ZM and CRWD results next week

For me these two are the most anticipated earnings results in this earnings cycle. They are also the last two of my portfolio companies that will be reporting results.

ZM    8/31   +243% rev growth guidance
CRWD  9/02    +76% rev growth guidance

The guidance for revenue growth is the highest than any of my companies (except LVGO which I sold recently).

We will soon find out how these companies fared in their respective July quarters.

The expectations for ZM are high and the share price appreciation since the last quarterly result has reflected high expectations. I have seen anecdote after anecdote of adoption of Zoom by new customers, new product announcements, and new use cases. It’s hard for me to imagine that ZM’s guidance from 3 months ago is still valid as a lot of positive things have happened since the last update by management. In addition to the above mentions developments, the pandemic and work from everywhere has dragged on for another 3 months and the end is not yet in sight. Clearly, ZM is one of the biggest beneficiaries of reduced travel, school from home, work from home, etc. The status quo continues to benefit ZM. Three months ago it was not really known how long the pandemic would last. Some people were thinking that things were going to stay open and not partially close down again. I would be surprised if ZM does not completely blow away their $500M revenue guidance for the July quarter.

CRWD is a different story. The shares have not risen that much since the last earnings result. If I recall correctly, the shares were around $95 after the April quarter’s was released. The shares dropped below $100 again a couple of weeks ago (close to the same level as after the last results were announced). CRWD does not share the same enthusiasm by investors as ZM. But in the past 2 weeks, the shares have rallied about 20%. Part of the reason for the share rise could be the anticipation of the results next Wednesday. That happens sometimes. But I think that investors are noticing something in the results of other companies. In the past week, we’ve had results (or CEO comments) from many companies including PANW, CRM, WDAY, and others. The management teams of other companies have been seeing some things in their businesses and these things are reflected in the results of some of these other companies:

  1. cloud adoption is strong (PANW, CRM, WDAY, MRVL, VMW have said this)
  2. on-prem SW sales have stalled (PANW, MRVL, VMW)
  3. essential SW sales have been very strong (PANW, CRM, WDAY)
  4. solutions that are fast to implement have been flying off the shelves (CRM, PANW)

When you see the results of these comparable companies and listen to their CEOs of these companies describe what’s happened in the past quarter, then you can predict that CRWD may well have a blowout quarter too.

I’ve placed my bets on CRWD and ZM (much bigger on CRWD than ZM) for blowout quarters. We’ll find out in a few days…