Zoom Video Communications Inc.’s sales growth slowed in the fourth quarter, indicating that demand for the company’s videoconferencing application is losing traction as more symptoms of the COVID-19 pandemic fade.
Sales for the three months ended Jan. 31 increased to $1.07 billion from $882.5 million the previous year, according to the San Jose, California-based company. Analysts expected sales of $1.05 billion for the quarter. According to FactSet data, the company’s year-over-year sales growth is the slowest on record, at 21%. Sales increased by approximately 35% year on year in the third quarter.
Zoom expects total revenue of $1.07 billion to $1.08 billion in the first quarter of the fiscal year 2023, falling short of analysts’ expectations of $1.1 billion. The top end of its steering would imply a 12 percent increase in sales. For the year, the company stated that it expects revenue to range between $4.53 billion and $4.55 billion, an increase of approximately 11% over the recently completed fiscal 2022.
In a conference call with analysts, monetary chief Kelly Steckelberg stated that the company expects its sales to larger corporations—its enterprise—to grow by 20% year on year, whereas its online enterprise—self-service prospects—to be largely flat for the year.
Ms. Steckelberg stated that the company is attempting to enter the enterprise market, which is being driven primarily by current customers and new services such as its recently launched contact-centre capabilities.
Zoom, since pandemic, has fallen from its zenith when coronavirus treatments were largely unavailable and much of the world relied on platforms like Zoom’s as people stayed indoors. Concerns about Zoom’s future prospects are likely to grow as the COVID-19 situation worsens and competitors continue to compete for market share.
Zoom announced in November that it would begin displaying advertisements in its applications for free primary service users. Another area where the company is looking for new growth is with its cloud-based phone service Zoom Phone.
The company reported that it had 2,725 prospects who contributed more than $100,000 in the previous year, a 66 percent increase from the previous year. Zoom stated that it had approximately 509,800 prospects with more than ten years of experience.
Zoom earned $490.5 million in internet revenue pertaining to common stockholders in the fiscal fourth quarter, up from $260.4 million the previous year. Adjusted earnings per share of $1.29 were higher than analysts’ expectations of $1.07.
The company announced the appointment of Bill McDermott to its board of directors, effective Tuesday. Mr McDermott succeeds Bart Swanson as president, CEO, and director of software firm ServiceNow. In addition, the board approved a stock repurchase programme of up to $1 billion of Zoom’s outstanding shares.