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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Amazon.com, Inc.    AMZN

AMAZON.COM, INC.

(AMZN)
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Delayed Quote. Delayed Nasdaq - 01/22 04:00:00 pm
3292.23 USD   -0.45%
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Zoom's margins dented by booming free user base, cloud costs

11/30/2020 | 07:06pm EST
Small toy figures are seen in front of diplayed Zoom logo

(Reuters) - Zoom Video Communications Inc warned on Monday its gross margins would remain under pressure going into 2021 as the surging number of free users of its video conferencing service makes it hard to offset a spike in costs to maintain its growth.

Shares of the company, which have risen about sevenfold this year fueled by the meteoric rise in demand in video conferencing for work, school or socializing due to the COVID-19 pandemic, fell 5% after the bell, despite upbeat fourth-quarter forecasts.

Zoom operates some of its own data centers, but it also relies on cloud computing services from outside vendors such as Amazon.com and Oracle Corp, meaning it must bear costs for free users.

Those bills, driven in part by a jump in free users in the third quarter as millions of students and teachers started new school semesters, pushed down Zoom's gross profit margins to 66.7%, below analysts' estimates of 72.1%, and its pre-pandemic average of around 80%.

"We expect gross margins to be consistent with Q3 into the next fiscal year before starting to improve towards our long-term target margin," Chief Financial Officer Kelly Steckelberg said.

Zoom said it had 433,700 customers with more than 10 employees, a 485% increase from the year before but only a 17% increase from the fiscal second quarter, compared to the 40% growth rate between the company's first and second quarters.

Slower sales to corporate customers could mean Zoom is losing out to established tech giants, said Ryan Koontz, analyst at Rosenblatt Securities.

"Cisco and Microsoft are very entrenched in the larger enterprise segment, so Zoom has a much harder job selling against them than they do in the small business space which is largely unpenetrated," he said.

Zoom still forecast fourth-quarter revenue of between $806 million and $811 million, above estimates of $730.1 million, according to Refinitiv data.

It forecast adjusted earnings of 77 cents to 79 cents per share, compared to estimates of 66 cents.

Revenue for the third-quarter ended Oct. 31 surged 367% to $777.2 million, beating analysts' average estimate of about $694 million.

(Reporting by Uday Sampath in Bengaluru and Stephen Nellis in San Francisco; Editing by Tom Brown and Sriraj Kalluvila)

By Stephen Nellis and Uday Sampath Kumar


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
AMAZON.COM, INC. -0.45% 3292.23 Delayed Quote.1.08%
MICROSOFT CORPORATION 0.44% 225.95 Delayed Quote.1.15%
ORACLE CORPORATION -1.39% 60.36 Delayed Quote.-6.69%
ZOOM VIDEO COMMUNICATIONS, INC. 0.15% 383.4 Delayed Quote.13.66%
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Financials (USD)
Sales 2020 380 B - -
Net income 2020 18 146 M - -
Net cash 2020 44 304 M - -
P/E ratio 2020 94,6x
Yield 2020 -
Capitalization 1 652 B 1 652 B -
EV / Sales 2020 4,23x
EV / Sales 2021 3,53x
Nbr of Employees 798 000
Free-Float 81,7%
Chart AMAZON.COM, INC.
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Amazon.com, Inc. Technical Analysis Chart | MarketScreener
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Technical analysis trends AMAZON.COM, INC.
Short TermMid-TermLong Term
TrendsNeutralNeutralBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 52
Average target price 3 840,89 $
Last Close Price 3 292,23 $
Spread / Highest target 36,7%
Spread / Average Target 16,7%
Spread / Lowest Target 6,31%
EPS Revisions
Managers and Directors
NameTitle
Jeffrey P. Bezos Chairman, President & Chief Executive Officer
Dave Clark Senior Vice President-Worldwide Operations
Brian T. Olsavsky Chief Financial Officer & Senior Vice President
Patricia Q. Stonesifer Independent Director
Thomas O. Ryder Independent Director
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