Apple logo is seen on the Apple store at The Marche Saint Germain in Paris, France July 15, 2020. REUTERS/Gonzalo Fuentes

Nov 22 (Reuters) – Zoom Video Communications Inc’s (ZM.O) third-quarter revenue growth rate slowed to 35% as demand for its video-conferencing tools eased from the pandemic-fueled heights last year, sending its shares down about 6% on Monday.

Revenue was at $1.05 billion in the quarter ended Oct. 31, Zoom said, after rising 54% in the previous quarter and surging 360% a year earlier.

The stock, a pandemic winner, fell to $227.5 in extended trading, after having lost about 28% this year.

Moreover, stiff competition posed by Cisco’s (CSCO.O) conferencing tool Webex and Microsoft’s (MSFT.O) Teams has made it challenging for Zoom to win over enterprise customers.

Small toy figures are seen in front of Zoom logo in this illustration picture taken March 15, 2021. REUTERS/Dado Ruvic/Illustration

To retain its users, the company launched a variety of new offerings such as Events platform, where businesses can host large-scale conferences, cloud-calling service Zoom Phone and in-office meetings feature Zoom Rooms.

“Their Rooms and Phone businesses are 5% penetrated or below and that seems to imply plenty of remaining runway for growth even within their existing capabilities only,” said Joe McCormack, senior analyst at Third Bridge said.

Investment bankers and analysts have warned that Zoom faces several hurdles in sustaining growth after its $14.7 billion bid to buy call center software firm Five9 Inc (FIVN.O) fell through. read more

Still, Zoom reported an adjusted profit of $1.11 per share, beating Wall Street’s estimates $1.09 per share, according to Refinitiv data.

The company also forecast current-quarter revenue and earnings above expectations, and raised its full-year revenue estimate to around $4.08 billion from about $4.01 billion earlier.

Source: https://www.reuters.com/technology/zoom-beats-quarterly-revenue-estimates-2021-11-22/

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