If in doubt, don't Zoom outZoom reports better than expected Q1 earnings – but will investors be unmuting their mics to show support?
- ZM spiked 20% in extended trading after the video chat company reported earnings that beat Wall St. expectations. Zoom beat on the bottom line, with an EPS of $1.03 on revenues that matched top-line expectations of $1.07bn. Share prices eventually simmered down to finish after hours 5.5% up.
- Is Zoom able to see the forest for the trees? Apparently so. For Q2, it reckons revenue will increase up to $1.12bn. For the fiscal year, it also expects EPS of $3.77 against $3.53 estimates.
- Did someone say monkeypox? While we’re sure nobody wants to see the spread of a deadly virus, Zoom did rocket to its all-time high of $588 per share under covid lockdown restrictions. Since then, it’s cratered 85%, leaving investors wondering whether this stock can thrive only in times of disease-themed emergencies.
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Zoom leaves the meetingZoom investors’ eyes glaze over as the once-booming platform presents a disappointing future.
- Zoom shares slumped 13% in extended trading despite the communications platform topping on both ends with EPS of $1.29 on revenues of $1.07bn – but, while revenue was up 21%, that’s a deceleration from growth of 35% in the quarter before.
- It’s losing customers as the pandemic frenzy further wanes. It had 509,800 customers with over 10 employees at the end of the quarter, which was down over 3k. But, its major enterprise customers grew 35% y-o-y, so there’s always that.
- Investors were largely reacting to weak revenue guidance. Zoom expects Q1 sales to grow 12% and hit around $1.07bn, with the full year is set to grow 10.7% – both of which are below estimates. At one point in the pandemic, Zoom posted three consecutive quarters of revenue growth north of 350%, so there’s been a real shift in mood.
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Lockdown looming?Pandemic winners were quick to uptick on Friday as the Omicron outbreak puts another potential lockdown back on the cards.
- The global recovery was stopped in its tracks by the new Omicron strain, sending stay-at-home stocks popping.
- Zoom and Peloton (PTON) ended the week up nearly 6%, Docusign (DOCU) was up 3%, Netflix (NFLX) nabbed 2%, and food delivery stocks got served a day in the green.
- But Zoom is still down over 35% this year as people have gone back to school and work.
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Nice from far but far from niceInvestors 'zoom' in on outwardly impressive Q3 earnings but don’t like what they see, sending prices down 7%.
- Q3 beat expectations on both ends with EPS of $1.11 on revenues of $1.05bn.
- Zoom is bulking up on big cheeses. Clients with revenue of over $100m are up 94% y-o-y. Tbh though, the good news stops there...
- Revenues grew their slowest since 2018 at 35%, down from 54% last quarter and over 300% in Q4 last year.
- Prices are still under pressure from its failed Five9 acquisition, but the CEO is apparently on the hunt for “cool companies” to beef up its investments.
- FY guidance came in “better than feared” but not enough to (video) call home about: up from $4.01bn to $4.08bn.
- Increasingly stiff competition from the likes of Microsoft (MSFT) Teams and Cisco’s (CSCO) Webex has made it hard to win enterprise contracts, and a lack of long-term growth prospects has got investors looking for a better connection.
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Zoom finally gives up on Five9 acquisitionVideo conferencing company Zoom announced its acquisition of cloud-based customer-service software Five9 (FIVN) in July for $14.7 billion, but since then the potential deal has gotten backlash from a number of different sources, and the pair have now decided that the merger isn't a good idea.
Since the announcement, a consultancy warned Five9 (FIVN) investors against the deal, while U.S. regulators also worried that acquiring a foreign company “poses a risk to the national security or law enforcement interests of the US”, and The Federal Communications Commission (FCC) started an investigation into the deal. The acquisition was set to be the second-biggest tech deal of the year (at the time), and Zoom’s first billion dollar deal ever.
