SAN JOSE, California: As it struggles to adjust after the end of the COVID-19 pandemic, shares in Zoom Video Communications were down some 90 percent from their pandemic peak in October 2020.
This week, the company's stock was down nearly 10 percent after it cut its annual sales forecast and posted its slowest quarterly growth.
After becoming a household name during COVID-19 lockdowns, due to the popularity of its video-conferencing app, the company has aimed to reinvent itself with products such as cloud-calling service Zoom Phone and conference-hosting offering Zoom Rooms.
However, it faces intense competition from Microsoft Corp's Teams and Cisco's Webex and Salesforce's Slack.
"Zoom has a fundamental flaw..it has needed to spend heavily to keep hold of market share," said Hargreaves Lansdown equity analyst Sophie Lund-Yates, as quoted by Reuters.
"Spending to cling onto, rather than grow, market share, is never a good place to be and was a sign of trouble ahead," she added.
In the third quarter of 2022, the company's operating expenses surged 56 percent, mainly due to spending on product development and marketing, while its adjusted operating margin dropped to 34.6 percent from 39.1 percent from one year earlier.
"The game is not over for them, but without acquisitions this is a multi-year path to returning to higher growth," said Needham & Co analyst Ryan Koontz, as reported by Reuters.