As millions of people continue to rely on video-conferencing amid the coronavirus pandemic, Zoom is benefiting—shares of the e-video company surged by over 40% on Tuesday morning, a day after it reported blowout second quarter earnings that easily topped analyst estimates.
KEY FACTS
The tech company posted revenue of $663.5 million last quarter, compared to the $500.5 million forecast by analysts, and profits of 92 cents per share (versus 45 cents per share expected).
Revenue more than quadrupled from last year, growing 355% on an annualized basis.
Zoom added nearly 105,000 new customers in the second quarter, with new customers’ subscriptions delivering 81% of revenue growth.
Zoom is one of the best performing stocks so far in 2020, largely weathering the pandemic-induced sell-off in March and rising by more than 370% year to date.
The company now expects revenue between $685 million and $690 million in the third quarter, and also raised its financial guidance for the full fiscal year to almost $2.4 billion as it takes into account growing “demand for remote work solutions for businesses.”
“Zoom crushed its second-quarter results and once again substantially raised full year revenue guidance,” says Morningstar analyst Dan Romanoff, adding, “While it was virtually impossible to top last quarter’s once-in-a-generation results, Zoom delivered a tremendous encore.”
CRUCIAL QUOTE
“Organizations are shifting from addressing their immediate business continuity needs to supporting a future of working anywhere, learning anywhere, and connecting anywhere on Zoom’s video-first platform,” said Eric Yuan, Zoom’s founder and CEO, in a press release.
SURPRISING FACT
At the beginning of the year, Zoom had a market cap of $19 billion. Today, that number has risen to more than $125 billion.
CHIEF CRITIC
While Zoom is a “recognized market leader in meeting software,” Morningstar still sees the stock as overvalued. Although the firm significantly raised its estimates, assigning a fair value of $153 per share—from $116 per share, that is still far below the more than $450 per share that the stock is trading at today. “We still cannot support the current share price within our discounted cash flow model,” Romanoff wrote in a note on Tuesday.
KEY BACKGROUND
Zoom reported revenues of $328 million in the previous quarter, a yearly increase of 169%. Its stock has been on a tear for much of 2020, rising steadily as demand for remote working solutions like video-conferencing skyrocketed amid the pandemic. More and more people have become dependent on Zoom for business, education and personal usage as government officials directed people to stay at home around the world.
FURTHER READING
-Sergei Klebnikov, Forbes Staff