This ‘pandemic darling’ is down significantly in after-hours trading

Zoom Video Communications Inc (NASDAQ: ZM) reported better-than-expected profit for its fiscal second quarter on Monday. Shares still slid 10% after-hours on lowered full-year guidance.

Zoom Video Q2 earnings snapshot

• Net income printed at $45.7 million versus the year-ago $316.9 million
• EPS tanked from $1.04 to 15 cents as per the earnings press release
• On an adjusted basis, per-share earnings came in at $1.05
• Revenue climbed 9.0% on a year-over-year basis to $1.1 billion
• Consensus was 94 cents of adjusted EPS on $1.12 billion in revenue
• Ended the quarter with 204,100 enterprise customers (up 18% YoY)
• Zoom Phone licenses more than doubled to nearly 4.0 million seats

CFO Kelly Steckelberg’s remarks

According to CFO Kelly Steckelberg, the fourth-quarter results could have been better if it wasn’t for the strong U.S. dollar. On the earnings webinar, she said:

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Zoom has implemented initiatives focused on driving new online subscriptions, which have shown early promise but were not enough to overcome the macro dynamics in the quarter. The big challenge is new customer additions.

Such initiatives include restricting meetings hosted by “free” users to 40 minutes to further incentivise upgrading to the paid plan.

Zoom stock down on trimmed guidance

For the full financial year, Zoom now forecasts $3.66 to $3.69 of adjusted per-share earnings on roughly $4.39 billion in revenue. It expects up to 83 cents of EPS this quarter and about $1.1 billion in revenue, which compares to the FactSet consensus of 92 cents and $1.15 billion.

Wall Street currently has a consensus “overweight” rating on the Zoom stock with upside to $126 on average; a 40% increase from here.