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Why Is Zoom Video (ZM) Up 18.3% Since Last Earnings Report?
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A month has gone by since the last earnings report for Zoom Video Communications (ZM - Free Report) . Shares have added about 18.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Zoom Video due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Zoom’s Q1 Earnings Top Estimates, Revenues Jump Y/Y
Zoom’s first-quarter fiscal 2022 adjusted earnings of $1.32 per share beat the Zacks Consensus Estimate by 36.08%. The company had reported earnings of 20 cents per share in the year-ago quarter.
Moreover, revenues of $957 million surpassed the consensus mark by 5.6% and also soared 191.8% year over year. This outperformance was primarily driven by new customer subscriptions.
Revenues from Americas (66.5% of revenues) jumped 158.5% year over year to $636 million. Revenues from EMEA (20.6% of revenues) soared a whopping 286.3% from the year-ago quarter to $197 million. Revenues from APAC (13% of revenues) were $124 million, up a massive 300% year over year.
User Base Jumps in Q1
Zoom continued to benefit from the coronavirus-induced work-from-home and online-learning wave, similar to its competitors Cisco and Microsoft.
At the end of the fiscal first quarter, Zoom had roughly 497,100 customers (with more than 10 employees), up 87% year over year. Markedly, Zoom’s trailing 12-month net dollar-expansion rate in customers with more than 10 employees was above 130% for the 12th consecutive quarter.
Moreover, the company had 1,999 customers with more than $100,000 in trailing 12-month revenues, up roughly 160% year over year.
KimberlyClark Corporation, Denso and Target were notable customer additions in the reported quarter.
Operating Details
Non-GAAP gross margin in the quarter under review expanded 440 basis points (bps) on a year-over-year basis to 73.8%.
Non-GAAP research & development (R&D) expenses as a percentage of revenues decreased 210 basis points (bps) on a year-over-year basis to 4.3%. Further, non-GAAP general & administrative (G&A) expenses decreased 720 bps to 7.7%.
Moreover, non-GAAP sales & marketing (S&M) expenses as a percentage of revenues were 19.9%, significantly down from 31.6% reported in the year-ago quarter.
Non-GAAP operating income surged to $400.9 million from $54.6 million reported in the year-ago quarter. Operating margin expanded to 41.9% from 16.7% reported in the year-ago quarter.
Balance Sheet & Cash Flow
As of Apr 30, 2021, cash and cash equivalents and marketable securities were $4.7 billion compared with $4.24 billion as of Jan 31, 2021.
Non-GAAP free cash flow was $454.2 million in the quarter under review compared with $377.9 million in the previous quarter and $251.7 million in the year-ago quarter.
Remaining performance obligation was $2.07 billion, up 94% year over year.
Guidance
For second-quarter fiscal 2022, Zoom expects revenues between $985 million and $990 million. Non-GAAP income from operations is expected between $355 million and $360 million. Moreover, non-GAAP earnings are expected in the $1.14-$1.15 per-share range.
For fiscal 2022, Zoom now expects revenues between $3.975 billion and $3.990 billion.
Non-GAAP income from operations is expected between $1.425 billion and $1.440 billion. Moreover, non-GAAP earnings are expected in the $4.56-$4.61 per share range.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 44.62% due to these changes.
VGM Scores
Currently, Zoom Video has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Zoom Video has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Why Is Zoom Video (ZM) Up 18.3% Since Last Earnings Report?
A month has gone by since the last earnings report for Zoom Video Communications (ZM - Free Report) . Shares have added about 18.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Zoom Video due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Zoom’s Q1 Earnings Top Estimates, Revenues Jump Y/Y
Zoom’s first-quarter fiscal 2022 adjusted earnings of $1.32 per share beat the Zacks Consensus Estimate by 36.08%. The company had reported earnings of 20 cents per share in the year-ago quarter.
Moreover, revenues of $957 million surpassed the consensus mark by 5.6% and also soared 191.8% year over year. This outperformance was primarily driven by new customer subscriptions.
Revenues from Americas (66.5% of revenues) jumped 158.5% year over year to $636 million. Revenues from EMEA (20.6% of revenues) soared a whopping 286.3% from the year-ago quarter to $197 million. Revenues from APAC (13% of revenues) were $124 million, up a massive 300% year over year.
User Base Jumps in Q1
Zoom continued to benefit from the coronavirus-induced work-from-home and online-learning wave, similar to its competitors Cisco and Microsoft.
At the end of the fiscal first quarter, Zoom had roughly 497,100 customers (with more than 10 employees), up 87% year over year. Markedly, Zoom’s trailing 12-month net dollar-expansion rate in customers with more than 10 employees was above 130% for the 12th consecutive quarter.
Moreover, the company had 1,999 customers with more than $100,000 in trailing 12-month revenues, up roughly 160% year over year.
KimberlyClark Corporation, Denso and Target were notable customer additions in the reported quarter.
Operating Details
Non-GAAP gross margin in the quarter under review expanded 440 basis points (bps) on a year-over-year basis to 73.8%.
Non-GAAP research & development (R&D) expenses as a percentage of revenues decreased 210 basis points (bps) on a year-over-year basis to 4.3%. Further, non-GAAP general & administrative (G&A) expenses decreased 720 bps to 7.7%.
Moreover, non-GAAP sales & marketing (S&M) expenses as a percentage of revenues were 19.9%, significantly down from 31.6% reported in the year-ago quarter.
Non-GAAP operating income surged to $400.9 million from $54.6 million reported in the year-ago quarter. Operating margin expanded to 41.9% from 16.7% reported in the year-ago quarter.
Balance Sheet & Cash Flow
As of Apr 30, 2021, cash and cash equivalents and marketable securities were $4.7 billion compared with $4.24 billion as of Jan 31, 2021.
Non-GAAP free cash flow was $454.2 million in the quarter under review compared with $377.9 million in the previous quarter and $251.7 million in the year-ago quarter.
Remaining performance obligation was $2.07 billion, up 94% year over year.
Guidance
For second-quarter fiscal 2022, Zoom expects revenues between $985 million and $990 million. Non-GAAP income from operations is expected between $355 million and $360 million. Moreover, non-GAAP earnings are expected in the $1.14-$1.15 per-share range.
For fiscal 2022, Zoom now expects revenues between $3.975 billion and $3.990 billion.
Non-GAAP income from operations is expected between $1.425 billion and $1.440 billion. Moreover, non-GAAP earnings are expected in the $4.56-$4.61 per share range.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 44.62% due to these changes.
VGM Scores
Currently, Zoom Video has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Zoom Video has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.