Review: Zoom Beats Earnings Expectations

One of the companies that benefited the most during the pandemic is Zoom Video Communications (ZM). Known as Zoom to its users, it gained tremendous exposure in 2022 as it became the de-facto way of online communication. 

Although competitors do exist, Zoom has  the right infrastructure in place as it was the only company that focused exclusively on online communication.

It reported $777.2 million in revenue in the Q3 of its 2021 fiscal year on expectations of $693.4 million. Also, the adjusted EPS reached $0.99 on $0.75 expected. Finally, it projects revenue in excess of $800 for the upcoming quarter.

Highlights of Q3 2021 Fiscal Year

Zoom had a remarkable year so far. As vaccines are rolling out (today, the U.K. authorized the use of the Pfizer/BioNTech COVID-19 vaccine), people’s mobility will increase.

In other words, demand for online communication will likely decrease as the world finds a solution to the pandemic. However, consumer behavior changed. People discovered remote working, for instance. While a decline in revenue is expected in the years ahead, it depends a lot on how Zoom decides to invest the proceeds from its 2020 “boom” year.

The Q3 2021 fiscal revenue grew over 350% when compared to a similar period last year. An important detail here is that a big chunk of this revenue is made up by the corporate sector. For instance, the number of customers that contributed to the revenue by more than $100,000 increased 136% YoY. Also, over 400k customers have ten or more employees.

These companies that discovered the benefits of online communication over meetings in person would likely discover the benefit of paying less office rent too. Therefore, one should not dismiss Zoom for the simple reason that the pandemic’s end is in sight.

Zoom sits on $1.9 billion on cash, cash equivalents, and marketable securities. Moreover, operating activities generated over $400 million in net cash over the quarter.

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Disclaimer: None of the content in this article should be viewed as investment advice or a recommendation to buy or sell. Past performance/statistics may not necessarily reflect future ...

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