Zoom Communications: On a Growth Path Despite Short-term Setback

Zoom Communications showed an impressive performance in the second half of 2024. The shares of the provider of online communication services have risen by about 44% since July. However, this positive trend was slightly dampened when the stock fell by over 6% in pre-market trading on November 25, after Zoom released its results for the third quarter of fiscal 2025. Notably, the quarterly results and forecasts exceeded Wall Street's expectations. Additionally, the company announced it would change its corporate name to Zoom Communications to expand its business areas beyond video communication and leverage the potential of growing technologies such as Artificial Intelligence (AI). Zoom's revenue in the third quarter amounted to $1.18 billion, representing a 3.6% increase from the previous year. Adjusted earnings also rose by nearly 7% to $1.38 per share, while analysts had expected $1.31 per share on revenue of $1.16 billion. Furthermore, Zoom has raised its forecasts for the entire fiscal year. The company now expects annual revenue of about $4.66 billion and adjusted earnings of $5.42 per share. These optimistic prospects are due to increased customer interest in the company's platform, which is also attributed to the integration of AI solutions. A particular highlight was the growth in the area of contact center customers, which recorded an annual increase of 82% to now 1,250 customers. Since the introduction of the contact center platform in February 2022, there has been unabated demand, supported by experts who predict continued dynamic growth in the cloud-based contact center market.