Zoom forecasts upbeat revenue, expects boost from hybrid work

Zoom Video Communications Inc forecast current-quarter revenue above estimates. This is because of increased adoption of hybrid work models by companies is expected to drive steady demand for its video conferencing tools.

Due to this pandemic situation, from the past year many businesses and schools switched to its services for virtual classes, office meetings and socializing. This turned Zoom into a household name and investor favourite. But the rapid vaccination efforts and as all of our lives are slowly returning to normal, analysts are sceptical of the sustainability of Zoom’s growth. This is especially with the rivals Microsoft, Cisco and Google snapping at its heels.

Joe McCormack, senior analyst at Third Bridge said that the extent to which Zoom can compete sustainably with the likes of Cisco and Microsoft remains to be seen over the next few quarters, as they begin to enter true COVID comparable quarters. According to IBES Refinitiv data, this San Jose, California-based company forecasted current-quarter revenue in the range of $985 million to $990 million.

The costs jumped from 155% to $265 million, in the first quarter. The increasing number of free users on Zoom’s platform has led to higher costs for the company. Due to the security related issues, the company is now focussing on its two-year-old cloud-calling product Zoom Phone and conference-hosting product Zoom Rooms. Also, this is due to bigger players such as Facebook and Google amp up their video products. Zoom posted adjusted profit of $1.32 per share on revenue that nearly tripled to $956.2 million in the quarter, compared with estimates of a profit of 99 cents and $906 million in revenue.