Shares of Zoom Video Communications Inc slumped to 17-month lows today (November 23) after the video conferencing platform posted its slowest quarterly revenue growth amid stiff competition from deep-pocketed rivals Cisco, Microsoft and Salesforce.
The company on Tuesday posted a better than expected third-quarter revenue of US$1.05 billion, although that came at a 35 per cent jump compared with an astronomical 360 per cent in the pandemic-hit year earlier.
“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.
Zoom’s addition of new customers with over 10 employees also grew at its slowest pace at 18 per cent, below pre-pandemic levels when the company was not yet a household name.
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.
ZOOM STOCK NEARLY HALVED IN VALUE
However, developing it into a contact centre product will take longer after its US$14.7 billion deal to buy call-centre software provider Five9 fell through last month.
Shares of Zoom fell about 14 per cent to US$208.15 in early trading. The stock has nearly halved in value since hitting a peak of US$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.