmed.
Zoom
ZM,
posted a fiscal fourth-quarter net loss of $104.1 million, or 36 cents a share, on revenue of $1.12 billion, up from $1.07 billion a year ago. After adjusting for stock compensation and other effects, Zoom reported earnings of $1.22 a share, down from $1.29 a share last year but easily topping analysts’ expectations. Analysts surveyed by FactSet had on average expected adjusted net income of 81 cents a share on revenue of $1.1 billion.
Zoom executives said they expect first-quarter adjusted earnings of 96 cents to 98 cents a share on revenue of $1.08 billion to $1.09 billion , while analysts on average are projecting 86 cents a share on sales of $1.12 billion, according to FactSet. For the full year, Zoom executives predicted adjusted earnings of $4.11 to $4.18 a share on revenue of $4.46 billion to $4.48 billion, while analysts on average were expecting $3.66 a share on sales of $4.38 billion. Zoom ended its fiscal year with adjusted earnings of $4.37 a share on sales of $4.39 billion.
“While the macroeconomic situation continues to negatively impact our overall growth, we have maintained a healthy balance sheet and operating cash flow generation of approximately $1.29 billion,” Zoom Chief Executive Eric Yuan said in a statement announcing the results.
“We really concentrated on efficiencies in the fourth quarter,” Zoom Chief Financial Officer Kelly Steckelberg said in a video call with analysts late Monday.
Shares of Zoom rose more than 6% in after-hours trading immediately following the release of the results Monday, after closing with a 0.3% decline at $73.72. Zoom’s stock has tumbled 44% in the past 12 months; the broader S&P 500 index
SPX,
has dipped 9% over the past year.
In the days leading up to Zoom’s results, analysts expressed skepticism as outlined by Bernstein’s Peter Weed in a note to clients last week. “During FQ3 earnings management remained pessimistic that their post-COVID hangover would continue, guiding growth at 2.5% YoY and roughly 0% QoQ,” Weed wrote.
Since its last earnings report, Zoom has said it plans to lay off 1,300 workers, or 15% of its workforce. Yuan in a blog post said he had “made mistakes” in tripling Zoom’s workforce during the pandemic.
Read more: Zoom’s stock jumps on news that company will lay off 15% of staff and cut executive pay
Yuan said he would cut his own pay by 98% and forego any corporate bonus in the 2023 fiscal year and that other executive leaders will also receive 20% pay cuts and will not receive bonuses.
“This painful exercise has been a tremendous learning experience for us,” Yuan said in prepared remarks on Monday. “It allows us to look inward to reset ourselves, so we can weather the economic environment with greater focus and agility, deliver for our customers and achieve Zoom’s long-term vision.”
Zoom is battling for videoconferencing customers with Microsoft Corp.
MSFT,
Cisco Systems Inc.
CSCO,
Alphabet Inc.’s
GOOGL,
GOOG,
Google, Salesforce Inc.
CRM,
and others.
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