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Zoom lifts forecasts

by LLB Reporter
23rd May 23 9:58 am

While Zoom’s glory days during the pandemic may be behind it, the picture of a sustainable business at least flickered into life in its latest earnings update as it beat expectations and forecasts were lifted.

However, early gains for the stock were pared back on hints its enterprise business – which serves big companies – is likely to experience slowing growth.

AJ Bell’s Russ Mould said: “The group’s overall revenue growth hit the slowest quarterly pace on record. During Covid growth really lived up to the company’s name but since then it has been more snail-paced.

“The company faces a significant competitive threat from larger, more well-resourced plays like Microsoft and the video conferencing market has the feel of a winner-takes-all environment.

“Being the market leader would create a virtuous circle. If a platform has the most users, then it will be the one most businesses use to connect with each other. This reinforces its position as a must-have product for firms and provides it with significant pricing power when it comes to securing subscriptions.

“Microsoft’s decision to introduce AI to its Teams platforms arguably gives the company another dimension relative to Zoom.”

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