Investing.com — Stocks in Zoom video communication (NASDAQ:) fell in premarket trading in the US on Tuesday after the videoconferencing giant unveiled a generally cautious outlook for the current quarter and fiscal year.
Zoom, a pandemic-era darling that became an essential tool for many remote workers, has faced a surge in competition following the COVID-19 crisis and lingering questions about how it plans to incorporate artificial intelligence into its offerings. integrate.
Still, the company reported stronger-than-expected performance for its fiscal first quarter, beating analysts’ expectations for both earnings per share (EPS) and revenue.
Adjusted earnings per share of $1.35 in the three months ended April 30 exceeded analyst consensus projections of $1.19, while revenue of $1.14 billion also exceeded expectations, largely thanks to an increase in the acquisition of new customers. Quarterly corporate revenue rose 5.3% to $665.7 million.
Zoom’s adjusted operating margin was 40.0%.
CEO Eric S. Yuan said the company’s performance during the quarter was strengthened by the integration of AI into its platform and strategic investments.
“These innovations, combined with our execution and targeted investments, have enabled us to exceed our expectations,” Yuan said in a statement.
Zoom said it now has $7.4 billion in cash on hand and expects free cash flow of $1.47 billion for the current fiscal year, although analysts at Evercore ISI indicated it had not yet provided “incremental color on how that will be deployed directionally,” apart from a $1.5 billion share buyback announced in the previous quarter.
“This is likely to remain a sore point for some,” they said.
Looking ahead, Zoom expects second-quarter adjusted earnings per share to be between $1.20 and $1.21, slightly lower than Wall Street’s consensus forecasts of $1.23. Revenue is also expected to be between $1.145 billion and $1.15 billion, compared to analyst estimates of $1.15 billion.
For full fiscal 2025, Zoom’s forecasts adjusted earnings per share from $4.99 to $5.02, above the $4.91 consensus. Annual revenue expectations are now $4.61 to $4.62 billion, compared to projections of $4.61 billion.
Analysts at Goldman Sachs noted that there wasn’t much change in Zoom’s prospects compared to previous estimates, arguing that this “points to a still choppy demand environment that could extend a turn toward slowing growth trends.”
Senad Karaahmetovic contributed to this report.
