Video conferencing company Zoom shared its second-quarter earnings this week and managed to beat the estimates of Wall Street analysts. However, investors were still unconvinced by the results, causing the company’s stock to fall by more than 10% at one point.
Zoom reported $1.14 billion in revenue compared to an estimated $1.11 billion, while its $1.34 adjusted earnings per share topped the expected $1.05. The company also had $289.4 million in free cash flow versus the $258.6 million that analysts estimated.
On the flipside, Zoom came slightly short when it came to enterprise customers, failing to meet the expectations of 219,350 customers and instead coming at 218,000. The company kept its Q3 revenue forecast of $1.12 billion, which is in line with Wall Street expectations.
The weak sales growth and underwhelming projections for the third quarter seemed to have affected the company’s stock more than expected. After climbing as high as $70 per share in after-hours trading on Monday, the company’s shares plunged to $63.67 early on Tuesday. Zoom stock slightly recovered to close at $65.83.
“Zoom’s Q2 results initially appeared quite solid, with a healthy top/bottom line beat with revenue upside coming from the Enterprise segment with ZM Phone strength. That said, the upside was partially one-time driven with PSO revenue pull-forward, a softer Q3 billings, and weaker 2H revenue outlooks,” Citi analyst Tyler Radke wrote in a note to clients.
