Zoom lowers its annual forecast as revenue growth approaches an all-time low

Zoom Video Communications Inc. cut its annual profit and revenue forecasts on Monday as demand for its video-conferencing platform declines from pandemic levels due to tough competition from Microsoft (NASDAQ:MSFT) Teams and Cisco (NASDAQ:CSCO) WebEx.

The pandemic darling's stock fell 7% in extended trading after the company reported its worst quarterly revenue growth ever, at 8%, as customers migrated from virtual to in-person meetings.

Chief financial officer Kelly Steckelberg advised analysts that the company's internet business would likely decrease by 7% to 8% in fiscal year 2023.

Early in the year 2020, Zoom, which was started by a top Cisco employee, was a relatively unknown firm. At the height of the crisis, however, the company saw triple-digit sales growth as people who were confined to their houses turned to videoconferencing to communicate.

Zoom faces a severe problem in obtaining high-paying consumers to sustain its growth, and its expenses have increased as it spends more money to attract customers whose spending has decreased owing to high inflation.

In the three months prior to July, operating expenses increased by 51 percent to $704 million.

The business now estimates annual revenue between $4.39 and $4.40 billion, a decrease from its earlier projection of $4.53 to $4.55 billion.

It now expects an annual adjusted profit per share in the range of $3.66 to $3.69, down from $3.70 to $3.77 before.

Rishi Jaluria, managing director of software at RBC Capital Markets, commented, "Zoom remains a'show me' story in which the company believes there is a great deal of promise and stronger growth ahead, but Wall Street is hesitant."