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Zoom Video Communications (ZM - Free Report) is slated to release third-quarter fiscal 2023 results on Nov 21.

Zoom expects third-quarter fiscal 2023 revenues in the range of $1.095 billion to $1.10 billion. The Zacks Consensus Estimate for the top line is currently pegged at $1.10 billion, indicating growth of 4.44% from the year-ago quarter.

Non-GAAP earnings per share are expected in the range of 82 cents to 83 cents. The consensus mark for earnings has decreased 24.32% to 84 cents per share over the past 30 days.

Zoom Video Communications, Inc. Price and Consensus

Zoom Video Communications, Inc. price-consensus-chart | Zoom Video Communications, Inc. Quote

Factors to Note

Zoom’s third-quarter performance is likely to have gained from strong demand for varied products like Zoom Video Webinars, Zoom Rooms, and Zoom Phones. An expanding portfolio of solutions is expected to have aided customer growth in the fiscal third quarter.

The launch of Zoom Node, a central hub for hosting a variety of Zoom workloads or modules, designed to address certain customer deployment requirements like loss of Internet connectivity, in-country compliance, or bandwidth optimization, is expected to have been a key growth driver.

The launch of Zoom One, a new offering that brings together persistent chat, phone, meetings, whiteboard, and more into secure and scalable packages is expected to have attracted users in the to-be-reported quarter. Additionally, Zoom also launched an all-new translated and multi-language captions feature.

The company’s freemium business model helps it win customers rapidly, whom it can later convert into paying customers. Zoom customers, contributing more than $100,000 in revenues in the trailing 12 months, grew 37% to 3,116 in the fiscal second quarter. These customers accounted for 26% of revenues, up from 20% in the year-ago quarter. The momentum is expected to have continued in the to-be-reported quarter.

However, the company has been facing significant competition from the likes of Cisco, Microsoft and Google Meet. This might have led to a loss in small and medium-sized business customers, which is likely to have hurt top-line growth.

What Our Model Unveils

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Zoom has an Earnings ESP of +0.27% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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