CRUCIAL DATA FOR ZOOM INVESTORS
I believe that the contents of this post are crucial for Zoom investors, but that you may have missed them. You need to be aware of them, but I was afraid that anyone who wasn’t around on Saturday when the news came out, might lose it in the myriad of posts on the board since, so I’m giving it its own thread. If you are already aware just go ahead and skip this post.
In an earlier post three or four days ago, I took a guess that at the end of March Zoom will probably have added, oh, ten times as many customers as they had at the end of December. I said that many of those will be non-paying, but many of the ones they had at the end of December were non-paying too… so having a lot of non-paying customers is normal for them, not something just sprung on them. I said that I was trying to be conservative😀.
However, in posts #65040 and 65041, on Saturaday, hmcproperties just kindly provided us with THE ACTUAL FIGURES… ?and it turns out that I WAS being conservative! Very conservative! Those two posts linked to an independent service that keeps track of app downloads, which gave the information that is in the paragraph below, and the other post to was about Zoom’s CEO just giving the same information in an interview. A big thanks to hmcproperties! Here’s the gist of what I’m talking about:
As of several days ago Zoom was getting about 2,140,000 new users per day, and rising. In late January it was just 56,000 per day!!!
That means that in late March they were signing up 38 TIMES!!! the number of new users per day that they were signing up per day in January! That’s an awesome figure!!! It’s not 38% more! It’s 38 TIMES???
It means that they are now signing up considerably more new users every DAY than in the entire MONTH of January. STOP and just think about those numbers!?
And late January was certainly up somewhat from the average for the December quarter, as they’ve been constantly been increasing signups. If we estimate they signed up 48,000 a day in the December quarter, it would be 4.3 million in the 90 days. That means that every TWO DAYS they are now signing up as many new users as they did in the entire December QUARTER!!! And this isn’t a wild guess of mine. It’s the actual figures.
And in that “puny” December quarter they grew revenue by 78%!!! Can you imagine what revenue is growing by now?
We need to keep in mind that they only have had probably only one and a half months of these huge new numbers of users in this quarter (the second half of February and all of March).
I don’t know how much of all those new users will turn into revenue, and you should make your own estimates, but my most conservative estimate would be a doubling of the revenue growth rate in the March quarter, to 156%. And that seems to me to be ridiculously low. After all, Zoom is currently equalling the entire Dec quarter’s new signups every two days!!! And those December signups, plus upgrades from existing customers, were giving them 78% growth.
People who have been worried about Zoom’s over-valuation and limiting their investment in it, or who have never gotten in, seem to be rationalizing their decision by saying that most of these new users will be free users, but most of Zoom’s users have always been free users, and that hasn’t stopped from growing like mad and from being profitable and quite cash flow positive.
I can’t estimate realistically what will happen here. It’s impossible. But I’m keeping every one of my Zoom shares for now. But just think, today and tomorrow, the last two days of March, they will again sign up as many new users as in the entire three months of the December quarter. Keep that in mind.
Best,
Saul
A link to the Knowledgebase for this board is in the Announcements panel that is on the right side of every page on this board.
For some additions to the Knowledgebase, bringing it up to date, I’d advise reading several other posts linked to on the panel, especially “How I Pick a Company to Invest In,” and “Why My Investing Criteria Have Changed,” and “Why It Really is Different.”