What happened
Shares of Zoom Video Communications (ZM 0.13%) fell 7.4% on Tuesday after the cloud communications leader warned of slowing growth.
NASDAQ: ZM
Key Data Points
So what
Zoom's revenue rose 21% year over year to $1.1 billion in its fiscal 2022 fourth quarter, which ended on Jan. 31. That marked a significant slowdown from the 35% growth the company experienced in the third quarter and the 54% sales increase it achieved in the second quarter.
The number of customers with more than 10 employees on the videoconferencing platform grew 9% from the year-ago period to 509,800. But that was down from 512,100 customers at the end of the third quarter.
Image source: Getty Images.
Perhaps due to the downturn in its small-business customer growth, Zoom will place a greater emphasis on increasing its corporate accounts in the year ahead. In turn, the video-chat software provider will report two new metrics: the number of enterprise customers on its platform and their net dollar expansion rate.
Zoom ended fiscal 2022 with roughly 191,000 enterprise customers, representing year-over-year growth of 35%. Those customers' trailing-12-month net dollar expansion rate was 130%, meaning they spent 30% more on Zoom's services than they did the year before.
All told, Zoom's adjusted net income increased 8% to $393.6 million, or $1.29 per share. That was above analysts' estimates calling for per-share profits of $1.06.
Now what
But Zoom sees a further deceleration in its growth in the coming year as more people return to traditional workplaces. Management expects revenue to rise by less than 11%, to approximately $4.54 billion, in fiscal 2023.
Moreover, Zoom's growth investments will weigh on its profits. The company guided for its adjusted earnings per share to decline by roughly 30% to $3.48. Still, CEO Eric Yuan believes these investments will bolster Zoom's standing in the increasingly competitive cloud communications industry.
Yuan said, "To sustain and enhance our leadership position, in fiscal year 2023 we plan to build out our platform to further enrich the customer experience with new cloud-based technologies and expand our go-to-market motions, which we believe will enable us to drive future growth."
