Zoom shares rose as much as 7% on Tuesday morning before sharply paring its gains, after the videoconferencing platform posted better-than-expected earnings on Monday and said it expected strong growth to continue this year.
Zoom was up 1.93% as of 10.27 a.m. ET, taking shares to $417.57. The stock had jumped 9.65% on Monday to close at $409.66 a share ahead of the earnings announcement.
Total revenue for the quarter to the end of January came in at $882.5 million, above analysts’ expectation for $811.8 million.
Revenue was up 369% year-on-year, the company said, reflecting the rapid rise of Zoom to prominence during the coronavirus pandemic, when people and businesses around the world turned to the service to keep in touch.
The big question for investors, however, is whether Zoom can keep up its rapid growth. The company’s founder and CEO, Eric Yuan, pleased the markets Monday by saying it could.
“As we enter FY2022, we believe we are well positioned for strong growth with our innovative video communications platform,” he said in a statement to accompany the earnings.
Zoom said it expected total revenue for the financial year ending in early 2022 to be $3.76 billion to $3.78 billion, above Wall Street estimates.
Despite the bullish forecasts and rising stock price, Zoom’s shares remain well below their October high of more than $560. That reflects investors’ expectations that the reopening of economies will pull people away from the technologies that have become central to their lives.
The company’s shares are up more than 20% in 2021, however, outperforming the Nasdaq’s 5% rise.