Shares in Zoom Technologies Inc (NASDAQ:ZOOM) were down almost 7% in pre-market trading as its third-quarter results failed to live up to expectations - despite an earnings beat and upgraded guidance.
Against the backdrop of a 62% rise from its mid-August low, the mark-down would appear to reflect some profit-taking or a rebasing of the runaway valuation that reflects the current outlook for the business.
Either way, Zoom still has a fan: Wedbush Securities, which has raised its price target by $10 a share to $95 after the video conferencing on the back of the latest print.
While maintaining its "outperform" rating, Wedbush lauded Zoom’s strong performance and raised guidance as signs of the company’s resilience and growth potential.
It reported $1.177 billion in revenue for the quarter, a 4% year-over-year increase, exceeding both company and Wall Street expectations.
This was driven by growth in its enterprise offerings, particularly its contact center solution, which saw an 82% customer increase to over 1,250 users, and Workvivo, with a 72% customer growth rate. Its AI Companion also gained traction, with monthly active users up 59% quarter-over-quarter.
Enterprise customers grew to 192,400, up from 191,600 in the previous period, with nearly 4,000 customers contributing over $100,000 in trailing 12-month revenue. Zoom’s efforts to reduce churn in its online segment also showed progress, with churn improving to 2.7%.
Zoom raised its full-year guidance, projecting fourth-quarter revenue between $1.175 billion and $1.180 billion, ahead of analyst estimates. The company expects non-GAAP operating income to range between $443 million and $448 million.
Wedbush highlighted Zoom’s focus on expanding its product portfolio, particularly in artificial intelligence and improving profitability. The firm praised the company’s ability to cross-sell products and grow wallet share among existing customers, creating a strong foundation for long-term growth.
Ahead of the bell, the stock was quoted marked down $5.93 to $83.10.