Zoom (NASDAQ: ZM) earnings release for the 1st quarter of their 2021 fiscal year
Category: Stock Market and Zoom Video Communications
Date: 22 June 2020 Stock Price of Zoom : $251.77 We take a look at the 1st quarter earnings release of their 2021 fiscal year of Zoom, a communications platform provider whose number of users shot up as countries went into lockdown and stay at home orders were enforced across the world to stop the spread of Coronavirus
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- We were humbled by the accelerated adoption of the Zoom platform around the globe in Q1. The COVID-19 crisis has driven higher demand for distributed, face-to-face interactions and collaboration using Zoom"
About Zoom Video Communications
Zoom Video Communications, Inc. (NASDAQ: ZM) brings teams together to get more done in a frictionless and secure video environment. Our easy, reliable, and innovative video-first unified communications platform provides video meetings, voice, webinars, and chat across desktops, phones, mobile devices, and conference room systems. Zoom helps enterprises create elevated experiences with leading business app integrations and developer tools to create customized workflows. Founded in 2011, Zoom is headquartered in San Jose, California, with offices around the world
Overview of Zoom's 1st quarter 2021 earnings report
The data below refers to the latest quarter unless specified otherwise:
- Revenue: $328.167 million (up from $121.988 million from the same quarter of the previous year)
- Revenue increased by 169% over the last 12 months
- Cost of revenue : $103.707 million (up from $24.104 million for the same quarter of the previous year)
- Cost of revenue increased by 330% over the last 12 months
- Net income: $27.075 million (down from from $2.214 million for the same quarter of the previous year)
- Diluted earnings per share:$0.09 (up from $0 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 295.184 million (up from 136.428 million for the same quarter of the previous year)
- PE ratio of Zoom: 678
- Cash and cash equivalents: $483.653 million
- Cash and cash equivalents per share: $1.63
- Cash and cash equivalents makes up 0.65% of Zoom's current market capital
- Cash and cash equivalents makes up 23.6% of Zoom's total assets
- Accounts receivable: $164.191 million
- Accounts receivable makes up 7.9% of Zoom's total assets
- Total stockholders' equity of Zoom: $901 million
- Stockholders' equity per share: $3.05
- So Zoom (ZM) is trading at 82.6 times its stockholders equity per share which is WELL outside the expected range of between 2 and 4 times that most firms tend to trade at
- The average price to book value of firms in the S&P 500 is 3.7
Zoom's management commentary on their 1st quarter 2021 earnings
SAN JOSE, Calif., June 02, 2020 (GLOBE NEWSWIRE) -- Zoom Video Communications, Inc. (NASDAQ: ZM), a provider of video-first unified communications, today announced financial results for the quarter ended April 30, 2020.
“We were humbled by the accelerated adoption of the Zoom platform around the globe in Q1. The COVID-19 crisis has driven higher demand for distributed, face-to-face interactions and collaboration using Zoom. Use cases have grown rapidly as people integrated Zoom into their work, learning, and personal lives,” said Eric S. Yuan, Founder and Chief Executive Officer of Zoom. “I am proud of our Zoom employees who dedicated themselves to support customers and the global community during this crisis. With their tremendous efforts, we were able to provide high-quality video services to new and existing customers.
“We were humbled by the accelerated adoption of the Zoom platform around the globe in Q1. The COVID-19 crisis has driven higher demand for distributed, face-to-face interactions and collaboration using Zoom. Use cases have grown rapidly as people integrated Zoom into their work, learning, and personal lives,” said Eric S. Yuan, Founder and Chief Executive Officer of Zoom. “I am proud of our Zoom employees who dedicated themselves to support customers and the global community during this crisis. With their tremendous efforts, we were able to provide high-quality video services to new and existing customers.
Yuan added, "We also supported an unprecedented number of free participants, including over 100,000 K-12 schools around the globe that chose Zoom to deliver the best online education experience. This quarter, we were also proud to launch Zoom Cares, our corporate philanthropic entity, with initial grants to San Jose Digital Inclusion Fund, Destination Home, the CDC Foundation, the World Health Organization and the CDE Foundation. While the key long-term focuses of this foundation are education, climate change, and social equity, our primary grants in Q1 were toward organizations making a difference during COVID-19.”
