Zoom stock pops more than 5% as earnings and forecast top expectations

Zoom executives said they expect second-quarter adjusted earnings of $1.04 to $1.06 a share on revenue of $1.11 billion to $1.12 billion, while analysts on average were projecting $1.05 a share on sales of $1.11 billion, according to FactSet. For the full year, Zoom executives predicted adjusted earnings of $4.25 to $4.31 a share on revenue of $4.47 billion to $4.49 billion, while analysts on average were expecting $4.21 a share on sales of $4.45 billion.

“The solid start to the year has enabled us to raise our outlook for fiscal-year 2024 while continuing to invest in innovations such as AI to help make interactions more meaningful and communications more effective,” Zoom Chief Executive Eric Yuan said in a statement announcing the results.

The results underscore the inherent risk/reward for services such as Zoom as more Americans return to work after teleconferencing became the norm early in the COVID-19 pandemic. Rosenblatt Securities analysts warned that this was a “a big renewal quarter for the company, with COVID contracts coming up,” and said their checks had returned mixed results.

“Our proprietary fieldwork indicates the company’s competitive position is steady, but only with substantial discounts and free services added,” the analysts wrote, while pointing out strong competition from larger companies such as Microsoft Corp.
MSFT,
+0.89%,
which offers Teams as a competitor, and Cisco Systems Inc.’s
CSCO,
-0.63%
WebEx offering.

Shares of Zoom improved more than 5% in after-hours trading immediately following the release of the results Monday, after closing with a 2.9% gain at $71.41. Zoom’s stock has inched up 3.6% this year, while the broader S&P 500 index
SPX,
+0.02%
 has climbed 7%.