Zoom Posted $1 Billion in Revenue. Why the Stock Is Falling.

Zoom Video reported fiscal second-quarter nett income of $316.9 million, which amounts to $1.04 a share, compared with $185.6 million, oregon 63 cents a share, successful the year-ago period. Adjusted for banal compensation, among different things, net were $1.36 a share. Revenue roseate 54% to $1.02 billion.

Analysts had expected adjusted net of $1.16 connected gross of $991.2 million.

In a league call, main fiscal serviceman Kelly Steckelberg said the results marked Zoom’s archetypal billion-dollar quarter, but that the company’s maturation would statesman to normalize, “especially erstwhile compared to the unprecedented year-over-year comps.”

Steckelberg said the institution finished the 4th with astir fractional a cardinal customers with much than 10 employees, which accounted for 64% of revenue.

Zoom said that it expects third-quarter adjusted net of $1.07 to $1.08 a share, and gross of astir $1.02 billion; analysts expected non-GAAP net of $1.10 a stock connected gross of $1.02 billion.

For the afloat year, Zoom forecast net of 4.75 and $4.79 a stock connected gross of $4.01 cardinal to $4.02 billion. Analysts had modeled adjusted net of $4.68 a stock and gross of $4.01 billion. For the afloat year, analysts expect gross maturation to dilatory to 51% from 326% successful the year-ago period.

Steckelberg said the company’s forecast assumes online income volition beryllium a headwind successful the coming quarters, arsenic “smaller customers adjusted to the evolving environment” caused by the pandemic. A important information of the company’s concern is billed monthly and purchased online.

As a pandemic winner, Zoom finds itself successful an absorbing spot. Some stay-at-home stocks person deed connected hard times due to the fact that what they offered isn’t request successful a satellite that’s unfastened again. Campbell Soup (CPB) has dropped beneath its pandemic debased due to the fact that no 1 is hoarding food anymore and costs are rising, portion Peloton (PTON) dropped Friday, successful part, because gyms present connection a viable alternative. But beingness hasn’t wholly returned to normal, and galore radical are inactive moving from home, which means Zoom has much clip to marque them imperishable customers.

That’s 1 happening investors volition beryllium watching, writes RBC expert Rishi Jaluria—the magnitude of “churn” successful Zoom’s accounts. “Management has consistently communicated expectations for higher than humanities churn among customers added successful the pandemic,” she explained. “So far, churn has been beneath expectations.” Zoom is Jaluria’s apical pick, with a $450 terms target, up 31% from its caller trading price.

Zoom closed regular trading Monday with a 2% summation to $347.50. The banal has precocious 3% this year; the S&P 500 index is up 20%.

Write to Ben Levisohn astatine ben.levisohn@barrons.com