Zoom shares drop as the company beats expectations but doesn’t blow them away

Zoom founder Eric Yuan speaks before the Nasdaq opening bell ceremony in New York on April 18, 2019.

Kena Betancur | Getty Images

Zoom Video Communications shares fell about 5% in extended trading on Monday after the company reported fiscal third-quarter earnings and quarterly guidance that exceeded analysts’ expectations. Investors seemed disappointed that the rate of revenue growth, which has accelerated this year, could moderate.

Here’s how the company did:

  • Earnings: 99 cents per share, adjusted, vs. 76 cents per share as expected by analysts, according to Refinitiv.
  • Revenue: $777.2 million, vs. $694.0 million as expected by analysts, according to Refinitiv.

With the coronavirus pandemic continuing to drive people to Zoom for work, school and family meetings, Zoom’s revenue grew 367% on an annualized basis in the quarter, which ended Oct. 31, according to a statement. In the previous quarter revenue increased 355%, and in the quarter before that, revenue had risen 169%.

Zoom’s gross margin declined to 66.7% from 67.3% in the previous quarter.

In the quarter Zoom said that its premium Zoom Phone cloud-phone service had expanded to over 40 countries and territories, and that Zoom would come to smart-home devices made by Amazon, Facebook and Google. The company also announced OnZoom, a tool for putting on live virtual events that people can attend by paying fees.

Zoom called for fiscal fourth-quarter adjusted earnings of 77 cents to 79 cents per share on $806 million to $811 million in revenue. Analysts polled by Refinitiv had been expecting 66 cents in adjusted earnings per share and revenue of $730.1 million.

Excluding the after-hours move, Zoom stock has gone up 591% since the start of the year, while the S&P 500 index is up about 12% over the same period.

Executives will discuss the results with analysts during a Zoom webcast starting at 5:30 p.m. Eastern time.

This is breaking news. Please check back for updates.

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