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• Zoom’s sales rose 35% in the quarter, compared to 54% in the previous quarter
• Shares of the company fell around 6% to $227 in after-hours trading
Zoom Video Communications Inc sales slowed down in the third quarter due to muted demand of videoconferencing applications as offices reopen.
The California-based company’s sales rose 35% in the quarter to $1.05 billion, compared to 54% sales growth in the previous quarter and 360% in the year earlier.
Shares of the company fell around 6% to $227 in after-hours trading.
Net income rose more than 70% in the quarter to $340 million, compared to analysts’ expectations of $337 million.
Zoom expects total sales of between $1.051 billion and $1.053 billion for the current quarter, up from $1.018 billion expected by analysts, according to FactSet.
Muted demand
As economies reopen and organizations head back towards office, Zoom has not been able to maintain the growth it experienced during the onset of COVID-19 pandemic. Zoom sales’ had grown exponentially in the middle of the pandemic.
Zoom now faces competition from Microsoft’ Teams application as well, which provides other features in addition to videoconferencing.
Investors are worried about Zoom’s performance as its shares are down more than 40% compared with a year ago.
Diversification plans
Some of the Zoom’s plans to diversify have also failed including company’s nearly $15 billion offer to acquire Five9 Inc, a cloud call-center business, in September over price issues.
Zoom is planning to expand its research-and-development budget with expenses growing 169% to $68 million to focus in other areas as well.
“We are working hard to develop and deploy the technologies of the future to address current business needs and reimagine how we communicate and work in a flexible hybrid world,” Zoom Chief Executive Eric Yuan said in prepared remarks released by the company.
Zoom said earlier this month that it would start displaying ads in its app for users opting free basic service.
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