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Zoom Video Rallies Ahead of Q1 Earnings: Here's What to Expect

Tirthankar Chakraborty

Zoom Video Communications, Inc. ZM is set to report first-quarter fiscal 2021 earnings on Jun 2, after market close. The stock surged past the coveted $200 a share mark to an all-time high of $205.87 on Jun 1 as investors await its quarterly results. 

 

In fact, shares of Zoom have risen nearly 54% since its last quarterly results reported on Mar 4. What’s more, the unified-communications platform provider’s shares have jumped 200.1% so far this year, in contrast to the S&P 500’s decline of 5.1%.

 

This has, undoubtedly, made Zoom Video one of the top-performing stocks amid the coronavirus pandemic.

 

 

 

The stock exploded this year on expectations of increased Zoom’s video conferencing services and products due to the spread of coronavirus as a large number of people are staying connected with friends and family and working from home.

 

In fact, the company’s paid subscriber growth for the video conferencing service climbed 50% to 300 million daily users on Apr 21 from 200 million at the beginning of the month, according to CEO Eric Yuan.

 

Yuan said that the increase in paid subscriber growth showed that the Zoom platform has been able to provide “an incredibly valuable service to our beloved users” amid the coronavirus-induced lockdown situation and has earned “trust of so many enterprises, hospitals, teachers and customers throughout the world.”

 

Moreover, the company’s efforts to eradicate security and privacy flaws are expected to help Zoom Video expand user base in the quarter ending April 2020. For instance, the company appointed technology experts to beef up security, including encryption (AES 256-bit GCM encryption).

 

But Zoom Video has some serious competition. Microsoft Corporation MSFT has added Zoom like features, including Microsoft Teams, to Microsoft Office 365. Google-parent Alphabet Inc. GOOGL also offers meetings with Google Mail, while Facebook, Inc. FB expanded its video chat services and Verizon Communications Inc. VZ entered the race with the buyout of Blue Jeans Software.

 

However, Zoom Video continues to be a dominant player and easily surpassed competitors in the fiscal first quarter. Its mobile app is only second to TikTok as the world’s most downloaded app, with installations soaring 213% in the week ended Mar 16 compared to the week of Mar 9, and a staggering 728% compared to the week of Mar 2.

 

Wall Street analysts thus expect a solid beat from the company this earnings season. Analysts expect earnings per share of 10 cents in the quarter, suggesting more than triple the figure reported in the previous quarter and 233.3% from year-ago level.

 

 

At the same time, the company expects revenues of $203 million, calling for a 66.4% jump from the same period last year. It is to be noted here that Zoom Video’s revenues rose 78% year over year to $188.3 million in the prior quarter.

 

 

Zoom currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

 

5 Stocks to Soar Past the Pandemic: In addition to the companies you learned about above, we invite you to learn about 5 cutting-edge stocks that could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of the decade.

 

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