Zoom beats Q2 estimates, but Q3 profit outlook disappoints

Market Commentary

South African Market Summary

South African equities edged higher yesterday, with the JSE All Share gaining 0.1% to 116,828.14 and the Top 40 rising 0.13% to 109,534.57. Domestic economic signals were softer, however, as the SARB’s composite leading business cycle indicator declined 1.4% month on month in June, pointing to weaker forward momentum. MTN Group is exploring banking licences in selected markets as it seeks to expand lending from its own balance sheet and deepen its fintech offering beyond traditional telecommunications. Infrastructure investment also remained in focus after President Cyril Ramaphosa said more than R264 billion in projects are expected to enter procurement over the next 12–18 months. The government’s Strategic Integrated Projects portfolio has expanded to R1.67 trillion from about R340 billion in 2020, spanning transport, energy, water and municipal infrastructure.

European Market Summary

European equities advanced on Tuesday as investors welcomed a softer-than-feared US sanctions package on Iran and lower oil prices. The STOXX 600 gained 0.35% to 656.48, leaving the index 0.6% below its record high, with industrial and healthcare shares supporting the move. German economic data also improved sentiment, as second-quarter GDP exceeded expectations and the Ifo business climate index rose to 88.8 in August from a revised 86.7 in July, its strongest level in a year. UK equities also closed higher, helped by housing stocks after the government announced plans to spend £10 billion on lower-cost housing. However, UK inflation expectations increased, with one-year expectations rising to 3.9% from 3.4% and longer-term expectations reaching 4.1%, keeping monetary-policy risks in focus.

US Market Summary

Wall Street ended higher on Tuesday as technology shares rebounded ahead of Nvidia’s results, while lower oil prices and easing bond yields provided additional support. Longer-dated Treasury yields declined as crude prices fell to a one-week low and investors assessed the impact of Treasury Secretary Scott Bessent’s expanded buyback programme. Nvidia’s earnings on Wednesday represent a key test for the AI-led equity rally, with any evidence of slowing growth potentially renewing concerns over elevated valuations. Investors are also awaiting July PCE inflation data for further clarity on US price pressures and the Federal Reserve’s policy outlook. US consumer confidence meanwhile fell to a seven-month low in August, while markets continue to price one 25-basis-point rate increase by year-end ahead of Fed Chair Kevin Warsh’s Jackson Hole speech.

Asian Market Summary

Asian equities struggled for direction on Wednesday as falling oil prices pulled bond yields lower, while investors awaited Nvidia’s earnings for further signals on the AI-driven market outlook. In Japan, services producer prices rose 3.6% year on year in July, accelerating from a revised 3.4% in June and reinforcing expectations that persistent cost pressures could keep the Bank of Japan on a tightening path. A Reuters poll indicated that most economists now expect another BoJ rate increase in September, amid sticky inflation and continued yen weakness. Australian inflation also surprised to the upside, with consumer prices rising more than expected in July as fuel and travel costs increased. Stronger core inflation added to expectations that the Reserve Bank of Australia may need to raise interest rates again.

Currency Market Summary

The South African rand strengthened on Tuesday alongside broader emerging-market currencies, despite domestic central bank data indicating that business conditions deteriorated for a third consecutive month. Sterling remained close to a six-month high against the dollar, supported by expectations that the Bank of England could raise interest rates this year as persistent inflation and elevated government debt remain in focus. The US dollar traded within a narrow range during early Asian trade on Wednesday as investors awaited inflation releases from major economies and the Jackson Hole symposium later in the week. Attention is centred on July US PCE inflation data due Wednesday, which could influence expectations for monetary policy. The dollar index ended a three-day winning streak on Tuesday and was little changed at 98.918 in early Asian trading.

Commodity Market Summary

Gold held near a more than three-month high on Wednesday as investors awaited July US PCE inflation data for further guidance on the Federal Reserve’s interest-rate outlook. Oil prices fell about 2%, extending the previous session’s decline after Iran resumed talks with Oman over management of the Strait of Hormuz, including discussions around a temporary navigational corridor and mine-clearing efforts. The development raised hopes that the waterway, which handled around one-fifth of global oil and LNG shipments before the war, could reopen more fully. Signs of reduced near-term escalation risk were reinforced by plans for some US diplomatic personnel to return to the Middle East. Oil also faced pressure after API data showed US crude inventories rose by 4.2 million barrels, well above expectations.

