Zoom shares tumble despite solid results

Zoom Video Communications Inc. shares initially tumbled as much as 10% in after-hours trading Wednesday after it reported better-than-expected results and guidance that did not meet lofty expectations. The stock has since cut those losses, though it was still down 5% after hours.

Thus may end the teleconferencing company’s ZM, -0.57% recent spectacular stock run as one of the few tech companies to benefit from the coronavirus fears.

Zoom reported net income of $15.3 million, or 5 cents a share, in the fourth quarter, compared with net income of $1.2 million, or 1 cent a share, in the year-ago fourth quarter.

Revenue soared 78% to $188.3 million from $105.8 million a year ago. Total revenue was $622.7 million, up 88% year-over-year.

Analysts surveyed by FactSet had expected a loss of one cent a share on sales of $176.5 million.

“It was a strong finish to our fiscal year,” Zoom Chief Executive Eric Yuan said in a video webinar following the quarterly results. He pointed to 81,900 customers with at least 10 employees, a 61% improvement from the same quarter a year ago. VMware Inc. VMW, +4.13% and Johnson & Johnson JNJ, +5.82% are among Zoom’s larger customers, he said.

Zoom offered first-quarter revenue guidance of between $199 million and $201 million, exceeding FactSet’s projection of $185.6 million. For fiscal 2021, Zoom expects between $905 million and $915 million, topping the $869.5 million forecast by FactSet.

If there has been a tech stock immune to coronavirus, it’s been Zoom. In fact, it has thrived as more people are flock to its remote-work tools like videoconferencing as the virus continues to spread. A flood of tech shows, ranging from Alphabet Inc.’s GOOGL, +3.28%GOOG, +3.36% Google I/O 2020 to Adobe Inc.’s ADBE, +4.45% Summit have been revamped from in-person confabs to online forums.

See also: Tech shows go digital route amid coronavirus risks

In the video webinar, Yuan deemed the impact of COVID-19 on Zoom’s business as more than a temporary event. “This will dramatically change the landscape of workers collaborating remotely,” he said, although he added it was too early to measure its financial impact. So far, the recent surge in Zoom use has been largely on its free application, as noted by financial analysts.

“In the last 30 days alone, average daily downloads are up 90% versus the prior 30-day period, with greater user engagement as evidenced by a 17% increase in user session per day and a 3% increase in average session length,” Bernstein analyst Zane Chrane wrote in a note to clients last week. Zoom has already added more new active users this year than it did in 2019, he added.

See also: Zoom Video is seeing a surge in downloads amid coronavirus panic, analyst says

Shares of Zoom, which went public on April 18, 2019, are up 89% since then. The broader S&P 500 index SPX, +4.22%  is up 12.9% in the past year.

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