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Don’t believe the hype: we’re all still Zooming



Zoom is set to buy Five9

Zoom has reported a significant revenue beat in its second-quarter earnings, exceeding expectations and raising its revenue outlook for the current fiscal year.

The company unveiled these impressive results during its latest earnings report, released after the closing bell on Monday.

Zoom’s Q2 revenue reached $1.14 billion, slightly surpassing analysts’ estimates of $1.11 billion. Additionally, the company adjusted its revenue guidance for the fiscal year 2024, which is the current fiscal year, projecting it to be in the range of $4.49 billion to $4.5 billion. This updated forecast represents an increase from the previous range of $4.47 billion to $4.49 billion and exceeded analyst estimates of $4.48 billion.

Robust performance

The market responded positively to Zoom’s robust performance, with the company’s stock surging over 5% in after-hours trading. Prior to this earnings announcement, Zoom’s shares had experienced relatively flat year-to-date performance.

Zoom entered this earnings cycle with a strategic focus on leveraging artificial intelligence (AI) trends. The company aimed to harness AI-driven advantages after the initial surge in demand during the pandemic subsided.

Q2 results

Here’s a summary of Zoom’s Q2 results in comparison to estimates:

– **Revenue**: Actual – $1.14 billion vs. Estimated – $1.11 billion
– **Adjusted EPS**: Actual – $1.34 vs. Estimated – $1.05
– **Free Cash Flow**: Actual – $289.4 million vs. Estimated – $258.6 million
– **Number of Enterprise Customers**: Actual – 218,000 vs. Estimated – 219,350
– **Q3 Revenue Forecast**: Actual – $1.12 billion vs. Estimated – $1.12 billion

Zoom had high expectations for AI to bolster its performance this year, especially in terms of profit margins. CEO Eric Yuan expressed this sentiment in his prepared remarks, stating, “For the full year, we expect non-GAAP gross margin to be approximately 79.7%, as we make additional investments in new AI technologies.”

To enhance its AI capabilities, the company welcomed XD Huang as its new Chief Technology Officer, who brought valuable AI experience from his previous role at Microsoft as the head of Azure AI.

Yuan emphasized the importance of trust in technology development, particularly regarding AI, by assuring customers that Zoom does not use their content for training its AI models or third-party AI models.


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Moody’s downgrades China credit outlook, cites growth concerns



Moody’s Investors Service has downgraded China’s credit outlook, expressing concerns about the country’s economic growth prospects and the ongoing property market crisis.

The credit rating agency revised its outlook from stable to negative, citing a combination of factors that are putting pressure on China’s economy.

China’s economic growth has been slowing down in recent years, and Moody’s warns that this trend is expected to continue. The country faces challenges such as high debt levels, a rapidly aging population, and a declining labor force. These factors could hamper its ability to sustain robust economic growth in the future.

Additionally, the ongoing property market crisis in China is a major concern for Moody’s. The real estate sector has been a significant driver of the country’s economic growth, but it is currently experiencing a severe downturn with falling property prices and a growing number of unsold homes. This crisis has the potential to further weigh on China’s economic performance.

Moody’s decision to downgrade China’s credit outlook raises questions about the country’s ability to manage its economic challenges effectively. It also underscores the importance of addressing issues in the property market to prevent a broader economic crisis.

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Australia Post to shift to alternate-day mail delivery



In a move aimed at modernising its operations and accommodating the growing e-commerce industry, Australia Post has announced plans to reduce letter deliveries to every second day.

This significant shift is part of a broader strategy to expand its parcel business and adapt to changing consumer preferences.

Australia Post has recognized the declining demand for traditional letter services in an increasingly digital age. With more people communicating electronically and relying on email and messaging apps, the postal service has faced challenges in sustaining daily mail deliveries. By transitioning to alternate-day letter delivery, Australia Post aims to optimize its resources and focus on meeting the surging demand for parcel deliveries, driven by the booming online shopping market.

This strategic shift comes as a response to the changing landscape of postal services worldwide. Many postal agencies are diversifying their services to remain relevant and profitable. Australia Post’s move is expected to not only streamline its operations but also reduce costs associated with daily letter deliveries, ultimately benefiting both the organization and its customers.

While the change may be welcomed by those who prefer faster parcel deliveries, it raises questions about the impact on individuals and businesses reliant on daily mail services. Australia Post will need to address concerns regarding the potential delay of important correspondence and provide solutions to ensure minimal disruption for customers during this transition period.

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RBA maintains 4.35% rates as mortgage applications surge



The Reserve Bank of Australia (RBA) has decided to keep its official cash rate at 4.35%, citing concerns over the rapidly increasing number of mortgage applications.

This decision comes after several consecutive meetings where the RBA has refrained from adjusting interest rates.

The central bank’s decision to hold rates steady reflects their cautious approach to managing the current housing market boom. Mortgage applications have seen a significant surge in recent months, driven by record-low interest rates and increased demand for housing. While this has been a boon for the real estate industry, it has raised concerns about the potential for a housing bubble and financial stability.

Experts are divided on whether the RBA’s decision is the right course of action.

Some argue that maintaining low-interest rates is necessary to support economic recovery, especially in the wake of the COVID-19 pandemic. Others worry that the continued surge in mortgage applications without rate adjustments could lead to unsustainable levels of household debt.

In light of this decision, homeowners, prospective buyers, and investors will be closely watching the housing market’s trajectory and wondering how long the RBA can maintain its current stance.

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