Domestic Company News 

Gold Fields Limited (GFI) +1.01%
Gold Fields reported an 81% increase in profit attributable to owners of the parent to US$1.85 billion, or US$2.07 per share, for the six months ended 30 June 2026. Attributable gold-equivalent production rose to 1.267Moz from 1.136Moz, while revenue increased to US$4,681/oz from US$3,089/oz. AISC increased to US$1,893/oz from US$1,682/oz. Adjusted free cash flow more than doubled to US$2.23 billion, supporting an interim dividend of 1,625 cents per share, up from 700 cents. Net debt declined to US$437 million from US$1.49 billion, while the net debt-to-adjusted EBITDA ratio improved to 0.06 from 0.37. Gold Fields also completed US$300 million in share repurchases and allocated a further US$500 million to shareholder returns, lifting its additional returns programme to US$1.25 billion through special dividends and targeted buybacks.

Afrimat Limited (AFT) -2.36%
Afrimat expects HY1 2027 results to be pressured by weaker Rand-denominated iron ore export revenue, lower international prices, higher shipping costs linked to the Iran conflict, volatile fuel costs, adverse weather and an overtraded cement market. Domestic iron ore demand improved in Q2, while anthracite sales are recovering as ferrochrome smelters reopen. Construction Materials is expected to be the largest contributor to first-half revenue and profitability, supported by aggregates and fly ash operations following the Lafarge acquisition. Afrimat secured a 240,000tpa manganese export allocation for seven years and additional iron ore export capacity, while acquiring the lower-cost Doornfontein deposit to replace Demaneng. Management expects a stronger second half, with cash generation, debt reduction and balance-sheet preservation remaining key priorities amid continuing external pressures.

Grindrod Limited (GND) -0.96%
Grindrod delivered a resilient first-half performance, with revenue rising 19% to R2.84 billion and EBITDA increasing 52% to R884 million. Port volumes grew 29% to 8.4 million tonnes, supported by record throughput at Maputo, while drybulk terminal volumes increased 2% to 8.1 million tonnes. Headline earnings were broadly unchanged at R592.6 million, with HEPS at 88.8 cents, while basic earnings declined 59% to R598.3 million due to prior-period once-off gains. Cash generated from operations rose 28% to R561 million, supporting a 6% increase in the interim dividend to 24.3 cents per share. Logistics delivered mixed results, although locomotive redeployment and the rail access agreement are expected to support second-half momentum and a stronger contribution once Open Access begins in early 2027.

Master Drilling Group Limited (MDI) +3.82%
Master Drilling reported a 17.0% increase in US dollar revenue to US$155.8 million for the six months ended 30 June 2026. Headline earnings per share rose 16.7% to US11.2 cents, while ZAR-denominated HEPS increased 4.1% to 183.9 cents. Profit after tax declined 3.9% to US$17.4 million, with basic earnings per share falling 4.3% to US11.2 cents and 14.6% in rand terms to 183.9 cents. Net asset value per share increased 11.5% to US165 cents. The Group reported a revenue pipeline of US$1.06 billion and a committed order book of US$400.9 million, providing visibility over future activity. No interim dividend was declared, in line with past practice, although a special FY2025 dividend of 40.0 cents per share was paid during August 2026.

Global Company News

Zoom Communications Inc. (ZM) -3.73%
Zoom Communications delivered second-quarter results ahead of expectations, but its third-quarter profit outlook disappointed as competitive pressure remains elevated. Revenue reached US$1.28 billion, above the US$1.27 billion consensus, while adjusted earnings of US$1.55 per share exceeded the US$1.48 forecast. For the third quarter, Zoom expects revenue of US$1.275–US$1.280 billion, broadly in line with the US$1.28 billion analyst estimate, but adjusted earnings guidance of US$1.46–US$1.48 per share fell below the US$1.50 consensus. The company continues expanding its AI offering through AI Companion, meeting receptionist tools and enterprise-focused Zoom AI Services. However, competition from Microsoft Teams and Google Meet remains intense, increasing pressure on growth and profitability as Zoom seeks to strengthen customer adoption and differentiate its platform through artificial-intelligence capabilities.

Intuit Inc. (INTU) -3.37%
Intuit forecast fiscal 2027 revenue of US$23.28–US$23.51 billion, representing growth of 9%–10% but falling below the US$23.72 billion analyst consensus and slowing from 14% growth in 2026. Management expects near-term sales pressure as it prioritises customer acquisition and market-share gains, while Mailchimp weakness, declining desktop-product revenue and lower TurboTax revenue per customer weigh on growth. TurboTax revenue is expected to increase only 2%–3% in 2027, versus 7% in 2026, while Mailchimp revenue is forecast to be flat to down 1%. Fourth-quarter revenue nevertheless rose 13.6% to US$4.35 billion, beating expectations. Adjusted FY2027 EPS guidance of US$22.88–US$23.12 also trails the US$27.32 consensus, while first-quarter revenue guidance came in below forecasts.

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