Zoom (ZM) earnings Q2 2022

Zoom CEO Eric Yuan speaks at the Nasdaq opening bell in New York on April 18, 2019.

Hit by Betancur | Getty Images

Zoom stock fell 12% in expanded trading on Monday after the video calling software maker reported second-quarter earnings that exceeded analysts’ expectations but showed slower growth compared to the previous quarter.

This is how the company did it:

  • Merits: $ 1.36 per share, adjusted, down from $ 1.16 per share analyst expects, Refinitiv said.
  • Revenue: According to Refinitiv, $ 1.02 billion versus $ 991.0 million as analysts expected.

Revenue for the quarter ended July 31st increased 54% year over year, according to a release. In the previous quarter, sales had increased by 191%. For the next quarter, Zoom is targeting growth of 31%.

The gross margin increased to 74.4% from 72.3% in the previous quarter. The availability of new data center capacity benefited the company’s gross margin in the quarter as well as lower usage in the summer, thanks in part to the school break, Kelly Steckelberg, chief financial officer of Zoom, said in a Zoom call with analysts.

In the quarter, Zoom announced its intention to acquire cloud contact center software provider Five9 for $ 14.7 billion in shares. The deal comes after Zoom gained millions of new users after the coronavirus surfaced and companies rushed to enable online meetings to increase Zoom’s stock.

Also in the quarter, Zoom announced the availability of Zoom Events, which will enable businesses to host premium online meetings. And Zoom said it invested in event software maker Cvent when Cvent tried to go public through a merger with a special purpose vehicle.

Zoom now has 2 million seats for the Zoom Phone cloud-based phone service, up from 1.5 million three months earlier, Steckelberg said.

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Regarding its guidance for the next quarter, Zoom called for adjusted earnings per share of $ 1.07 to $ 1.08 on revenue of $ 1.015 to $ 1.020 billion. Analysts polled by Refinitiv had expected adjusted earnings per share of $ 1.09 and revenue of $ 1.01 billion.

For the full fiscal year, Zoom sees adjusted earnings of $ 4.75 to $ 4.79 per share and revenue of $ 4.005 to $ 4.015 billion – an increase from recent estimates of 4.56 to 4.61 Adjusted earnings to $ 3.98 billion to $ 3.99 billion in revenue. It is also above analyst consensus estimates of $ 4.67 in adjusted earnings per share and $ 4.01 billion in revenue.

The company raised its forecast for the year as the number of coronavirus cases increased, including from the Covid Delta variant, and some companies delayed plans to reopen offices.

The forecast assumes strong growth in the direct and channel business of Zoom and a weakness in the online business due to challenges with smaller customers and consumers, said Steckelberg. The gross margin will increase when students return to schools, she said.

At the same time, travel is returning sooner than executives expected, she said.

Excluding the post-close price change, Zoom stock is up about 3% since early 2021, trailing the S&P 500, which is up nearly 21% over the same period.

SEE: Trading Nation: Zoom to Report on Profits Monday – Two traders on whether the pandemic favorite can hold out

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