Zoom shares tumble as revenue growth slows

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A 3D printed Zoom logo
A 3D printed Zoom logo is placed between small toy people figures and a keyboard in this illustration taken April 12, 2020. REUTERS/Dado Ruvic/Illustration

Nov 23 (Reuters) - Shares of Zoom Video Communications Inc (ZM.O) slumped to 17-month lows on Tuesday after the video conferencing platform posted its slowest quarterly revenue growth amid stiff competition from deep-pocketed rivals Cisco (CSCO.O), Microsoft (MSFT.O) and Salesforce (CRM.N).

The company on Tuesday posted a better than expected third-quarter revenue of $1.05 billion, although that came at a 35% jump compared with an astronomical 360% in the pandemic-hit year earlier. read more

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"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%, below pre-pandemic levels when the company was not yet a household name.

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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.

However, developing it into a contact center product will take longer after its $14.7 billion deal to buy call-center software provider Five9 (FIVN.O) fell through last month. read more

Shares of Zoom fell about 14% to $208.15 in early trading. The stock has nearly halved in value since hitting a peak of $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.

Reporting by Akash Sriram and Tiyashi Datta in Bengaluru; Editing by Ramakrishnan M.

Our Standards: The Thomson Reuters Trust Principles.

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Akash reports on technology companies in the United States, electric vehicle companies, and the space industry. His reporting usually appears in the Autos & Transportation and Technology sections. He has a postgraduate degree in Conflict, Development, and Security from the University of Leeds. Akash's interests include music, football (soccer), and Formula 1.

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