Zoom Video set to report earnings after market close

Video Communications company Zoom is set to release its first-quarter fiscal 2021 earnings on Tuesday. Yahoo Finance’s Melody Hahm discusses.

Video transcript

JULIE HYMAN: You're watching "On the Move" on Yahoo Finance. I'm Julie Hyman, along with Adam Shapiro. We are looking ahead to Zoom earnings after the close of trading today. The stock has just about tripled thus far this year because a lot more people are Zooming. There's some interesting estimates for exactly how many people are Zooming, but we'll get more information on that after the close when we get those Zoom numbers. Adam Shapiro, we were laughing earlier because not only do we have the confusion between Zoom Communications and Zoom Technologies, but ZoomInfo is going to IPO later this week.

ADAM SHAPIRO: [LAUGHS]

JULIE HYMAN: But-- but ZM is the one we're talking about this time around, and it seems like those numbers could be impressive once again.

ADAM SHAPIRO: Right now, but, you know, remember, you get the first 40 minutes for free, and then you have to buy up. But the question I think that some people are going to be looking for is, how sustainable is this? Because you have our parent company bought BlueJean. You have Google, which now has Google Meeting. You know, there's going to be a great deal of video conferencing, which we've all shown is quite easy to do now. I think those of us who might have been Luddites and had trouble signing into what used to be a Google Hangout five months ago, [SNAPS FINGERS] it's a snap right now. So--

JULIE HYMAN: Yeah.

ADAM SHAPIRO: --how can we go back to the office? How does this go forward with all the competition that's going to be out there?

MELODY HAHM: Well, Adam, I actually think the incremental differences between a company like Zoom and then Cisco Webex, right, it actually speaks volumes, and it is where the-- the direction that it's going, right? Especially with startups that previously hadn't really had any sort of infrastructure for video calls, this is going to be the go-to from here on out, especially as we see more companies saying they won't return to the office for the foreseeable future. So that's a very big question up in the air.

One thing I want to point out regarding the earnings is that they do not actually break out subscriber numbers. That's something that they haven't actually disclosed yet, and there are many estimates out there, ranging from 7 million to 8 million paying users at the end of April. Estimates from Credit Suisse say it's much higher, maybe closer to 16 million. So those numbers we should not actually expect to hear from the company itself, but there's a lot of speculative talk right now.

DAN ROBERTS: And, guys, just quickly, one of you, Adam or Julie, mentioned whether the growth has been sustainable, whether it's sustainable in the future. I think there's a double whammy here for Zoom. Question is, is this sustainable because was this huge bump just a coronavirus quarantine thing? Although as Melody said, well, if people are going to keep working him from home, maybe that's not as big a concern. Maybe the-- the momentum can continue.

But question two, is this sustainable because of the competition? I think that's the bigger concern. Because Zoom may have had a head start, but there are so many other players out there. And especially with the security concerns, a lot of companies are thinking, well, we don't have to use Zoom. We can use Google Meets. We're on Google Meets right now. I mean, more and more companies are going to come out with their Zoom competitor product. So I think Zoom, you know, it might be a great earnings report, but there are two dark clouds on the horizon.

MELODY HAHM: And then, Dan, I think another comparison that comes up a lot is Slack and Microsoft Teams, right? But we understand what the consumer likes. You can kind of poll anyone on the street, and I would say that 9 out of 10 people would say, I like Slack, or I would like to use Slack, if they're on Microsoft Teams. So I think it ends up becoming a pressure point, right, where employees who prefer to use one mode or another will be kind of escalating it up. And I think Zoom right now is the obvious winner.

JULIE HYMAN: Melody, thank you very much. Dan, thank you. Adam, thank you. Just to mention as well, the earnings per share estimate, the consensus is $0.09 a share. Revenue estimated to have risen 81% to $202 million. So those are the numbers you want to watch after the close of trading. Although given this surge that we have seen in the shares, the incredible surge this year, it'll be curious to see if they can continue that.