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Zoom forecasts annual profit above estimates, shares up

Zoom announced a 15% reduction in its workforce earlier this month
Zoom announced a 15% reduction in its workforce earlier this month

Zoom Video Communications said it will integrate more artificial intelligence into its products and forecast annual profit above Wall Street estimates, sending the company's shares up 8% in extended trading.

Analysts predict the AI tech will be a major driver for future growth for the tech industry, which has been grappling with slowing demand amid recessionary fears.

The AI race picked up pace after Microsoft-backed OpenAI's ChatGPT last year prompted heavyweights from Alphabet to China's Baidu to announce their own offerings.

San Jose, California-based Zoom forecast fiscal 2024 profit between $4.11 and $4.18 per share, compared with analysts' average estimate of $3.66 per share, according to Refinitiv data.

"The age of AI and large language models has arrived," said chief executive Eric Yuan during a call with analysts, adding that AI can "truly help" the company.

Zoom is also benefiting from steady demand for its video-conferencing service from the ongoing shift to hybrid work models and cost cuts. Earlier this month, it announced an about 15% reduction in its workforce.

On an adjusted basis, Zoom earned $1.22 per share for the fourth quarter ended January 31, compared with estimates of 81 cents per share.

Revenue grew 4% to $1.12 billion, above analysts' average expectation of $1.10 billion.

Finance chief Kelly Steckelberg said the growth was primarily driven by strength in Zoom's enterprise business.

The company, however, expects 2024 revenue between $4.44 billion and $4.46 billion, below average Street estimate of $4.60 billion.

"The revenue outlook is softer than initially expected, partly due to macro pressures and especially given declining online business," analysts said.