(Bloomberg) — Zoom Communications Inc. projected slower-than-expected revenue growth for the year, dimming optimism that an expanded suite of products will bring a sales surge.
Most Read from Bloomberg
Revenue will be about $4.79 billion in the fiscal year ending in January 2026, Zoom said Monday in a statement. Profit, excluding some items, will be $5.34 to $5.37 a share. Analysts, on average, projected adjusted sales of $4.81 billion and earnings of $5.37 a share, according to Bloomberg-compiled data.
The company — best known for videoconferencing — has been trying to boost its user ranks by offering more tools. That includes phone systems, a contact center application and artificial intelligence assistants. Investors have been waiting for signs of a payoff from that effort, especially as the company faces tough competition from Microsoft Corp.
In October, Zoom named a former executive from that company, Michelle Chang, as chief financial officer.
“The company’s core video opportunity remains challenged, much due to market saturation and competitive pressures from Microsoft,” wrote Brad Reback, an analyst at Stifel, ahead of the results.
Chief Executive Officer Eric Yuan shared signs of traction for the company’s new products. Zoom won twice as many large contact center deals this quarter compared with a year prior, he said in prepared remarks for a call with investors Monday. Its contact center software handles tasks such as customer support. Monthly active users of its AI companion was up 68% from the previous quarter.
The shares slipped about 2% in extended trading after closing at $81.10 in New York. Heading into the report, the stock had gained 28% over the last 12 months.
The outlook raises questions about the sustainability of Zoom’s revenue recovery, according to John Butler, an analyst at Bloomberg Intelligence.
For the quarter that ended in January, sales grew 3.3% to $1.18 billion, in line with the average analyst estimate. Profit, excluding some items, was $1.41 per share, compared with an average estimate of $1.31.
As the world reopened from pandemic restrictions, many individuals and small businesses let their Zoom licenses lapse, and this ongoing churn has concerned investors. Average monthly churn in this segment was 2.8% in the quarter, in line with analysts’ estimates.
