Zoom Sees Positive Outlook After Expanding Beyond Video Conferencing

In a positive development, Zoom Video Communications Inc. has increased its yearly predictions, indicating successful endeavors in expanding its product sales to major corporate clients. As a result, the company’s shares experienced a rise of approximately 4% during after-hours trading.

The turnover for the year ending in January 2024 will be as much as 4.5 billion dollars, the company said in a statement on Monday. In May, Zoom’s annual revenue was forecast to be around $4.48 billion. Full-year earnings, excluding some items, are in the range of $4.63 to $4.67 per share, compared with the previous forecast of $4.25 to $4.31.

Investors have been concerned that Zoom’s once-explosive sales are stalling as the company’s core video conferencing software challenges major rivals such as Microsoft Corp. Zoom’s plan to revive growth depends on expanding its tools for large enterprise customers, such as phone platforms. service systems, calendar applications and chat features based on the development of artificial intelligence. It has invested in artificial intelligence startup Anthropic and announced the acquisition of workplace communication tool Workvivo.

The business’s second-quarter revenue rose 10% to $659.5 million, beating analysts’ estimates. This improved performance bodes well for Zoom’s plan to offer more services to large companies, said Bloomberg Intelligence’s John Butler. Online sales to consumers and small businesses fell 4.3% to $479.2 million.

“Our increased total revenue estimate reflects a consistent view of Enterprise, and expectations are moderate for Online for the remainder of the year,” CFO Kelly Steckelberg said of the results on a conference call.

The San Jose, Calif.-based company said it had 218,100 business customers in the period ended July 31, up 6.9% from a year earlier. Of those customers, 3,672 paid more than $100,000 in trailing-12-month revenue, up nearly 18% year-over-year.

Steckelberg also touted the demand for Zoom’s new non-video products. Zoom Phone achieved about $500 million in annual user fee revenue, while its contact center tool surpassed 500 customers, he said. While some customers have reduced their workforce, affecting Zoom, the company has been able to sell new products “to make up for the revenue,” Steckelberg said.

In the second financial period, Zoom’s total revenue increased by 3.6% to 1.14 billion dollars. Earnings excluding items were $1.34 per share. Both beat the average of analysts, according to data compiled by Bloomberg.

Shares rose to $74.50 in extended trading after hitting $67.27 in New York. The company has missed out on the big technology rally, and the stock is down about 1 percent this year.