Zoom Video Communications Inc (NASDAQ: ZM) reported market-beating results for its fiscal second-quarter late last night. Shares of the company, however, are down about 15% on Tuesday as Q3 guidance disappointed investors.
CFO Steckelberg’s comments on CNBC’s “Squawk Box”
According to CFO Kelly Steckelberg, ‘upmarket’ remained resilient in Q2, resulting in the company’s first billion-dollar quarter on record. The weaker guidance, however, was attributed to the mass market that was failing to maintain momentum. On CNBC’s “Squawk Box”, she said:
“We’re seeing headwinds in our mass market. People are now moving around, they are taking vacations, going to happy hours in person. So, we’ve started to see some additional churn there. That’s what’s reflected in our guidance and the self-off in the stock.”
In Q2, revenue from customers with ten or fewer employees made up about 36% of Zoom’s quarterly revenue that remained unchanged from the same quarter last year.
Baird analyst Will Power’s bull case for Zoom
Also on Tuesday, Baird analyst Will Power acknowledged that Zoom was seeing some pressure in the SMB segment in Europe but said on CNBC’s “Squawk on the Street”:
“Historically, SMB wasn’t the principal focus of the company, but with the pandemic, there was a sharply higher demand from customers of all sizes. But the good news is that the bigger business segment continues to perform quite well.”
Despite the sell-off, Power rates Zoom Video Communications at “outperform” with a price target of $380 that translates to an about 30% upside from here. On top of growing video adoption in enterprises, he also sees massive potential in Zoom Phone that is still in its “really early days” and yet have 2 million seats in total already.
“The longer-term bet here, the reason we like the stock on the weakness is, this is an opportunity for Zoom to build its platform to cross-sell additional products into that large and global video base,” he added.
The post Zoom CFO on weak guidance: ‘we’re seeing headwinds in our mass market’ appeared first on Invezz.
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Wajeeh Khan
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