Shares of Zoom Video Communications, Inc.
ZM have soared over 85% in 2020 and are up 45% in the last month, as investors dive into stocks they see as immune to the spreading coronavirus. Investors should also note that Zoom Video posted strong Q4 financial results on Wednesday, March 4, which helped ZM pop while the market fell again. The Pitch
Zoom Video’s cloud-native platform allows people to connect via video, voice, chat, and content sharing. The firm boasts that it can connect “thousands of people in a single meeting across disparate devices and locations.” Zoom Video’s offerings certainly seem made for today’s globally-connected business world.
The teleconferencing firm allows people to have face-to-face meetings across the world, across the country, or across the city. Zoom Video is also great in our modern work-from-home or remotely environment.
ZM could also be a long-term hit with international corporate giants as more companies are put under more pressure to curb their carbon footprints. In fact, ZM in February released a
list of the 10 companies that it called its Green Leader customers, who were “estimated to be avoiding the most carbon dioxide emissions by replacing face-to-face, in-person meetings with face-to-face Zoom video meetings.”
Even those who aren’t worried about the potential environmental impact might be swayed by the money saved by cutting out all non-essential business flights. This also seems like an easy option that investors can get behind.
Climb & Recent Results
In today’s interconnected digital world, video conferencing seems likely to grow in popularity. And the numbers back up Zoom Video’s recent climb.
The San Jose, California-based company went public in April 2019 and saw early success. This stood in direct contrast to Uber (
UBER Quick Quote UBER - Free Report) and Lyft LYFT, which both hit the public markets around that time. The nearby chart shows that ZM stock has skyrocketed over 100% since its debut, to crush its industry’s 7% climb.
On Thursday, ZM stock climbed another 7% to close regular trading at $125.00 a share. The recent jump came after Zoom Video’s fourth quarter fiscal 2020 financial results wowed Wall Street.
The company’s Q4 revenue jumped 78%, with 2019 sales up 88% to $622.7 million. ZM’s adjusted quarterly earnings of $0.15 a share also destroyed our $0.08 estimate—it has now blown away our estimate by an average of 340% in the trailing four quarters.
Meanwhile, its full fiscal year operating cash flow surged nearly 200% to $151.9 million. Wall Street was also happy to see the firm add larger clients.
The company closed the year with roughly 82,000 customers with more than 10 employees, up 61% from a year ago. Plus, it boasted that 641 customers contributed more than $100,000 in trailing 12 months revenue, which marked an 86% climb.
Looking ahead, the company expects its full-year fiscal 2021 revenue will come in at between $905 million to $915.0 million. This crushed our pre-earnings release estimate of $854.6 million. Investors should note that the high-end would represent 47% growth from 2020.
At the bottom end of the income statement, Zoom Video called for its adjusted fiscal 2021 EPS to hit between $0.42 and $0.45 a share. This once again easily tops our current estimate of $0.27 per share, and would mark a 29% jump from 2020, on the high side.
Clearly, Zoom Video’s outlook is far better than analysts initially predicted. Plus, Bernstein analyst Zane Chrane
wrote in a note to clients in late February that “in the last 30 days alone, average daily downloads are up 90% versus the prior 30-day period.”
More recently, Stifel analysts
told clients that “The global coronavirus epidemic will undoubtedly drive awareness and adoption of the company’s video conferencing platform, and we expect this environment to further enable the company to post industry-leading growth rates.” Bottom Line
U.S. lawmakers passed on Wednesday an $8 billion-emergency spending package to help fight the novel coronavirus. And the Dow, the S&P 500, and the Nasdaq all tumbled again Thursday as cases spread in the U.S. and elsewhere.
Most companies, including big tech giants Apple
AAPL and Microsoft MSFT—for obvious reasons—haven’t been able to stay above the flood of selling. Netflix NFLX, Slack WORK, and other work-from-home stocks have climbed.
In the end, Zoom Video appears to be worth considering not only to bolster your portfolio amid the coronavirus market volatility, but also as a long-term bet on the future of our digital, interconnected, and work-remote world. Watch for Zoom Video’s estimates to be revised soon to reflect their upbeat guidance.
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