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Why Is Zoom Video (ZM) Down 2.7% 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 lost about 2.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Zoom Video due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Zoom’s fourth-quarter fiscal 2024 adjusted earnings of $1.42 per share beat the Zacks Consensus Estimate by 23.48% and increased 16.4% year over year.
Revenues of $1.15 billion beat the consensus mark by 1.57% and increased 2.6% year over year on strong growth from Enterprise customers.
Quarter Details
Revenues from Enterprise customers rose 4.9% year over year to $667.3 million and represented 58.2% of total revenues. Customers contributing more than $100,000 in revenues in the trailing 12 months grew 9.8% to 3,810. These customers accounted for 30% of revenues, up from 28% in the year-ago quarter.
The company reported a trailing 12-month net dollar expansion rate for Enterprise customers of 101%.
The number of Enterprise customers rose 3% year over year to more than 220,400.
Zoom Phone reached approximately 9.5 million paid seats. Zoom Contact Center licenses grew three times year over year, while Zoom AI Companion enabled approximately 510,000 accounts.
Revenues increased 4% in America and 0.5% in EMEA, while international market revenues from APAC decreased 3% year over year.
Non-GAAP Operating Details
Gross margin expanded 874 basis points (bps) to 75.9% in the fiscal fourth quarter of 2024.
Research and development expenses decreased 21.43% year over year to $205.28 million. Sales and marketing expenses declined 26.61% to $371.05 million, while general and administrative expenses plunged 32.82% to $125.29 million.
Operating income surged 229.75% to $168.53 million year over year. The operating margin came in at 14.7% against the year-ago quarter’s negative operating margin of 11.6%.
Balance Sheet
Total cash, cash equivalents and marketable securities as of Jan 31, 2024, were $7 billion. As of Oct 31, 2023, cash, cash equivalents and marketable securities were $6.49 billion.
Free cash flow as of Jan 31, 2023, was $332.7 million. As of Oct 31, 2023, free cash flow was $453.2 million.
Guidance
Zoom expects first-quarter fiscal 2025 revenues to be approximately $1.125 billion.
Non-GAAP earnings per share are expected in the range of $1.18 to $1.2.
For fiscal 2025, Zoom expects revenues in the range of $4.597-$4.6 billion.
Non-GAAP earnings per share are expected in the range of $4.85 to $4.88.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 14.93% due to these changes.
VGM Scores
Currently, Zoom Video has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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 #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Zoom Video belongs to the Zacks Internet - Software industry. Another stock from the same industry, HubSpot (HUBS - Free Report) , has gained 2.7% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
HubSpot reported revenues of $581.91 million in the last reported quarter, representing a year-over-year change of +23.9%. EPS of $1.76 for the same period compares with $1.11 a year ago.
For the current quarter, HubSpot is expected to post earnings of $1.49 per share, indicating a change of +24.2% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for HubSpot. Also, the stock has a VGM Score of C.
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Why Is Zoom Video (ZM) Down 2.7% Since Last Earnings Report?
A month has gone by since the last earnings report for Zoom Video Communications (ZM - Free Report) . Shares have lost about 2.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Zoom Video due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Zoom Q4 Earnings Beat, Customer Growth Drives Revenues
Zoom’s fourth-quarter fiscal 2024 adjusted earnings of $1.42 per share beat the Zacks Consensus Estimate by 23.48% and increased 16.4% year over year.
Revenues of $1.15 billion beat the consensus mark by 1.57% and increased 2.6% year over year on strong growth from Enterprise customers.
Quarter Details
Revenues from Enterprise customers rose 4.9% year over year to $667.3 million and represented 58.2% of total revenues. Customers contributing more than $100,000 in revenues in the trailing 12 months grew 9.8% to 3,810. These customers accounted for 30% of revenues, up from 28% in the year-ago quarter.
The company reported a trailing 12-month net dollar expansion rate for Enterprise customers of 101%.
The number of Enterprise customers rose 3% year over year to more than 220,400.
Zoom Phone reached approximately 9.5 million paid seats. Zoom Contact Center licenses grew three times year over year, while Zoom AI Companion enabled approximately 510,000 accounts.
Revenues increased 4% in America and 0.5% in EMEA, while international market revenues from APAC decreased 3% year over year.
Non-GAAP Operating Details
Gross margin expanded 874 basis points (bps) to 75.9% in the fiscal fourth quarter of 2024.
Research and development expenses decreased 21.43% year over year to $205.28 million. Sales and marketing expenses declined 26.61% to $371.05 million, while general and administrative expenses plunged 32.82% to $125.29 million.
Operating income surged 229.75% to $168.53 million year over year. The operating margin came in at 14.7% against the year-ago quarter’s negative operating margin of 11.6%.
Balance Sheet
Total cash, cash equivalents and marketable securities as of Jan 31, 2024, were $7 billion. As of Oct 31, 2023, cash, cash equivalents and marketable securities were $6.49 billion.
Free cash flow as of Jan 31, 2023, was $332.7 million. As of Oct 31, 2023, free cash flow was $453.2 million.
Guidance
Zoom expects first-quarter fiscal 2025 revenues to be approximately $1.125 billion.
Non-GAAP earnings per share are expected in the range of $1.18 to $1.2.
For fiscal 2025, Zoom expects revenues in the range of $4.597-$4.6 billion.
Non-GAAP earnings per share are expected in the range of $4.85 to $4.88.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 14.93% due to these changes.
VGM Scores
Currently, Zoom Video has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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 #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Zoom Video belongs to the Zacks Internet - Software industry. Another stock from the same industry, HubSpot (HUBS - Free Report) , has gained 2.7% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
HubSpot reported revenues of $581.91 million in the last reported quarter, representing a year-over-year change of +23.9%. EPS of $1.76 for the same period compares with $1.11 a year ago.
For the current quarter, HubSpot is expected to post earnings of $1.49 per share, indicating a change of +24.2% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for HubSpot. Also, the stock has a VGM Score of C.