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Wednesday, March 22, 2023

Stock market: Zoom pleases investors despite meager growth and red numbers

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Zoom emerged as the winner from the Corona crisis, but the numbers are no longer quite as rosy. Jobs are being cut and bonuses reduced. There’s still reason for celebration on Wall Street.

The growth of the video conferencing service Zoom continues to level off after the boom at the beginning of the pandemic. In the fourth quarter, revenue rose four percent year-on-year to $1.1 billion, the company announced on Monday after the US market closed.

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Bottom line, Zoom posted a quarterly loss of $104.1 million, down from a profit of $490.5 million a year ago. The annual report was nevertheless well received by investors. The stock initially reacted after the trading session with a jump in price of more than six percent. Zoom significantly beat market expectations with its earnings guidance for the current quarter.

After Zoom was one of the winners in the Corona crisis and benefited greatly from the home office trend, the signs have been pointing to a downturn for some time now. In February, the company announced major job cuts in light of the uncertain economic climate. About 15 percent of the workforce – around 1,300 employees – should therefore be terminated. During the pandemic, Zoom launched a hiring offensive that later turned out to be oversized.

In order to save money, top management’s salaries are cut and bonuses are cancelled. CEO Eric Yuan plans to cut his salary by 98 percent this fiscal year.

Source: Stern

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