Zoom quarterly revenues top $1bn for first time but slowdown warning hits shares

Zoom has reported quarterly revenues of more than $1bn for the first time but shares fell as it warned of demand cooling.

The video-conferencing platform posted sales of $1.02bn for the three months to the end of July, up 54% on the same period a year ago while profits climbed 71% to $317m.

It has grown rapidly during the pandemic as more people use video services to communicate for work, study and socialising.

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But the pace of its growth has inevitably come under strain as vaccinations encourage companies to bring workers back to the office and schools to reopen.

It also faces competition from rivals such as Cisco’s Webex and Microsoft Teams.

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Founder and chief executive Eric Yuan said: “Today we are a global brand counting over half a million customers with more than 10 employees, which we believe positions us extremely well to support organisations and individuals as they look to reimagine work, communications, and collaboration.”

But the latest figures failed to impress Wall Street as investors looked ahead to Zoom’s outlook for the current quarter.

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It is forecasting revenue of between $1.015bn and $1.02bn for the August-October period, a 31% rise on a year earlier but a sharp slowdown on previous rates of growth.

Shares fell 11%.

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Chief financial officer Kelly Steckelberg said: “We had expected that [the slowdown] towards the end of the year, but it’s just happened a little more quickly than we expected.”

Zoom said it expects a decline in revenue from customers with 10 or fewer employees – a group consisting mainly of small and medium-sized businesses which pay monthly.