Tech

Zoom shares continue falling after signs of slowing growth

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Key Points
  • Zoom shares fell nearly 14% on Tuesday morning.
  • The company beat third-quarter earnings expectations on Monday but signaled its tremendous growth rate seems to be slowing.
Eric Yuan, CEO, Zoom Video Communications
Source: CNBC

Zoom shares fell nearly 14% on Tuesday, a day after the company beat third-quarter earnings expectations but signaled its tremendous growth rate may slow.

The videoconferencing software company reported that its revenue grew 367% on an annualized basis during the third quarter. Revenue increased 355% in the second quarter.

But Zoom called for fiscal fourth-quarter adjusted earnings of 77 cents to 79 cents per share on $806 million to $811 million in revenue, implying 329% revenue growth at the middle of the range

Investors seem to be disappointed that Zoom may not gro as fast as it did earlier in the pandemic, as people were forced to work from home more and turned to Zoom for work and personal meetings.

Zoom's gross margin also declined to 66.7% from 67.3% in the second quarter, partially because it has a larger number of free users, including students and teachers who have started to use the service more now that school has resumed.

Shares of Zoom, one of the biggest winners from the pandemic, has soared over 500% this year.

CNBC's Jordan Novet contributed to this report.

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