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

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Zoom Video Communications (ZM - Free Report) is slated to release first-quarter fiscal 2023 results on May 23.

Zoom expects first-quarter fiscal 2023 revenues in the range of $1.07 billion to $1.075 billion. The Zacks Consensus Estimate for the top line is currently pegged at $1.07 billion, indicating growth of 12.2% from the year-ago quarter.

Non-GAAP earnings per share are expected in the range of 86 cents to 88 cents. The consensus mark for earnings has increased 1.1% to 88 cents per share over the past 30 days but moved down 33.3% year over year.

Factors to Note

Zoom’s first-quarter performance is likely to have gained from strong demand for varied products like Zoom Video Webinars, Zoom Rooms and Zoom Phones. An expanding portfolio of solutions is expected to have aided customer growth in the fiscal first quarter.

The launch of Zoom Up Partner Program and Zoom Contact Center, an omnichannel contact center solution that is optimized for video and integrated right into the same Zoom experience are expected to have been growth drivers.

The company’s freemium business model helps it win customers rapidly, whom it can later convert into paying customers. Markedly, in the fiscal fourth quarter of 2022, Zoom customers contributing more than $100,000 in revenues in the trailing 12 months grew 66%. These customers accounted for 23% of revenues, up from 18% in the year-ago quarter. The momentum is expected to have continued in the to-be-reported quarter.

Additionally, the company’s strong partner base is expected to have benefited the company in winning enterprise customers like Carrier Global (CARR - Free Report) in the fiscal first quarter. Carrier Global has been increasing its spending on Zoom products by selecting Zoom phones for 53,000 employees across 180 countries.

However, the company has been facing significant competition from the likes of Cisco, Microsoft and Google Meet. This might have led to a loss in small and medium-sized business customers, which is likely to have hurt top-line growth.

What Our Model Unveils

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that is not the case here.

Zoom has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Per our model, Star Bulk Carriers (SBLK - Free Report) and Costco Wholesale (COST - Free Report) have the right combination of elements to post an earnings beat in their upcoming releases.  

Star Bulk has a Zacks Rank #1 and an Earnings ESP of +1.77%. The company is scheduled to report first-quarter 2022 results on May 24. Star Bulk surpassed the Zacks Consensus Estimate for earnings in two of the trailing four quarters and missed twice, the average negative surprise being 1.99%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for SBLK’s first-quarter earnings is pegged at $1.41 per share, suggesting year-over-year growth of 291.7%. The consensus mark for revenues stands at $338.6 million, indicating an increase of 200.5% year over year.

Costco is slated to report third-quarter fiscal 2022 results on May 26. The stock has a Zacks Rank #2 and an Earnings ESP of +1.90%. Costco’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 13.3%.

The Zacks Consensus Estimate for COST’s quarterly earnings is pegged at $3.04 per share, suggesting a year-over-year improvement of 10.6%. Its quarterly revenues are estimated to increase 14.3% year over year to $51.76 billion.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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