Zoom shares fall despite third quarter growth

Videoconferencing platform Zoom on Monday reported third quarter earnings that were better than expected, although the popular pandemic-era service also experienced a 5 percent decrease in shares after revenue numbers came out. 

Zoom announced in a press release Monday that the company had a total revenue of $777.2 million for the third quarter, an increase of approximately 367 percent from this time last year. 

In the second quarter, revenue had increased by 355 percent, and by 169 percent in the quarter before that. 

According to The Associated Press, Zoom’s revenue increase yielded a profit of $198 million, up from just $2.2 million a year ago.

While these numbers exceeded analysts’ expectations, Zoom’s stock had a decline of 5 percent Monday.

The AP noted that this reaction could be attributed to companies joining Zoom’s subscription service at lessened rates compared to early on in the pandemic, when they turned to Zoom to hold virtual meetings as COVID-19 forced people to work from home. 

Zoom ended the latest quarter with 433,700 customers with at least 10 employees, an increase of 63,500 customers from July. In each of the previous two quarters, Zoom added more than 100,000 customers with at least 10 employees.

According to the AP, investors may now be considering selling their shares after looking at the promising developments of vaccines and the potential for companies to start returning to in-person work as stay-at-home orders and other restrictions are lifted. 

While Zoom’s shares are more than six times higher than at this point last year, the company’s stock price has fallen more than 20 percent from its all-time high of $588.84 last month.

However, Kelly Steckelberg, Zoom’s chief financial officer, told the AP Monday that the company anticipates subscribers will still rely on Zoom as they continue to limit the number of employees in their offices and cut back on business travel due to the ease of virtual meetings. 

“The trends of remote work had started long before the pandemic and they have just been accelerated by this,” Steckelberg said. “Given the adoption and the way we have seen all segments, from small business owners to individuals all the way up to large organizations, embrace Zoom, we really expect that those remote working trends will continue even after there is a vaccine.”

Both Pfizer and Moderna have announced that they have applied for emergency use authorization from the U.S. Food and Drug Administration for their candidate vaccines. 

While the first high-priority Americans, including health care workers, are expected to get doses of the vaccine in December, the general public will likely not have access until well into 2021.