Shares of video communications company Zoom fell 16% on Tuesday after the company missed revenue estimates for the second quarter.
Zoom reported $1.10 billion in revenue for the three months ending June, falling short of analyst expectations of $1.12 billion. Net income was $45.7 million or 15 cents a share. After adjusting for stock compensation and other factors, the company’s earnings stood at $1.05 a share, down from $1.36 a share last year.
CFO Kelly Steckelberg said in a statement that the strong U.S. dollar and performance in the online business of the company had negatively impacted revenue. “We have implemented initiatives focused on driving new online subscriptions, which have shown early promise but were not enough to overcome the macro dynamics in the quarter,” Steckelberg said on a call with analysts.
Zoom also lowered projections for the full year, blaming economic conditions. Analysts at both Citi and BTIG downgraded the stock, stating concern the outlook was worse than expected.
“While Q2 surfaced many of our concerns that drove our recent downgrade, including SMB/Online pressure+margin risk, we underestimated the severity,” Citi analysts wrote in a Tuesday note to investors. They added the company outlook is “much worse than we feared.”
There was some good news for Zoom in its quarterly report. Its enterprise business, which sells subscriptions to large organizations, jumped 27% to $599 million, and the number of enterprise customers grew 18% to 204,100.
Zoom’s video conferencing tools were deployed widely during the lockdowns associated with the COVID-19 pandemic, and schools and businesses relied on them heavily. But since lockdowns were lifted across the world, the company’s growth has slowed considerably. Zoom shares are down 54% so far this year.