However, the acquisition plans have been scrapped after Five9 (FIVN) shareholders rejected the deal, which is a massive blow to Zoom and its plans to expand its offerings in the post-pandemic world. Eric Yuan, Zoom’s founder and CEO, put a brave face on it:
Buying Five9 presented an attractive means to bring to our customers an integrated contact center offering. That said, it was in no way foundational to the success of our platform, nor was it the only way for us to offer our customers a compelling contact center solution.
Zoom stock has lost over 25% since the deal was announced, but prices gained 1.59% on Thursday.
Five9 deal comes under fire... againAfter Five9 investors are warned against Zoom’s planned acquisition of the company, The US Department of Justice raises national security concerns over the deal.
Zoom’s acquisition of U.K. software company Five9 has come under fire yet again after a consultancy warned Five9 investors against the deal earlier this week. Now, the $14.7 billion deal has caused concerns among U.S. regulators, who worry that acquiring a foreign company “poses a risk to the national security or law enforcement interests of the US”. The Federal Communications Commission (FCC) is already examining the deal, so this will intensify regulatory scrutiny.
The stock has lost over 25% since the deal was announced.
Will Zoom get cut off?Five9 investors have been told by an influential advisory firm to reject Zoom’s acquisition offer.
Advisory firm Institutional Shareholder Services (ISS) has recommended that Five9 investors reject Zoom’s planned purchase of the company for $14.7 billion. Zoom stock has lost over 20% since the acquisition was announced on July 18, and ISS said the purchase would expose investors to:
A more volatile stock whose growth prospects have become less compelling as society inches towards a post-pandemic environment.
Prices ended Monday down 2.44%.
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Zoom fails to impress. Again.Zoom holds an investor day releasing a bunch of new features, but apparently they aren't enough to eclipse its disappointing earnings last week and the stock slips just under 4%.
Zoom is still nursing its wounds after its disappointing Q2 earnings release at the end of August took 17% off prices, and the stock is trading at its lowest price since May. Monday’s investors day released a host of new products that the communications company hoped would calm fears that growth is slowing in the post-pandemic world.
Alas, the new features failed to sweep investors off their feet and prices lost just under 4% to close at $290.24.
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Cathie Woods buys the dipZoom has sunk over 16% since its latest earnings release, but Ark’s Cathie Woods sees the silver lining and buys the dip.
Despite boasting its first billion dollar quarter, shares of video communication platform Zoom went spiralling down 17% on Tuesday following its Q2 earnings release, which fed fears that growth is slowing in the post-pandemic world. Not everyone was fazed by the results though, and star stock-picker Cathie Woods takes the opportunity to buy the dip and stock up on her reserves, seeing a promising future for the stock.
Zoom closed Wednesday at $290.86.
Is the Zoom boom finally coming to an end?Zoom leaves investors less than impressed with its second quarter earnings, with fears of slowing growth sending the stock down 12% in extended trading.
Shares of video communication platform Zoom went spiralling down 12% in after-hours trading on Monday following its Q2 earnings announcement, which fed fears that growth is slowing in the post-pandemic world. The company still beat on both the top and bottom lines, reporting earnings per share of $1.36 on revenue of $1.02 billion, compared to the $1.16 in earnings per share and $991 million in revenue that analysts were expecting.
Zoom actually saw its first billion dollar revenue quarter ever, up 54% from the same period the year before – which sounds impressive, but in the previous quarter revenue climbed a whopping 191% growth, so things still look to be slowing down after the pandemic-fuelled bull run of 2020. User growth boomed during the initial months of the Covid crisis, and the number of Zoom customers with more than 10 employees soared just under 460% in the second half of the year – taking the stock with it to a peak of $588.84 in October 2020.
