There has been something interesting with the actions of Zoom Video (NASDAQ: ZM) conference call technology over the last few weeks. Since mid-May, its shares have risen more than 10%, while the highly technological Nasdaq has barely managed to remain stable. In fact, it was only last Friday that the latter reached new lows as current sales across the market continued to pick up pace, while Zoom’s latest low was again set on May 12th.
It is important to note, however, that once we cross the timeline of the last two weeks, the divergence ends fairly quickly. While the Nasdaq has had one of the worst first 5 months of the year on record and is down 30%, Zoom Video is down 85% from the all-time high of 2020. But there is reason to believe that the spread is not will it expand and are there any indications of an offer starting to be introduced in Zoom? Let’s take a look.
For starters, the company’s first-quarter fiscal gains that came out at the end of Monday’s session gave investors a lot to think about. The EPA was ahead of the consensus, while revenues were also higher than expected and up 12% year-over-year. Other highlights included the number of customers who contributed more than $ 100,000 in revenue over the next 12 months, up 46% year-over-year, while the net expansion rate in dollars was 12 months for customers. business was 123%.
Zoom founder and CEO Eric Yuan spoke optimistically about the report. “In the first quarter, we launched Zoom Contact Center, Zoom Whiteboard and Zoom IQ for Sales, demonstrating our continued focus on improving the customer experience and promoting hybrid work. We believe that these innovative solutions will further expand our market opportunity. for future growth and expansion with customers, “he said.
In addition to the innovative part of the company, he highlighted the financial results, saying that “we earned more than $ 1 billion in revenue driven by continued success in Enterprise, Zoom Rooms and Zoom Phone, which reached 3 million seats during the quarter We also maintained strong profitability and cash flow, including 17% of GAAP operating margin, approximately 37% of non-GAAP operating margin, approximately 49% of operating cash flow margin and more than 46% adjusted cash flow margin “.
Perhaps the biggest surprise, and probably the main reason for the strong supply, was the advance guidance given by Yuan and his management team. Total second-quarter revenue is expected to be between $ 1.115 billion and $ 1.1 trillion compared to the $ 1.11 billion consensus. The diluted non-GAAP EPA is expected to be between $ 0.90 and $ 0.92 compared to the previous consensus of $ 0.87. For any bag holder, or perhaps more optimistic for anyone considering getting involved out there, this could be the signal we were waiting for. After being relentlessly beaten for 18 months while becoming a child of the post-pandemic pop poster in action, Zoom could be on the verge of a recovery. No one is suggesting that they will return to $ 400 per share soon, but perhaps there is a short-term reality that makes them trade in the comfortable three digits.
But buyers count. Coatue Management, Citi and Piper Sandler teams have lowered their target price or lowered their stock rating in recent weeks. The bulls might call this the final capitulation that we will look back on in the coming months, and in reality they may not be so wrong. In fact, how many more inconveniences can be highlighted in Zoom’s actions? They are generating more than $ 1 billion in revenue every quarter, have achieved universal brand recognition, and suddenly have a price-to-earnings ratio of 20. Few could say their actions are expensive here, especially since they are now back to his level. pre-pandemic levels.
The equities have been severely hurt by the growing interest rate environment in which they find themselves, and investors have not been so reluctant to pay for long-term growth stories for many years. But there is a future ahead of Zoom, and at some point you must be thinking that your fortune will change. Aside from last October, they have had 11 red months in a row, but are currently outperforming the wider market in recent weeks. Let’s see what happens as we head into the summer.