Great post, Monkey. I can think of a couple more reasons why it will blow Wall Street’s lousy estimate right out of the water -
- Hints from the Q2 conference call. This has been discussed in the past, AThinkingFool had a great post on this thread (https://discussion.fool.com/zoom-q2-21-earnings-34606451.aspx?so…), see #71368. This question and answer sums it up well for me -
Shebly Seyrafi – FBN Securities – Analyst
“You’re guiding revenue to be up around 3% sequentially. But if I assume that your customer count is at least flattish Q to Q, your average customer count is going to be up around 16% Q to Q, which implies that your ARPU is implicitly guided to be down 13% Q to Q. And so, my question is, I’ve never seen a double-digit decline in your ARPU before. What would drive that?”
Kelly Steckelberg – Chief Financial Officer
“Well, as we’re sitting here right now, looking forward, I think it’s more around the uncertainty around churn and what’s going to happen with the overall economy. That’s really the uncertainty there, and why we’re guiding flat for Q3 to – Q3 and Q4 revenue will be flat, modestly up from Q2. And, you know, we’ve had a significant increase in our mass market customers, where there just remains limited visibility in terms of the long-term contribution for those customers. It’s more around the uncertainty in churn and what does that mean for the top line growth.”
Well, we know that COVID raged on during Zoom’s Q3 period so I would be shocked to see revenue come in flat QoQ.
- Zoom has a history of sandbagging.
Here is a breakdown of their previous quarterly guidance since the IPO. I believe all numbers are the at the high point of the guidance.
Q Guidance $130.0 $156.0 $176.0 $200.0 $500.0 $690.0
YoY Change % 74.5% 73.1% 66.4% 63.9% 242.9% 314.2%
$ Beat $15.80 $10.60 $12.30 $128.20 $163.52
Beat % 12.2% 6.8% 7.0% 64.1% 32.7%
The 64% beat can be thrown out as an outlier since that guidance was given prior to COVID really arriving in the US, however their most recent beat is very telling. They guided for $500M in revenue for Q2 on June 2 which was months into the thick of COVID. They knew darn well at this point in time that their growth and usage was exploding globally. Yet, the guided for $500M in revenue and proceeded to beat this by $163M, or 33%. That is absolutely insane.
Your estimate of $740M in revenue suggest a beat of only 7%. I believe that is far too conservative given the points you made above, comments on the last CC, and their history of sandbagging, especially considering last quarter. I think a conservative estimate would be a beat of 10%, or revenue of $760M. I consider it very possible they beat their estimate by roughly 20% given how they performed last quarter. This would amount to Q3 revenue of $830M, which equates to nearly 400% YoY growth.
So, I think revenue will land somewhere in the ballpark of $740-830M, although it would not surprise me to see it come in above $830M whatsoever. If it does, I will be one happy man.
Cheers,
Rex