November 28, 2021, 18:52

    Zoom shares tumble as revenue growth slows

    Zoom shares tumble as revenue growth slows

    Nov 23 (Reuters) – Shares of Zoom Video Communications Inc (ZM.O) slumped to 17-month lows on Tuesday after the video conferencing platform posted its slowest quarterly revenue growth amid stiff competition from deep-pocketed rivals Cisco (CSCO.O), Microsoft (MSFT.O) and Salesforce (CRM.N).

    The company on Tuesday posted a better than expected third-quarter revenue of $1.05 billion, although that came at a 35% jump compared with an astronomical 360% in the pandemic-hit year earlier. read more

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    "With topline growth still weighed down by weakening trends in the micro segment from pull-forward and temporary pandemic business, we look for a clear line of sight to the growth trough," said brokerage Needham.

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    Zoom's addition of new customers with over 10 employees also grew at its slowest pace at 18%, below pre-pandemic levels when the company was not yet a household name.

    Reuters Graphics

    The company's growth at small and medium businesses might be saturating, while it has barely penetrated the large enterprise market, Third Bridge analyst Joe McCormack said.

    However, developing it into a contact center product will take longer after its $14.7 billion deal to buy call-center software provider Five9 (FIVN.O) fell through last month. read more

    Shares of Zoom fell about 14% to $208.15 in early trading. The stock has nearly halved in value since hitting a peak of $114 billion last year as the pandemic raged.

    "For now, investors will need some patience as we do not see any upcoming catalysts that would change the sentiment on the stock," Evercore analysts wrote in a note.

    Register now for FREE unlimited access to reuters.comRegisterReporting by Akash Sriram and Tiyashi Datta in Bengaluru; Editing by Ramakrishnan M.

    Sourse: reuters.com

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