Zoom is popping 16% on the first-quarter earnings, beating the strong guidance

May 26, 2022: -Zoom shares increased 16% in extended trading after the provider of video chat software reported over first-quarter earnings and issued an upbeat forecast for the upcoming period.

Investors are looking for tech companies to produce earnings as they move into stocks that can better withstand increasing inflation and interest rates. Zoom sailed past analysts’ earnings estimates for the quarter and gave profitability guidance for the current quarter and full-year well beyond expectations. That shows that the company can reduce costs as growth decelerates.

Heading into the report, Zoom is a struggle for shareholders. After five straight quarters of triple-digit revenue growth during the pandemic, Zoom is considering dramatically more lagging expansion and a market discipline that hammers stay-at-home stocks the most.

As of Monday’s close, zoom shares were 85% from their peak in October 2020, including a drop of better than 50% this year.

Revenue growth finished April 30 and peaked at 12%, down from close to 200% in the same quarter a year.

The company expects earnings of $1.115 billion to $1.12 billion for the second quarter, representing at least 9.2% growth. Analysts look for growth of 8.7% to $1.1 billion, according to Refinitiv. The company anticipates earnings each share of 90 cents to 92 cents, taller than the 87 cents analysts were estimating.

Zoom expects revenue of $4.53 billion and $4.55 billion for the full fiscal year versus the $4.55 billion analysts anticipated. It is expecting earnings between $3.70 and $3.77 for each share, versus the $3.53 analysts were expecting, according to Refinitiv.