Video communications platform Zoom (ZM.US) delivered better-than-expected fiscal second-quarter results, but its tepid third-quarter revenue outlook disappointed investors who had hoped the company's expanding product portfolio would drive stronger growth. The stock slipped nearly 4% in after-hours trading on Tuesday.

According to the earnings report, Zoom's second-quarter revenue rose 4.9% year-over-year to $1.277 billion, slightly surpassing the analyst consensus of $1.27 billion. Enterprise revenue grew 7.8% to $787.5 million, while online revenue edged up 0.6% to $489.7 million. On the profitability front, adjusted net income came in at $464 million, down 1.5% from $471 million in the same period last year. Adjusted earnings per share reached $1.55, beating the average analyst estimate of $1.48.

During the quarter, the average monthly churn rate for individual users and small business customers stood at 2.9%, roughly flat with the prior quarter. While this metric has remained stable over the past year, these consumers account for a shrinking share of Zoom's business as the company shifts its focus toward larger enterprise clients.

The company, which rose to prominence on the back of its popular video conferencing tool, has been working to broaden its office collaboration offerings, including enterprise phone systems and contact center software. Many of these tools now incorporate artificial intelligence features, which can be costly to provide as they rely on models from companies like Anthropic.

Despite the better-than-expected second-quarter performance, the third-quarter guidance fell short of expectations. Zoom projects third-quarter revenue of $1.275 billion to $1.280 billion, with the midpoint of $1.2775 billion coming in below the analyst consensus of $1.28 billion. The company also forecasts adjusted EPS of $1.46 to $1.48 for the quarter, with a midpoint of $1.47, trailing the average analyst estimate of $1.50.

Looking ahead, Zoom anticipates full-year fiscal 2027 revenue of $5.085 billion to $5.095 billion, with the midpoint of $5.090 billion aligning with analyst expectations. The company projects full-year adjusted EPS of $6.08 to $6.12, with a midpoint of $6.10, exceeding the average analyst forecast of $6.05.