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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Zoom Video Communications, Inc.    ZM

ZOOM VIDEO COMMUNICATIONS, INC.

(ZM)
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Zoom nearly doubles revenue forecast on remote-work boost, but costs rising

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06/02/2020 | 08:23pm EDT
Small toy figures are seen in front of diplayed Zoom logo

By Ayanti Bera and Stephen Nellis

Zoom Video Communications Inc nearly doubled its expectations for annual sales on Tuesday, driven by a surge in users as more people work from home and connect with friends online during coronavirus lockdowns.

But Zoom's costs also rose sharply, and executives said gross margins would likely remain below Zoom's historical norms in the coming quarters, sending shares of the San Jose, California-based down 3.5% to $200.75 in after-market trading.

The company has transformed itself into a global video hangout from a business-oriented teleconferencing tool. It came under fire over privacy and security issues, prompting it to roll out major upgrades.

The company raised its full-year revenue forecast to a range of $1.78 billion (1.4 billion pounds) to $1.80 billion from $905 million to $915 million. Analysts on average expected revenue of $935.2 million for the fiscal year ending January 2021.

The latest quarterly report shows the company now has about 265,400 customers with more than 10 employees, a near fourfold increase from a year earlier.

But there were also possible signs the Zoom boom may be slowing as economies reopen. Chief Financial Officer Kelly Steckelberg said the April peak usage of 300 million daily meeting participants declined slightly in May.

The company expects it to rise eventually above 300 million again.

Zoom company competes with Cisco Systems Inc's Webex, Microsoft Corp Teams and Google's Meet platform for paying customers, particularly enterprises, while offering a free version to consumers.

Zoom reported fiscal first-quarter revenue of $328.2 million, beating analysts' estimates of $202.7 million, according to IBES data from Refinitiv.

While Zoom's revenue increased sharply, its costs rose even more steeply. The company's cost of revenue was up 330% to $103.7 million, which lowered its gross margin to 68.4% from 80.2% a year earlier.

One of Zoom's biggest costs is data centers and bandwidth to host calls. The company runs some of its own data centers, but also pays for cloud computing services from Amazon.com Inc's Amazon Web Services and Microsoft, and in April added Oracle Corp as a vendor.

On a Zoom call with investors, Chief Executive Eric Yuan said Amazon provided the "majority" of new capacity that Zoom needed to meet demand.

Steckelberg said on the call that the company planned to expand its own data centers to become more efficient, which should boost margins to the mid-70% range in the next several quarters. Analysts had expected gross margins to hover between 79% and 81% over the coming year, according to Refinitiv data.

Excluding items, the company earned 20 cents per share in the latest quarter, beating analysts' estimate of 9 cents.

Zoom's shares have more than tripled this year.

(Reporting by Ayanti Bera in Bengaluru and Stephen Nellis in San Francisco; Editing by Lisa Shumaker, Peter Henderson and Peter Cooney)

Stocks mentioned in the article
ChangeLast1st jan.
ALPHABET INC. 1.34% 1539.01 Delayed Quote.14.90%
AMAZON.COM, INC. 0.55% 3200 Delayed Quote.73.18%
CISCO SYSTEMS, INC. -0.09% 46.66 Delayed Quote.-2.71%
LINE CORPORATION -0.54% 5500 End-of-day quote.2.80%
MICROSOFT CORPORATION -0.30% 213.67 Delayed Quote.35.90%
ONE STOP SYSTEMS, INC. 1.23% 1.95 Delayed Quote.-3.47%
ORACLE CORPORATION -0.24% 57.39 Delayed Quote.8.32%
RISE, INC. -3.13% 31 End-of-day quote.3.33%
THE GLOBAL LTD. -3.30% 205 End-of-day quote.-56.48%
THE NEW HOME COMPANY INC. 2.16% 3.31 Delayed Quote.-28.97%
UNITED STATES DOLLAR (B) / CHINESE YUAN IN HONG KONG (USD/CNH) 0.28% 7.0085 Delayed Quote.0.53%
ZOOM VIDEO COMMUNICATIONS, INC. 2.36% 275.87 Delayed Quote.305.45%
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Financials (USD)
Sales 2021 1 804 M - -
Net income 2021 252 M - -
Net cash 2021 989 M - -
P/E ratio 2021 319x
Yield 2021 -
Capitalization 77 824 M 77 824 M -
EV / Sales 2020
EV / Sales 2021 42,6x
Nbr of Employees 2 854
Free-Float 57,1%
Chart ZOOM VIDEO COMMUNICATIONS, INC.
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Zoom Video Communications, Inc. Technical Analysis Chart | MarketScreener
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Technical analysis trends ZOOM VIDEO COMMUNICATIONS,
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 28
Average target price 216,04 $
Last Close Price 275,87 $
Spread / Highest target 8,75%
Spread / Average Target -21,7%
Spread / Lowest Target -58,0%
EPS Revisions
Managers
NameTitle
Eric S. Yuan Chairman, President & Chief Executive Officer
Aparna Bawa COO, Secretary & General Counsel
Kelly S. Steckelberg Chief Financial Officer
Harry D. Moseley Global Chief Information Officer
Sunil Madan Chief Information Officer
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