Zoom's Pandemic-Fueled Boom Continues -- Update

By Aaron Tilley

Zoom Video Communications Inc. posted another quarter of record sales and again lifted its outlook as remote working and distance schooling drags on during the pandemic, but the growth has come with higher costs that disappointed investors.

Zoom on Monday reported sales of $777.2 million in the latest quarter, up from $166.6 million a year earlier, as it posted a profit of $198.4 million. Analysts surveyed by FactSet had expected sales of $694 million and net income of $149 million for the three months ended October 31.

"We remain focused on the communication needs of our customers and communities as they navigate the current environment and adapt to a new world of work from anywhere using Zoom," Chief Executive Eric Yuan said. "We expect to strengthen our market position as we finish the fiscal year," he added.

The videoconferencing company, which went public last year, raised its full-year outlook for a third time during the pandemic, cementing its position as one of the biggest corporate winners from the shift to working from home and remote schooling.

Zoom said it now expects sales in the current financial year ending in January to reach around $2.58 billion, up from the previous quarter's guidance of sales reaching as much as $2.39 billion.

Its shares have surged amid the Covid-19 outbreak and are up about sevenfold this year. But shares were down around 4% in after-hours trading.

Zoom's global boost in popularity has put it at the center of a rivalry among tech companies pushing their services for managing daily life during the pandemic, pitting it against far larger rivals such as Microsoft Corp. and Facebook Inc.

The rise of Zoom, founded nine years ago, hasn't been without setbacks. The Federal Trade Commission this month said it had settled a case with the company over how the videoconferencing platform handles user privacy. Zoom also reacted to pressure to more actively police content on its platform.

Another challenge for Zoom has been that many of its users rely on a free service, which has weighed on profitability as the company expands to handle the larger customer numbers.

Zoom said it plans to capitalize more broadly on its massive surge in popularity but is still assessing how best to target smaller consumers, Chief Operating Officer Aparna Bawa said at last month's WSJ Tech Live conference.

The company said it expects sales in the current quarter of $806 million to $811 million and adjusted per-share earnings of 77 cents to 79 cents. Wall Street is forecasting adjusted earnings per share of 62 cents for the quarter on sales of $728 million.

Write to Aaron Tilley at aaron.tilley@wsj.com

(END) Dow Jones Newswires

November 30, 2020 17:03 ET (22:03 GMT)

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