As mentioned above, on Sept. 30, 2021, Five9 announced that the two parties had mutually agreed to abandon the deal. The company said that the agreement had not received the required number of votes from Five9 shareholders to approve the merger. Earlier in September, The Wall Street Journal reported that a U.S. Department of Justice-led panel, named Team Telecom, was investigating the proposed merger’s potential national security risks. The company is headquartered in San Jose, Calif., and has additional offices in more than 15 locations in the United States, Europe, Asia, and Australia. Meetings on the platform can host as many as 1,000 participants, while webinars can scale up to as many as 50,000.
The virus has caused many to work remotely, creating a larger demand for conferencing tools that enable workers and teams to keep in touch and continue collaborating. Zoom Video Communications (ZM), the video-conferencing company has seen major price increases since the Coronavirus outbreak. Is the company’s stock value a reflection of the businesses promising growth?
Looking back at the last two years, there may be no stock more representative of the pandemic’s impact on the stock market than Zoom Video Communications (ZM -0.52%). After growing parabolically in 2020, the stock has come crashing back to earth and is down 45% year to date at the time of this writing. This is especially stark when compared to the S&P 500, which is up 27% on the year.
ZM price to earnings (PE)
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. As with last quarter, Zoom Video Communications’ report was a mixed bag. The positives continued to include solid adjusted EPS growth and robust cash flows. I last covered ZM in July where I reiterated my buy rating for the stock even as management suggested that enterprise revenues would see struggling growth rates later this year. In this call as well as subsequent conferences, management was repeatedly asked about how they intend to reaccelerate revenue growth rates.
Revenue stood at $1.15 billion, beating an estimate of $1.13 billion. Zoom is a relatively new company that has managed to consistently increase its revenue and earnings YoY. 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. Zoom is a cloud-based conferencing software that can be used via your browser, desktop or mobile application. Zoom enables users to virtually interact with contacts when a physical meeting is not possible, such as if you work remotely. Zoom is more than a video chat software, as it allows users to record meetings, share one another’s screens and create annotations.
- I last covered ZM in July where I reiterated my buy rating for the stock even as management suggested that enterprise revenues would see struggling growth rates later this year.
- 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.
- Also, Zoom reported 3,731 customers contributing more than $100,000 in trailing 12 months’ revenue, up 13.5% year over year.
- ZM’s mission was never to transform the world to a fully remote workplace environment in the first place.
This flexibility results in the ability to collaborate efficiently on projects for work or education. Zoom Video Communications Inc. (ZM) offers a video-first communications platform used by millions of people worldwide for both business and personal use. The platform connects people via video, phone, chat, and content sharing and can be integrated across fxtm review a broad range of devices. Zoom Video Communications (ZM -0.52%) stock gained 10.4% in Monday’s after-hours trading following the cloud-based communications company’s release of its results for the fourth quarter of fiscal 2024 (ended Jan. 31). For the current quarter, Zoom predicted adjusted earnings of $1.14 a share on sales of $1.13 billion.
Zoom Video Communications, Inc. provides unified communications platform in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. The company was formerly known as Zoom Communications, Inc. and changed its name to Zoom Video Communications, Inc. in May 2012. The company was incorporated in 2011 and is headquartered in San Jose, California. Zoom shares have lost over 60% of their value in the past six months as part of a broader tech sell-off in response to rising interest rates and inflation. Revenue and earnings growth remain strong — analysts are forecasting revenue and earnings per share to grow by 54% and 46% year over year up to $4.1 billion and $4.87 per share in fiscal year 2022, respectively.
Zoom Video Communications Inc.’s stock surged in extended trading Monday, after the videoconferencing company topped expectations across the board with its financial results and forecasts. Going into the release, Wall Street had been modeling for Q1 revenue and adjusted EPS of $1.13 billion and $1.13, respectively. So, Zoom’s revenue guidance came very close to the consensus estimate, while its profit outlook was notably better than it. The quarter’s operating cash flow surged 66% year over year to $351.2 million.
Zoom forecast first-quarter adjusted earnings of $1.18 to $1.20 a share on revenue of about $1.125 billion, while analysts on average were projecting $1.13 a share on sales of $1.13 billion, according to FactSet. He finds undervalued companies with secular growth that appreciate over time. His approach is to look for avatrade broker companies with strong balance sheets and management teams in sectors with long growth runways. In its most recent quarter, ZM delivered 4% YoY revenue growth to $1.139 billion, coming ahead of guidance for $1.115 billion (but I doubt many investors cared about the guidance beat given the low nominal growth rate).
Zoom Video Communications MarketRank™ Stock Analysis
Upgrade to MarketBeat All Access to add more stocks to your watchlist. Sign-up to receive the latest news and ratings for Zoom Video Communications and its competitors with MarketBeat’s FREE daily newsletter. The Motley Fool has positions in and recommends Zoom Video Communications. It’s not clear how much some new product initiatives are contributing to growth. One key to Zoom’s success has been a “freemium” business model.
17 Wall Street analysts have issued “buy,” “hold,” and “sell” ratings for Zoom Video Communications in the last year. There are currently 2 sell blackbull markets review ratings, 10 hold ratings and 5 buy ratings for the stock. The consensus among Wall Street analysts is that investors should “hold” ZM shares.
Zoom ended the last quarter with $5.4 billion in cash, cash equivalents, and marketable securities and only $97 million in debt. To that end, Zoom has recently introduced Zoom Phone, Zoom Meetings, Zoom Video Webinars, and Zoom for Home. Jon Swartz is a senior reporter for MarketWatch in San Francisco, covering many of the biggest players in tech, including Netflix, Facebook and Google. Jon has covered technology for more than 20 years, and previously worked for Barron’s and USA Today.
How fast is Zoom growing?
ZM stock holds an Accumulation/Distribution Rating of C-minus. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. Its current rating indicates more funds are buying than selling. Analysts polled by FactSet had expected Zoom earnings of $1.09 a share on sales of $1.12 billion. Zoom puts limits on the number of participants in a group call and the length of meetings. Zoom software gets high ratings for ease of use and simplicity following earlier video services that provided jerky images and out-of-sync audio.
Communications Services Up as Netflix, Zoom Video Gain — Communications Services Roundup
Management issued guidance for the first quarter and full year of fiscal 2025 (ends late January 2025). GAAP net income was $298.8 million, or $0.95 per share, up from a net loss of $104.1 million, or $0.36 per share, in the year-ago period. Adjusted net income came in at $444.0 million, or $1.42 per share, up 16% year over year.
This demand pulled forward a ton of growth and warped some investors’ views of the company’s fundamentals. Zoom is a member of the information technology sector and operates within the software industry. They include legacy web-based meeting service providers such as Cisco Systems Inc.’s (CSCO) WebEx and LogMeIn Inc.’s GoToMeeting.
Zoom’s growth will inevitably decelerate in a post-pandemic world, but investors should still note how often it “sandbags” its guidance. Zoom Video Communications’ stock is owned by a number of institutional and retail investors. 450 employees have rated Zoom Video Communications Chief Executive Officer Eric S. Yuan on Glassdoor.com. Eric S. Yuan has an approval rating of 97% among the company’s employees. This puts Eric S. Yuan in the top 30% of approval ratings compared to other CEOs of publicly-traded companies.
Adjusted EPS jumped 16%
Zoom Video aims to be a player in the contact center market with its own products and services. In the business market, Zoom rivals include RingCentral (RNG), Cisco Systems (CSCO), Google and others. Growth in annual recurring revenue for business customers with contracts topping $100,000 is one metric to monitor.