Zoom beats estimates on strong product demand, announces share buyback

what is zoom trading at

For the fourth quarter, analysts estimate Zoom will print EPS of $1.13 on revenues of $1.131 billion. Zoom forecast fiscal-year 2025 revenue of about $4.60 billion, which is below analysts’ estimate of $4.66 billion. The video-conferencing provider’s fourth-quarter results indicate Zoom’s attempts to integrate AI into its products and diversify its portfolio have paid off, as it takes advantage of a surge in hybrid working. Demand for collaboration tools, such as Zoom has hit a new high following the coronavirus pandemic. Most company’s employees are working from home and there is limited contact between businesses dealing with one another.

The stock then continued in its uptrend, which brought Zoom to a high of $74.77 on Dec. 27. Zoom introduced its AI companion during its third quarter, allowing paid users to access features including meeting summaries and catch-ups, as well as email and chat composing prompts. For the full year, Zoom expects its revenue to increase 51% and for its adjusted EPS to rise 42%-43%. The company bdswiss review is scheduled to release its next quarterly earnings announcement on Monday, May 27th 2024. For a company like Zoom that has been so tied in investors’ minds to the pandemic, it can be difficult to take a step back and see the forest for the trees. Taken without the noise of the past two years, Zoom is clearly a buy for existing shareholders or those investors looking to start a position.

SWOT Analysis for Zoom Video Communications

Management touted Zoom Phone as a key initiative as the company aims to become more than just a video conferencing company but instead a complete collaborations platform for its customers. Management did not give any potential growth rate target (but again, not a lot of growth is needed at these valuations). Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation. There is one caveat worth mentioning — Zoom’s growth in the coming years is expected to let up significantly from current levels. As the pandemic unwinds and Zoom becomes a more mature company, it’s inevitable that sales growth will come down from its all-time highs.

This is still a much higher price than it was trading at the same point last year. Should investors buy Zoom’s dip, or should they avoid it as more people physically return to work and school? Let’s examine Zoom’s growth rates, future plans, and valuations to find out. These 10 simple stocks can help beginning investors build long-term wealth without knowing options, technicals, or other advanced strategies. cryptocurrency broker canada By taking out of the equation the volatility of the past two years and viewing Zoom’s performance on this two-year basis, we see just how remarkable the growth of its business is. More importantly, the growth in larger customers — those with more than 10 employees and those spending more than $100,000 in revenue — provides a large base to upsell new features and hardware options as Zoom’s offerings expand.

Zoom has almost no debt, boasting a debt-to-equity ratio of 2% and a strong cash position of $1.3 billion. The company also grew free cash flow by over 1,100% in fiscal year 2021 up to $1.4 billion. The significant climb in free cash flow was a result of superb revenue growth stemming from pandemic-driven demand. The company’s powerful cash flows and $1.5 billion share buyback authorization also probably provided a tailwind to the stock. Zoom Video Communications’ (ZM -0.52%) stock price dropped to its lowest levels in over three months after the company released its second-quarter earnings report on Aug. 30.

Bureau of Labor statistics released in January, 11% of workers were still teleworking as of December 2021. It also forecast first-quarter revenue of $1.13 billion, in line with analysts’ expectations. Those strategies could help Zoom shake off its reputation as a one-trick pony and support its long-term evolution into a cloud-based communications giant. At the end of fiscal 2021, Zoom predicted its revenue would rise 42%-43% in fiscal 2022, compared to its latest guidance for 51% growth. Therefore, Zoom clearly prefers to temper Wall Street’s expectations instead of raising the bar too high and setting itself up for a big earnings miss.

Zoom Video in early March said company President Greg Tomb, a former cloud computing executive at Alphabet’s (GOOGL) Google, will leave. In May, Zoom announced an investment in AI startup Anthropic to support research roadmaps. Anthropic’s AI model will be integrated into Zoom’s Contact Center platform. Rather than increase revenue, Zoom Video expects gen AI tools to retain and add customers. One bright spot, ZM stock had $6.5 billion on its balance sheet as of Sept. 30.