Financial Outlook: Zoom is providing the following guidance for its second quarter fiscal year 2021 and its full fiscal year 2021.
Financial Outlook: Zoom is providing the following guidance for its second quarter fiscal year 2021 and its full fiscal year 2021.
- Second Quarter Fiscal Year 2021: Total revenue is expected to be between $495.0 million and $500.0 million and non-GAAP income from operations is expected to be between $130.0 million and $135.0 million. Non-GAAP diluted EPS is expected to be between $0.44 and $0.46 with approximately 299 million non-GAAP weighted average shares outstanding.
- Full Fiscal Year 2021: Total revenue is expected to be between $1.775 billion and $1.800 billion. This revenue outlook takes into consideration the demand for remote work solutions for businesses. It also assumed increased churn in the second half of the fiscal year when compared to historic churn levels due to a higher percentage of customers who purchased monthly subscriptions in the first quarter. Non-GAAP income from operations is expected to be between $355.0 million and $380.0 million. Non-GAAP diluted EPS is expected to be between $1.21 and $1.29 with approximately 300 million non-GAAP weighted average shares outstanding.
Zoom (NASDAQ:ZM) stock price history
The image below shows the stock price history of Zoom (ZM). It's been an amazing time for Zoom stockholders since their listing. At listing the stock of Zoom was trading at $62 a Zoom stock. And its currently trading at $251.77 a stock. Thats a whopping 306% return provided to stockholders in just over a year
The stock of Zoom (ZM) is trading at a lot closer to its 52 week high of $254.90 than it its to its 52 week low of $60.97 which is a clear indication that the short term sentiment and momentum towards Zoom Video Communications stock is very positive at this point in time.
The stock of Zoom (ZM) is trading at a lot closer to its 52 week high of $254.90 than it its to its 52 week low of $60.97 which is a clear indication that the short term sentiment and momentum towards Zoom Video Communications stock is very positive at this point in time.
Recent coverage of Zoom (ZM)
The extract below touches on the latest regarding Zoom, as obtained from Fool.com
Few stocks have been as successful during the COVID-19 pandemic as Zoom Video Communications (NASDAQ:ZM). Shares just touched another all-time high at $239.59 on Monday, and it's easy to see why. During the crisis, Zoom has gone from a niche business tool to an essential service, underpinning online social gatherings, business meetings, classes, and everything in between. The brand itself has become synonymous with videoconferencing, and though usage of videoconferencing has surged across the board, as companies like Facebook and Google have also reported, Zoom has been the clear winner here. It's the best known pure-play videoconferencing stock, and the one that has best monetized the surge in demand for videoconferencing tools.
Read the full article here.
Few stocks have been as successful during the COVID-19 pandemic as Zoom Video Communications (NASDAQ:ZM). Shares just touched another all-time high at $239.59 on Monday, and it's easy to see why. During the crisis, Zoom has gone from a niche business tool to an essential service, underpinning online social gatherings, business meetings, classes, and everything in between. The brand itself has become synonymous with videoconferencing, and though usage of videoconferencing has surged across the board, as companies like Facebook and Google have also reported, Zoom has been the clear winner here. It's the best known pure-play videoconferencing stock, and the one that has best monetized the surge in demand for videoconferencing tools.
Read the full article here.
Zoom (NASDAQ:ZM) latest stock valuation
So based on Zoom's latest earnings report and their outlook provided what do we value Zoom stock at? Considering their latest earnings report and the outlook provided our valuation model provides a target price (full value price) of $153 per Zoom stock.
Even so we believe the stock of Zoom is overvalued at its current price of $251.77. We usually recommend that fundamental or long term value investors look to enter a stock at least 10% below our target price (full value price) which in this case is $153. We therefore believe a good entry point into the stock of Zoom would be at $137.70 or below.
Since the stock of Zoom is trading at well above our recommended entry point we rate their stock as a SELL
Even so we believe the stock of Zoom is overvalued at its current price of $251.77. We usually recommend that fundamental or long term value investors look to enter a stock at least 10% below our target price (full value price) which in this case is $153. We therefore believe a good entry point into the stock of Zoom would be at $137.70 or below.
Since the stock of Zoom is trading at well above our recommended entry point we rate their stock as a SELL
Next earnings release of Zoom (ZM)
It is expected that Zoom will release their 2nd quarter 2021 earnings report in late September 2020