Shares of Zoom Video Communications Inc. plunged 12% Tuesday after the company reported a lower than the projected number of customers for the second consecutive quarter, raising concerns about the growth of the video conferencing company as more schools and offices open back.
As per a statement issued by the San Jose-based Zoom, the company had 512,100 companies with more than ten employees as their customers in the third quarter, an 18% increase compared to last year. This, however, missed out on the 516,174 average analyst estimates as per Bloomberg data.
Zoom also missed the last quarter predictions for large clients. The quarterly gains have been narrowing down since last year. During Covid-19, it reported a 485% increase, the next quarter it was 87% and the previous quarter to the current one was 36%.
Though the quarter 3 revenue and profit exceeded projections and gave an upbeat forecast for the current year, the share prices dropped on post-pandemic growth concerns. This year, the stock has fallen around 30% as investors closely monitor how the company performs when normal in-person activity returns and the growing competition from Microsoft and Google.
Zoom’s decline in share prices led to it calling off the merger agreement of $14.7 billion with Five9, a call center software vendor, in September. This cut of another channel for Zoom growth.
Zoom share prices went up by 9% on Monday’s forecast but then fluctuated between gains and losses before finally turning negative and closing at $242.28 on Tuesday in New York trading. The stock has fallen by 28% in 2021 after rising fivefold in 2020.
In Quarter 3 ending October, sales rose by 35% to $1.05 billion and close to analysts’ average estimates of $102 billion. Profit after excluding certain items came to $1.1 per share, surpassing projections. The net income was $340.3 million compared to $198. 4 million a year ago at 66 cents per share. The company expects the fourth-quarter revenue to be $1.05 billion against average analysts’ estimates of $1.02 billion.