  1. The recent coronavirus pandemic has resulted in the demand for Zoom’s product and services to skyrocket, resulting in a share price to reflect this increased demand.
  2. The video conferencing software company beat Wall Street’s estimates on the top and bottom lines, but its guidance for the third quarter slightly missed analysts’ profit expectations and hinted at a post-pandemic slowdown.
  3. Zoom expects its revenue to rise 31% year over year in the third quarter, which surpasses analysts’ estimates, but for its adjusted EPS to grow just 8%-9%, which misses expectations for 10% growth.
  4. Zoom’s operating margins are expanding as its scale improves and its data center capacity rises.

A combination of these factors and the likelihood of social distancing lasting throughout 2021 could boost Zoom’s revenue accordingly. Zoom video communication’s stock made its debut on the NASDAQ under the ticker ‘ZM’ on Thursday the 18th of April 2019. Zoom announced their stock would be priced at anywhere between $32.00 and $35.00. Once the stock was publicly available, the price quickly surged over 80% to $65, before ending its first day of trading at around $62.

Analysts had been looking for earnings of $1.09 a share on sales of $1.13 billion in the fiscal fourth quarter. I rate the stock a buy due to the reasonable valuation and large amount of net cash, as the stock offers considerable upside if management can execute on accelerating growth rates. ZM is an enterprise tech company which enables its customers to optimize collaboration – the company is most well known for its video conferencing product. ZM saw its online average monthly churn dip to 3.2% (emphasis on “monthly”) and enterprise revenues once again led the way with 10% YoY growth. ZM, however, did see its enterprise net dollar expansion rate dip sequentially from 112% to 109%.

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Zoom Video in July rolled out Zoom Workforce Management, which improves agent productivity by automating/optimizing agent work shifts and monitoring agent performance. The Nasdaq composite shot up 43% amid buzz over generative artificial intelligence technology.

what is zoom trading at

Zoom Video Communications’ stock was trading at $71.91 at the start of the year. Since then, ZM stock has decreased by 1.0% and is now trading at $71.19. New Rank-Based ScoringMarketRank™ is calculated by averaging available category scores (with extra weight given to analysis and valuation), then ranking the company’s weighted average against that of other companies. Zoom’s management also views international expansion as an important opportunity. Continuing the two-year comparisons, that number is up from Q3 2020, when international revenue was only 20% of total revenue. If Zoom can continue to grow internationally, it opens up plenty of new revenue opportunities.

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Microsoft (MSFT) and its Teams communications tools are Zoom’s major rival in the business market. Microsoft is upgrading its products with technology from startup OpenAI. Sales growth slowed for the ninth-straight quarter as the company adjusts to slower product demand in the post-coronavirus emergency era.

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Remember though, that this is just an approximate valuation, and like any complex formula – garbage in, garbage out. We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second ‘steady growth’ period. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren’t available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period.

Zoom Video Communications MarketRank™ Stock Analysis

I note that these valuations are before accounting for the net cash making up around 30% of the market cap. Zoom’s financials remain strong, but I think the company needs to improve future growth prospects to justify fxchoice forex review trading at current valuation multiples. With revenue and earnings growth expected to pull back in the years ahead, I wouldn’t be surprised to see growth-oriented investors exit their positions in Zoom stock.

After a historic valuation reset, the growth investing landscape has changed. ZM is one of the more profitable names in the tech sector and is trading at under 15x earnings. Growth has almost disappeared following the pandemic, but valuations are far less demanding than in the past. On Jan. 18, Exane BNP Paribas analyst Stefan Slowinski downgraded the stock from Neutral to Underperform with a price target of $60 on Jan. 18, 2024. When Zoom printed its third-quarter results on Nov. 20, the stock was highly volatile the following day, sliding over 4% lower at one point before closing the trading session flat.