The outlook remains moderate after the product line expansion! Zoom (ZM.US) Q2 performance exceeded expectations, but the Q3 guidance failed to boost investor confidence.

The video communication platform Zoom (ZM.US) announced better-than-expected results for the second quarter of the fiscal year 2027, but simultaneously issued a somewhat lackluster revenue outlook for the third quarter, which disappointed investors hoping for greater growth from the company's expanding product portfolio. As of the time of writing, Zoom's shares fell nearly 4% in after-hours trading on Tuesday. According to the earnings report, Zoom's second-quarter revenue increased by 4.9% year-over-year to $1.277 billion, slightly above analysts' average expectations of $1.27 billion. Of this, revenue from enterprise business grew by 7.8% year-over-year to $787.5 million, while revenue from online services increased by 0.6% year-over-year to $489.7 million. In terms of earnings, the adjusted net profit was $464 million, down 1.5% from $471 million in the same period last year; the adjusted earnings per share were $1.55, surpassing analysts' average expectation of $1.48. In the second quarter, the average monthly churn rate for individual users and small business clients was 2.9%, roughly unchanged from the previous quarter. Although this metric has remained stable over the past year, as the company shifts its focus to larger enterprise clients, these individual consumers represent an increasingly smaller share of Zoom's business. The company, which rose to prominence due to its popular video conferencing tool, has been working to offer more office collaboration products, such as enterprise phone systems and contact center software. Many of these tools have incorporated artificial intelligence features, which may be costly to provide as they rely on models from companies like Anthropic. Despite better-than-expected second-quarter results, the guidance for the third quarter has disappointed. Zoom expects third-quarter revenue to be between $1.275 billion and $1.280 billion, with a midpoint forecast of $1.2775 billion, falling short of analysts' average expectation of $1.28 billion; it anticipates adjusted earnings per share for the third quarter to be between $1.46 and $1.48, with a midpoint of $1.47, lower than analysts' average expectation of $1.50. Furthermore, Zoom expects its total revenue for the fiscal year 2027 to be between $5.085 billion and $5.095 billion, with a midpoint forecast of $5.09 billion, in line with analysts' average expectations; it anticipates adjusted earnings per share for the year to be between $6.08 and $6.12, with a midpoint of $6.10, exceeding analysts' average expectation of $6.05.