Zoom Overthrows Expectations in Q4 2023, Expects Slow Growth in Fiscal Year

Software company Zoom Video Communications (NASDAQ: ZM) outperformed expectations in its fiscal Q4 results, pushing its shares higher. The company’s stock trades up 7.43% to $79.20 in after-hours trading after closing down 0.28%. Since the year began two months ago, Zoom stock has grown 8.83% and increased by another 2.98% in the last three months. While the shares are down more than 44% in the last 12-month period, the video communication service provider went up 0.30% over the past month. In the last five days, ZM has lost 3.14%.

Zoom Exceeds Fiscal Q4 2023 Earnings Prediction

According to the fiscal Q4 report, Zoom crushed expectations in both earnings and revenue. The quarterly adjusted earnings were $1.22 per share, more than the predicted 81 cents. According to Refinitiv, analysts’ prediction of revenue for the three months was $1.10 billion. However, Zoom generated $1.12 billion in revenue during the fiscal Q4, which is a 4% jump compared to the same period in the previous year. It additionally reported $4.4 million for the full year fiscal year 2023, up 7% YoY.

Although the revenue increased, it is lower than the usual surge the company recorded in 2020 and 2021. Zoom became a household name during the coronavirus pandemic when the world had to stay indoors. As companies could not have onsite meetings, many resorted to using the video communication service, which sent its revenue to the top. CEO Eric S. Yuan said in a comment on the earnings results:

“Zoom One adoption continued to accelerate and helped drive Zoom Phone to grow more than 100% year over year, surpassing 5.5 million seats in Q4. Our emerging technologies such as oom Contact Center picked up pace as customer experience teams recognized the value of a modern, integrated collaboration solution.”

For the first time since 2018, Zoom recorded a net loss in the fiscal Q4. It lost $104 million while it saw a net income of around $491 million in the year-ago period. The company said the loss is “attributable to common stockholders.”

Forecast for New Fiscal Year

Looking forward to the new fiscal year, Zoom expects growth to continue to slow down following Q4 performance. The company predicted a 1.1% growth, representing between $4.435 billion to $4.455 billion in revenue. Meanwhile, analysts were expecting sales of $4.6 billion. On adjusted earnings per share, Zoom’s expectation is within the range of $4.11 and $4.18. And for the fiscal Q1, the software company is predicting adjusted earnings per share to come in between 96 cents and 98 cents. Revenue expectation is between $1.080 billion to $1.085 billion.

Like many other companies exploring means of cutting costs, Zoom announced it would dismiss some workers. The company said earlier in February that it is laying off 1,300 employees amid “uncertainty of the global economy.”