Investing.com – Stocks Zoom Video Communications (NASDAQ:) fell in U.S. pre-market trading on Tuesday after the video conferencing giant issued generally cautious guidance for the current quarter and fiscal year.
A pandemic-era darling that has become an essential tool for many remote workers, Zoom has faced increased competition post-COVID and lingering questions about how it plans to integrate artificial intelligence into its offerings.
However, the company reported better-than-expected results for its fiscal first quarter, beating analysts’ estimates on both earnings per share (EPS) and revenue.
Adjusted earnings per share of $1.35 for the three months ended April 30 topped analysts’ consensus estimate of $1.19, and revenue of $1.14 billion also beat expectations, thanks in large part to an increase in new customers. The enterprises’ quarterly revenue increased by 5.3% to $665.7 million.
Zoom’s adjusted operating margin was 40.0%.
CEO Eric S. Yuan said the company’s performance during the quarter was bolstered by the integration of artificial intelligence into its platform and strategic investments.
“These innovations, combined with our execution and focused investments, allowed us to exceed our forecasts,” Yuan commented in a statement.
Zoom said it now has $7.4 billion in cash and projected free cash flow of $1.47 billion in the current fiscal year, although Evercore ISI analysts noted the company has not yet provided “additional details on whether how these funds will be used,” except for $1.5 billion in share repurchases announced in the previous quarter.
“This likely remains a pain point for some,” they said.
Looking ahead, Zoom expects second-quarter adjusted earnings per share to be between $1.20 and $1.21, slightly below the Wall Street consensus of $1.23. Revenue is also expected to be between $1.145 billion and $1.15 billion, compared with analyst estimates of $1.15 billion.
For the full fiscal year 2025, Zoom forecast adjusted earnings per share of $4.99 to $5.02, above the consensus estimate of $4.91. Full-year revenue guidance now stands at $4.61 billion to $4.62 billion, down from a forecast of $4.61 billion.
Goldman Sachs analysts noted that Zoom’s forecast was little changed from its previous estimates, arguing that it “indicates a still fragile demand environment that could prolong the transition to slowing growth trends.”
Senad Karaakhmetovich contributed to this report.