By Zaheer Kachwala
(Reuters) -Zoom Video Communications raised its forecast for fiscal 2025 revenue and adjusted profit on Monday, anticipating robust demand for its online video conferencing software as it expands its product portfolio, and clients embrace hybrid working models.
Zoom (NASDAQ:ZM) also said it would expand its share repurchase plan by $1.2 billion.
Shares of the company were down around 3% in extended trading after closing up over 3.5%. Michael Ashley Schulman, chief investment officer at Running Point Capital, attributes the stock reaction to a rally in the shares leading up to the earnings report.
"Traders are probably taking profits going into this shortened and light Thanksgiving holiday week," he said.
The company expects revenue in the range of $4.65 billion to $4.66 billion, from its earlier forecast of between $4.63 billion and $4.64 billion.
Zoom's online meeting services continue to see strong spending from its large enterprise client base as hybrid working models become the norm in many firms and its push to integrate artificial intelligence makes it a staple for many companies' operations.
It raised its forecast for full-year adjusted earnings per share to a range of $5.41 and $5.43 per share, compared with the $5.29 to $5.32 previous range.
However, the company faces stiff competition from rival video conferencing services such as Microsoft (NASDAQ:MSFT)'s Teams and Cisco (NASDAQ:CSCO)'s Webex as they battle for client dollars in a crowded market.
Enterprise revenue for the third quarter grew 6% and now makes up 59% of the company's total revenue, reflecting Zoom's shift to an enterprise-centric customer base, newly appointed Chief Financial Officer Michelle Chang said on a post-earnings call.
The company reported revenue of $1.18 billion for the third quarter, beating estimates of $1.16 billion, as per data compiled by LSEG.
It reported adjusted earnings per share of $1.38 in the quarter ended Oct. 31, compared with estimates of $1.31.