For the latest full fiscal year, Zoom now expects revenue of up to $4.015 billion, compared to the $3.98 billion analysts were expecting. Zoom founder and CEO Eric Yuan said:
In Q2, we achieved our first billion dollar revenue quarter while delivering strong profitability and cash flow. Q2 also marked several milestones on our expansion beyond the UC platform. We launched Zoom Apps, bringing over 50 apps directly into the Zoom experience, and Zoom Events, an all-in-one digital events service. Today we are a global brand counting over half a million customers with more than 10 employees, which we believe positions us extremely well to support organizations and individuals as they look to reimagine work, communications, and collaboration.
Prices ended Monday at $347.50.
Analysts agree on Zoom strengthZoom Communications wins a new Buy rating on Sunday, along with a target up nearly 13% from its current share price.
Zoom Communications may have lost a lot of its pandemic-fuelled gains in recent months, but Mizuho Securities analyst Siti Panigrahi has just reiterated a buy rating on the stock nonetheless, setting a price target of $400 on the cloud-based software – up just under 13% from Friday’s closing price of $355.24. Mizuho is even lower than broad analyst consensus, which is around $421.75, but it points to bullish sentiment either way. The company has a current market cap of $102.99 billion, and its stock closed Tuesday down at $348.41, down 41% from its November 2020 peak of $588.84.
Zoom CMO Janine Pelosi doesn't seem quite as bullish on the stock, having just dumped 4,000 shares on Friday – her fourth time selling that amount in the last three months.
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Zooming into call centers with Five9Zoom closes the day in the green on Friday for the first time all week on the back of news that the video conferencing platform has acquired cloud call center company Five9 in a transaction worth almost $15 billion.
Shares of Zoom have seen a meteoric rise since COVID sent everyone to a digital office and made video meetings the new hot thing, and it’s taking advantage of the gains with its first major acquisition. The telecommunications software provider, which was valued at $9 billion at its IPO in 2019 and now has a market cap of over $106 billion, has agreed to buy cloud center service provider Five9 in an all-stock deal for around $14.7 billion. It’s the second-biggest U.S. tech deal of 2021, not far behind Microsoft's purchase of Nuance Communications for $16 billion.
Five9 has also seen some impressive growth since COVID hit, driving a surge in demand for its call center technology, which lets people do their jobs from home. The acquisition will help Zoom enter the $24 billion call center market, and is part of the company’s latest efforts to fend off the post-pandemic slowdown by expanding its offerings. Five9 will contribute its business customers, which include the likes of Lululemon (LULU and Under Armour (UA, and its cloud computing call center software will expand the Zoom Phone service.
We are continuously looking for ways to enhance our platform, and the addition of Five9 is a natural fit that will deliver even more happiness and value to our customers,
said Eric S. Yuan, Zoom founder and CEO.
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Q1 hike for Zoom even as Covid retreatsZoom reports knock-out Q1 earnings, along with an eye-watering revenue increase and a hefty outlook hike. Looks like the market was expecting it though, as prices barely move.
Investors approached this quarter’s earnings with cautious optimism, given that Zoom has been king of the earnings reports recently, crushing Wall Street estimates like a bug under the power of its COVID-driven foot. However, there’s been some concern about its ability to churn out a ninth expectations-beat in light of the restrictions easing and videoconferencing potentially taking a back seat.
No need to worry though, as it looks like earnings haven't yet seen any slowdown. The company reported earnings per share of $1.32 on revenues of $956.2 million, compared to estimates of $0.99 in earnings per share on $906 million in revenue. Its revenue and sales really got everyone’s attention after seeing an increase of 191% over the past quarter. It is worth remembering though, that this quarter only covers through the end of April, so earnings will only be a partial COVID-19 comparison, as stay-at-home orders only began to lift in mid-March.
We kicked off the fiscal year with a very strong first quarter, posting 191% total year-over-year revenue growth combined with strong profitability and cash flow. With this solid start, we are pleased to raise our total guidance range,
said Eric Yuan, Zoom founder and CEO.
