Zoom Video Communications Inc (NASDAQ:ZM) has lowered its annual revenue forecast as the video-conferencing platform expects a hit from a slowdown in its online business, although its third-quarter revenue rose.
After the market close on Monday, Zoom said it now expects its annual revenue to be between $4.37 billion and $4.38 billion, compared with an earlier outlook of $4.39 billion and $4.40 billion.
However, the company raised its annual adjusted profit per share forecast to between $3.91 and $3.94, compared with a $3.66 to $3.69 forecast earlier.
READ: Zoom reports its slowest quarterly revenue growth on record, reduces its annual profit and revenue forecasts
The San Jose, California-based company said revenue for its quarter ended October 31, 2022, rose by 5% to $1.1 billion, on the back of a 20% increase from high-paying enterprise customers.
On an adjusted basis, the company earned $1.07 per share during its third quarter, compared with estimates of 84 cents, according to Refinitiv data.
Zoom chief financial officer Kelly Steckelberg said during a post-earnings call that the company's online business would decline by nearly 8% during the year, Reuters reported.
After recording strong growth during the coronavirus pandemic, Zoom, which competes with WeChat Work, Microsoft Teams, Cisco WebEx and Slack, is facing a slowdown as 40-year high inflation is dampening customers' spending power. The easing of pandemic-related restrictions across the world is also weighing on its business as people start spending less time online.
"Guidance suggests further weakness in both enterprise and online. It is tough to disaggregate how much of this is macro (especially given slowing down in hiring or layoffs in tech) and how much is competition," said RBC analyst Rishi Jaluria.
"The focus for Zoom remains on its ability to expand to become a larger platform," he added.
Zoom shares, which were down nearly 56% this year, fell by around 5.7% to $74.60 in New York trading after the bell on Monday.
Contact the author at jon.hopkins@proactiveinvestors.com