The third-quarter revenue growth rate of Zoom Video Communications Inc (ZM.O) dropped to 35 percent as demand for its video-conferencing equipment fell from pandemic-fueled highs last year, sending the company’s shares down roughly 6% on Monday.
Zoom reported $1.05 billion in revenue for the quarter ending Oct. 31, up 54 percent from the previous quarter and 360 percent from a year ago.
The epidemic winner’s stock sank to $227.5 in extended hours after losing nearly 28% this year.
Furthermore, commercial customers have found it difficult to choose Zoom over Cisco’s (CSCO.O) Webex conferencing platform and Microsoft’s (MSFT.O) Teams.
To keep its users, the company introduced a number of new services, including the Events platform, which allows organizations to conduct large-scale conferences, the cloud-calling service Zoom Phone, and Zoom Rooms for in-office meetings.
“Their Rooms and Phone businesses are barely 5% penetrated or less, implying plenty of room for development even within their current capabilities,” said Joe McCormack, senior analyst.
Investment bankers and analysts have warned that Zoom faces several hurdles in sustaining growth after its $14.7 billion bid to buy call center software firm Five9 Inc (FIVN.O) fell through.
Still, Zoom reported an adjusted profit of $1.11 per share, beating Wall Street’s estimates of $1.09 per share, according to Refinitiv data.
The company also forecast current-quarter revenue and earnings above expectations and raised its full-year revenue estimate to around $4.08 billion from about $4.01 billion earlier.
