Zoom stock: Why did it fell after its Q2 earnings report?

Why did Zoom stock fell after its Q2 earnings report?

Zoom Video Communications Inc. (ZM) recently announced strong financial results for its fiscal second quarter ended July 31. However, its profit outlook for the third quarter fell short of estimates.

The disappointing guidance sent Zoom stock down more than 16 percent on August 31. Zoom shares are currently trading at their lowest price in nearly four months. The 52-week range of the stock is $273.20-$588.84, while the company’s market value has dropped to $88.63 billion.

Financial Highlights: Q2 2021

Zoom reported earnings of $1.04 per share for the quarter, well above 63 cents per share in the same period, a year earlier. Excluding certain items, the company reported adjusted earnings of $1.36 per share, easily surpassing the consensus forecast of $1.16 per share.

Total revenue for the quarter climbed 54 percent on a year-over-year basis to $1.02 billion, beating analysts’ average estimate of $991 million. It was the first time ever Zoom surpassed $1 billion in quarterly revenue.

Outlook

Zoom issued its financial outlook for both the third quarter and full year. The company expects adjusted earnings in the range of $1.07 per share to $1.08 per share for the third quarter, just below the consensus forecast of $1.09 per share. Revenue for Q3 is expected to come between $1.015 billion and $1.020 billion, in line with analysts’ average estimate of $1.01 billion.

For the full year, the company expects adjusted earnings in the range of $4.75 per share to $4.79 per share and revenue between $4.005 billion and $4.015 billion. Analysts, on average, expect Zoom to report adjusted earnings of $4.67 per share on revenue of $4.01 billion.