Guidance-wise, Zoom is expecting $1.14 to $1.15 in adjusted earnings per share on $985 million to $990 million in revenue in Q2, compared to expectations of adjusted earnings of 94 cents per share and $931.8 million in revenue. It’ll be interesting to see how the guidance hike plays out in light of the growing move towards normality.
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Zooming into other appsDespite Zoom’s impressive brand reputation, it’s now looking to un-brand itself by licensing its video conferencing tech to other companies and apps. Prices lift 3.43%.
Zoom announced that it would sell its videoconferencing technology for others to embed in their own products; meaning the calls would run over Zoom but not carry any branding, with companies can pay for the calls on a per-minute basis. The move could be partly in response to Amazon doing something similar by offering its own video conferencing tools, even getting Slack on board to use its tech for all its video calls.
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Need to escape? Now's your chanceAre you getting bored of Zoom calls yet? Artist Sam Levigne has got your back, with a new Zoom widget offering a whole bunch of fake noises to help you escape your boring work meeting.
Zoom Escaper uses a handy piece of software called VB Audio to set up effects like crying babies, construction noises, barking dogs, sobbing partners, or even sneakier excuses like echoes, static, and call interruptions to help you abruptly end a call without looking like a bad person.
And if you get really bored of Zoom, Levigne also has another trick up his sleeve – the Zoom Deleter, which just deletes the Zoom software every time it finds it on your computer. Might not be the most conducive aid to productivity, but man that sounds satisfying.
The Zoom Escaper got a lot of headlines, and people generally found it pretty funny – probably a sign of the times, with everyone going stircrazy after a year trapped at home. But investors, unsurprisingly, weren't keen. A tool to screw up video calls is never really gonna be market positive for the video call provider, and Zoom stock sank by 4.26% the day after the news broke, landing at $335.08 on March 16.
Zoom founder gives away $6bnEric Yuan is a generous guy. A March 8 SEC filing shows that the iconic Zoom founder transferred $6 billion in Zoom shares to "unspecified beneficiaries" – equating to around 40% of his total stake in the firm.
Seemed like a weird move, but Yuan has always been both unpredictable and altruistic. This time round though, it seems likely that instead of charity, it's children that are the driving force behind the move. According to a Zoom spokesperson, it was all about standard estate planning:
"The distributions were made in accordance with the terms of Eric Yuan and his wife's trusts."
As of March 2021 Yuan was the world’s 130th-richest person, according to the Bloomberg Billionaire's Index, with a pre-transfer net worth of about $15.1 billion.
The news sent the share price bouncing around, losing around 8% on March 10, but gaining back a strong 10% the following day to close at $342.11 on March 9.
Shares bounce on Q4 resultsIt's been a good quarter for Zoom despite the prospect of the world returning to work, and shares jump by almost 10% as Q4 results are released.
Fourth quarter total revenue hit $882.5 million, up by an impressive 369% year-over-year; while full fiscal year total revenue reached $2,651.4 million, up 326%. Not bad, not bad. But wait, it gets better. Fourth quarter GAAP income from operations reached $256.1 million, up by 2,327% year-over-year; and full year GAAP income from operations reached $659.8 million, up by – wait for it – 5,097% year-over-year.
Earnings per share were reported as $1.22, adjusted, beating analyst expectations of $0.79 by a substantial margin. The company ended the year with cash holdings of above $4 billion, putting it in a strong position for 2021, and CFO Kelly Steckelberg hasn't ruled out acquisitions to grow the company. "“We just haven’t quite found the right match yet,” she said on an analyst call.
Zoom Phone, a service that allows people to virtually make and receive phone calls, route calls and accept voice mail, also did pretty well, bouncing up to over a million seats in 2020, according to Q4 results.
And the outlook is strong. For 2022, Zoom is looking for adjusted earnings per share of $3.59 to $3.65, along with $3.76 billion to $3.78 billion in revenue, which would represent 42% growth.
