Zoom Communications said it expects third-quarter adjusted earnings per share to come in below the average forecast from Wall Street, a projection that weighed on its stock in extended trading. Shares of the San Jose, California-based company fell 3.8% after the guidance was released.
The company highlighted its ongoing roll-out of artificial intelligence tools intended to enhance its platform. Products mentioned by the company include an AI Companion assistant, a meeting receptionist assistant and a portfolio of enterprise-focused capabilities grouped under the "Zoom AI Services" banner. Zoom has said these features are part of efforts to attract additional customers.
Despite that push into AI, Zoom faces strong competition from established rivals in the business communications market. The company specifically contends with Microsoft’s Teams and Alphabet’s Google Meet, which the company acknowledged as active competitors in the space.
Guidance and recent results
- For the third quarter, Zoom forecast revenue in a range of $1.275 billion to $1.28 billion, compared with analysts’ average estimate of $1.28 billion, based on data compiled by LSEG.
- The company projected third-quarter adjusted profit between $1.46 and $1.48 per share, below analysts’ average estimate of $1.50 per share.
- Zoom reported second-quarter revenue of $1.28 billion, which was slightly above the analysts’ average estimate of $1.27 billion, according to LSEG.
- Second-quarter adjusted profit per share came in at $1.55, ahead of analysts’ average estimate of $1.48.
These figures show a recent quarter in which Zoom marginally outperformed consensus on both revenue and adjusted earnings, while the outlook for the coming quarter fell short of consensus on the profit line. The company’s expansion of AI functions is presented as an effort to broaden its enterprise appeal, but the guidance indicates near-term pressure on profitability versus analyst expectations.
Market reaction and context
Investors reacted to the profit guidance by pushing the stock lower in after-hours trading. The company’s simultaneous emphasis on AI feature rollouts and the acknowledgment of competitive pressure frame the current strategic posture: invest in product differentiation while managing revenue and profit expectations under an active competitive landscape.
Given the information provided, the immediate financial takeaway is that Zoom’s most recent quarterly results beat modestly on revenue and adjusted EPS, but forward-looking earnings guidance came in shy of consensus, triggering a negative market response.