Shares in Zoom Video Communications fell early Tuesday amid fiscal 2023 guidance that came in well below expectations. January-quarter profit for ZM stock topped estimates.
Zoom earnings for the fourth quarter were released after the market close on Monday. ZM stock fell 5.8% to near 125 in midday trading on the stock market today.
For fiscal 2023, Zoom forecast earnings of $3.48 per share on revenue of $4.54 billion. Analysts had estimated profit of $4.36 on revenue of $4.71 billion.
"Guidance for 'just' 11% growth next fiscal year vs. consensus at 16% is unlikely to trigger a meaningfully negative stock reaction like we've seen in recent periods," said Deutsche Bank analyst Matthew Niknam in a report.
Zoom guidance assumes that fiscal 2023 revenue growth will likely trough in the July quarter and reaccelerate through the back half of the year.
Analysts expected decelerating earnings and revenue growth for Zoom stock as economies normalize and in-person meetings rebound from the coronavirus pandemic. In addition, one problem for Zoom stock has been elevated turnover of small-business customers.
ZM Stock: January Quarter Profit Tops Views
Also, analysts had expected fiscal 2023 profit margins to fall amid higher investments in sales staff and research and development.
Zoom earnings for the fourth quarter were $1.29 a share on an adjusted basis, up 6% from a year earlier.
Revenue jumped 21% to $1.071 billion for ZM stock. A year earlier, the San Jose, Calif.-based company earned $1.22 cents a share on sales of $883 million.
Zoom stock analysts projected earnings of $1.07 a share on sales of $1.054 billion for the period ended Jan. 31. A year earlier, Zoom earned $1.22 per share on revenue of $883 million.
Heading into its earnings report, ZM stock owned an IBD Relative Strength Rating of only 6 vs. a best-possible 99, according to IBD Stock Checkup.
Zoom's cloud-based software sets up audio and videoconferencing, with chat tools also available. Customers also can easily share content.
Zoom Video announced a $1 billion buyback. The company has a strong balance sheet with $5.4 billion in cash.
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Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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