Illustration by TradingView
Zoom pushes 'Everywhere Workforce'As the world starts to imagine slowly getting back to normal after the Covid pandemic, Zoom is looking for ways to remain relevant. One of its flagship focal points is 'Zoom Rooms' and today, it launched a new set of innovations to promote its concept of an 'Everywhere Workforce' and help employees to "safely re-enter the office."
Data from Envyo.com has identified three top concerns for people returning to work: others coming to work sick, an overcrowded workplace, and proper ventilation. Zoom (unsurprisingly and probably not entirely altruistically) wants to help.
“Clearly, the office workspace continues to change. In fact, more than 80 percent of employees working remote say they’d like to continue to work remotely at least 50% or more once they do return to the office,” said Craig Durr, Senior Analyst with Wainhouse Research. “But, to accomplish this, employees have to have a healthy, safe and secure conference room experience that meets the needs of today’s emerging hybrid workforce. Zoom is well positioned to provide this.”
The new upgrades allow employees to pair a Zoom Room with a mobile device, view real-time people count data, offer a virtual receptionist, control shared desktops, and send a Zoom Rooms for Touch whiteboard to Zoom Chat or email. In a nifty new addition, you can also now monitor a room's environment and air quality with Neat Bar, a Zoom Rooms Appliance, which includes an advanced set of capabilities called Neat Sense, letting you monitor your meeting rooms for things like air quality, humidity, CO₂, and volatile organic compounds to keep occupants safe and healthy. Seems sensible, what with a global killer virus going round and everything.
Zoom hasn't had a great year so far, with the price struggling to regain its previous heights after the drop in October/November 2020 following vaccination news and hovering around $350 for most of January, but it showed a small rally in the week following the Zoom Rooms announcement, squeaking up to $420 by February 5.
New trust center. Also, goats.Zoom's had some well-documented mishaps around privacy, so it's good to see that the firm is putting the spotlight on security with the launch of its new Trust Center.
It's a one stop shop for info on Zoom compliance, privacy, safety, and security: including compliance and corporate governance resources, a detailed privacy overview, privacy resources, security resources and certifications, a detailed trust and safety overview, trust and safety policies, and more. So plenty of nice bedtime reading for you there.
In other news, Zoom's diversification plans seem to be ticking along nicely. Its business phone system, Zoom Phone, just hit a million phone seat sales, way ahead of expectations, and the company is feeling pretty smug about it. “We are excited to see this level of uptake in such a short timeframe,” said Graeme Geddes, Head of Zoom Phone.
And finally, a farm in the UK has made £50,000 by selling Zoom calls with its goats at £5 a pop. Yep, for the price of a McDonalds (MCD) Extra Value Meal you can completely confuse your friends, family and work colleagues by inviting a goat onto your next Zoom call. Just don't expect the goat to talk back.
Roll up, roll up: shares for sale!Zoom decides to launch a stock offering to raise $1.5 billion to boost its cash reserves – possibly a wise move, as its share price dwindles amid expectations of an eventual end to lockdown. And it did even better than expected, raising about $2 billion.
It was the first stock issuance for the firm since going public back in 2019, and on balance, looks like it worked out. The deal closed on January 15, selling $2 billion in shares priced at $340 each – a bigger sale than expected, because of strong demand from investors (according to CFO Kelly Steckelberg). “I wanted to preserve optimal flexibility for our balance sheet,” she said in, yep, you've guessed it, a Zoom presentation.
The stock did pretty well in 2020, gaining over 400% and with a market cap averaging an impressive $100 billion. But it started to slide towards the end of 2020 as plans for vaccination programs got properly underway: and from a high of almost $600 in mid-October it had lost almost 50% by mid-January, closing January 11 at $337.71. The stock sale brought a nice little boost though. It slid around 6% in pre-market trading following the announcement, but closed January 12 up 5.66% on the previous day. When the deal closed on January 15 it hit a high of $404, and closed out at $384.53, up 14% since the announcement.