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Monday, September 21, 2020

Zoom’s skyrocketing revenues pushes stock prices high, anticipated to be higher

Zoom Video Communications Inc., announced record earnings since the usage increased by several times during the pandemic. The company registered significant growth in its customer base that picked up and recorded at 458.4% y-o-y in the Q2 2021 and number of customers registered was 370,200. 

At the end of the quarter, the video conferencing company had as many as 988 customers and accounted for $100,000 in “trailing” revenue of 12 months, which was up by as much as 112%. 

ZoomAccording to CFO Zoom, Kelly Steckelberg, “For the quarter, the year-over-year growth in revenue was primarily due to subscription provided to new customers, which accounted for approximately 81% of the increase, while subscriptions provided to existing customers accounted for approximately 19% of the increase”. 

There was an increase of 355% in the second-quarter fiscal revenue over the years and was valued at $663.5 million. This figure was much higher than what analysts and company experts had anticipated. 

As such, many analysts increased the price target for the company from $240 to $460. Another securities analyst reiterated the so called “outperform” on the stocks of Zoom and changed the price target from $250 to $525. 

Experts are also of the opinion that the growth was impressive for the video conferencing. Zoom’s business grew at the rate of 288% yearly which led to a global record of 628% annually. 

According to Zoom’s guidance for fiscal 2021, it is anticipating that the total revenue will range between $2.37 billion and $2.39 billion and it is expecting a figure between $2.40 and $2.47 as far as non-GAAP EPS is concerned. 

As per experts, if there is a chance of 35% drop in Zoom bookings in the fiscal 2021 second half, and a further decrease of 50% in fiscal 2022, still Zoom will have the opportunity to grow revenue of 60% approximately.

video conferencingAccording to another analyst, the projected growth of the company is “conservative” and it is likely to be more than is being expected. The main reason for this is the “never-ending” pandemic which continues to haunt our everyday lives and the way we function. As such, the “new normal” will continue to prevail, which will invariably give a boost to virtual communication. 

Another reason why the growth of video conferencing resulted is because education now is virtual in most of the places that accounts for the increase in customer base and bookings. 

It may be mentioned here that due to the earnings, stocks of the company attained an all-time high, trading ending Aug 31st at $377.81. This is in sharp contrast to the stock of the company recorded June 2nd at $208.08 when Zoom reported the fiscal 2021 first-quarter figures. Since December 31st, Zoom’s stock price skyrocketed to 572.7%. 

Zoom conferencingZoom conferencing will continue to see exceptional results in stock prices and revenue till the time the pandemic does not end. What will be a much-awaited scenario is how the company performs when the virtual meetings become in-person meetings again. But when will we embrace the time when the Corona virus does not haunt us anymore, is uncertain.

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