Zoom Shares Plummet Despite Record Usage and Beating Estimates

It was a disappointing day for Zoom shares on Wednesday after the company reported its financial report. Despite beating across the board, the stock sank as much as 10% in extended hours.

Shares did recuperate some but it was a surprising collapse since the video communications company reported earnings and guidance that both beat what analysts had been anticipating. The company also said it experienced record usage despite the coronavirus spreading.

For the fourth quarter, Zoom reported earnings of 15 cents a share adjusted. This was more than double the 7 cents a share that analysts had expected per Refinitiv. Revenue at $188.3 million was also higher than the $176.6 million that analysts were expecting according to Refinitiv.

Revenue had a growth of 78% on an annualized basis in the quarter which ended January 31st. In the previous quarter revenue growth topped 85%.

The company revealed that there were 641 customers paying Zoom over $100,000 in the trailing 12 months at the end of the quarter, up 86% YOY. The growth rate in the previous quarter was 97%. At the end of the quarter Zoom had 81,900 customers with over 10 employees, up 61% year over year. In the prior quarter that growth rate had been 67%. Zoom also said its marketplace of third-party services had exceeded 200 products.

Looking ahead, Zoom expects fiscal first-quarter adjusted earnings of 10 cents per share and $199 million to $201 million Analysts polled by Refinitiv were looking for 6 cents in adjusted earnings per share and $185.7 million in revenue.

For the full 2021 fiscal year, Zoom calls for 42 cents to 45 cents in adjusted earnings per share on $905 million to $915 million in revenue. Analysts polled by Refinitiv had expected 30 cents in adjusted earnings per share and $868.4 million in revenue.

“I am happy to report that all of our employees in the affected areas are healthy,” CEO Eric Yuan said of the coronavirus. “Given the recent emergence and growing number of coronavirus cases in the U.S., we have directed our HQ employees to work from home, unless there is a business-critical need for them to be in the office.

Disclaimer: We have no position in Zoom Video Communications Inc. (NASDAQ: ZM) and have not been compensated for this article.