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Zoom Video (ZM) to Report Q1 Earnings: What's in the Cards?

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Zoom Video Communications (ZM - Free Report) is set to report first-quarter fiscal 2022 results on Jun 1.

For the quarter, the company expects non-GAAP earnings between 95 cents and 97 cents per share. Total revenues are expected between $900 million and $905 million.

The Zacks Consensus Estimate for earnings stayed at 97 cents per share over the past 30 days. The company had reported earnings of 20 cents per share in the year-ago quarter.

The consensus mark for revenues is pegged at $905.2 million, suggesting 175.8% growth from the figure reported in the year-ago quarter.
 

 

Zoom’s earnings beat the Zacks Consensus Estimate in all of the past four quarters, the average surprise being 73.2%.

Let’s see how things have shaped up for this announcement.

Factors to Watch

Zoom’s fiscal first-quarter revenues are expected to have benefited from the coronavirus-induced work-from-home and online-learning wave despite the vaccination campaigns.

Notably, the company’s freemium business model helps it win customers rapidly, whom it can later convert into paying customers. Net dollar-expansion rate on a trailing twelve-month basis was more than 156% in fourth-quarter fiscal 2021. The momentum is expected to have continued in the to-be-reported quarter.

Further, the availability of Zoom For Home, which supports remote working for business professionals, has been a key catalyst.

Additionally, this Zacks Rank #2 (Buy) company’s strong partner base, that includes the likes of Atlassian (TEAM - Free Report) , ServiceNow (NOW - Free Report) and Dropbox, is expected to have benefited the company in winning enterprise customers in fiscal first quarter. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

However, Zoom Video continues to face significant competition from the likes of Cisco (CSCO - Free Report) , Microsoft and Google Meet. This might have led to loss in small and medium business customers, which is likely to have hurt top-line growth.

Key Q1 Highlights

During the to-be-reported quarter, Zoom announced $100 million venture fund called Zoom Apps Fund, aimed at stimulating growth of Zoom’s ecosystem of Zoom Apps, integrations, developer platform and hardware.

Moreover, during the quarter, Zoom and Formula 1 announced that they have entered a new extensive multi-year partnership across the upcoming 2021 FIA Formula One World Championship racing season and beyond.

Further, in February, Zoom announced the availability of Zoom Rooms that will help organizations safely re-enter the office and sustain an “everywhere workforce”.

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