Zoom forecasts Q1 profit below estimates as competition heats up

Zoom Video Communications, Inc. forecasts first-quarter adjusted profit per share below Wall Street estimates, signaling increased competition and cautious spending.

The company’s shares fell nearly 3% in extended trading.

Zoom is increasingly squeezed by rivals such as Microsoft Teams and Google Meet, bundled with broader workplace suites attracting enterprise customers.

Zoom faces slowing growth as pandemic-era work-from-home declines, with its online segment revenue at US$489.7 million in Q4 and churn rising slightly.

Despite launching AI features, the company’s investments could pressure operating margins.

For the first quarter, Zoom expects revenue between US$1.2 billion and US$1.2 billion, broadly in line with analysts’ average estimate of US$1.2 billion, but forecasts adjusted profit per share of US$1.40 to US$1.42, below estimates of US$1.45.

In Q4, Zoom reported revenue of US$1.2 billion, beating estimates of US$1.2 billion, while adjusted profit per share was US$1.44, below estimates of US$1.49.

🔗 Source: Reuters

🧠 Food for thought

Implications, context, and why it matters.

Zoom’s future reaches beyond video calls

Zoom’s enterprise segment drove more of the momentum, rising 7.1% year over year to $757.3 million, while the online segment grew 2.6% 1.
New products support that climb as Zoom stretches beyond meetings into a broader communications platform, with tougher pressure from Microsoft Teams and Google Meet.
In Q4, Zoom reported strong growth in Zoom Customer Experience (CX), with paid AI included in each of its top 10 CX deals 1.
A sticking point remains as the trailing 12-month net dollar expansion rate for enterprise customers came in at 98%, meaning existing enterprise clients spent slightly less on average than a year ago 1.

More revenue per customer shapes the next SaaS phase

For maturing software-as-a-service (SaaS) companies, rapid single-product user growth has cooled.
Focus shifts to winning more “wallet share” through add-ons such as Zoom Phone sold to the current customer base.
Many firms now lean on the “land and expand” model in crowded markets, yet Zoom’s 98% trailing 12-month net dollar expansion rate for enterprise customers underscores the execution challenge even with a large base 1.
Investors punished a small profit guidance miss, reinforcing demand for profitable growth across multiple products rather than pandemic-era growth-at-all-costs.