https://apple.news/AB98Nu_xlTPu9aj6GqY0Eew
Takeaway for analysts is that we are way above price targets
I’ve done very well following Saul for a long time now but I cannot help wondering,
Should we get a large pop on this earnings. Would it be time to reduce and put that into the other stocks in the portfolio?
What if we hit $250?
How much further can it go in the short to medium or even longer term
Thanks everybody!
I feel like investors are expecting a perfect earnings report. If what they get is only “very, very good” vs. “the best the world has ever seen” it wouldn’t surprise me to see the stock back at 160 by about noon on Wednesday.
But, I’m virtually always wrong on these things.
Eric (long ZM)
Takeaway for analysts is that we are way above price targets
It was way above their price targets when it started the year at $68. You should have sold out then!!!
Saul
MusiCali,
“Would it be time to reduce?” is a question we each have to answer for our own portfolios. A more interesting question to me – which will be answered tomorrow, is what is the new PS ratio for ZM? Right now it is 96, which is astronomical. If ZM’s revenue is 500m this quarter, if ZM stays at $204 the PS ratio would drop to under 60. Even if ZM goes to $250 the PS ratio would fall a ton from where it is now.
Of course 60 is still a very high PS ratio. But just a little higher than DDOG. For a company that may do 3x or 4x as much revenue in 2020 as they did last year, 60 seems pretty reasonable. Also, after another 500m+ quarter, it would drop below 50.
Who knows if they’ll do anything close to 500m. But it will be fun to find out!
Bear
Th central analyst in the article has a model of them meeting their midpoint of revenue guidance ($200m) for the quarter which was made on March 4. Does anyone believe that to be a reasonable model? Considering the shutdown and work from home trend started later that month, and that these companies tend to be conservative with guidance in the first place, I think not.
Whether the company is worth $50 billion is certainly debatable, but I’ve learned not to kick myself for missing the absolute top because trying to guess that correctly and selling out tends to result in a lot more missed gains. That is, I’m more likely to make more money selling after a 15-20% drop from the peak because the growth story changes than I am selling out at what I think is the peak on the way up.
wow IR… what you just said is super super insightful.
Basically… selling when we think we’re at or near the top causes more missed opportunity…and more lost $$ than waiting and selling after a 15%-20% drop once the company actually misses expectations, slows down, etc.
Really really well put.
Of course 60 is still a very high PS ratio. But just a little higher than DDOG. For a company that may do 3x or 4x as much revenue in 2020 as they did last year, 60 seems pretty reasonable. Also, after another 500m+ quarter, it would drop below 50.
I don’t think there is only a very very very small possibility that Zoom does 3-4x the revenue that they did last year and that the hope for results like this is what’s driven its stock price to such a height so fast.
90,000 schools are using Zoom for free. Each teacher and student is having multiple meetings per day. If we assume each school has 200 students that average 3 meetings five days a week (conservative), that’s already 38.5 of your 300 million daily participants.
If Zoom’s revenue accelerates to even 150% growth, I will be absolutely floored.
The bull thesis for Zoom at this point is if it can become an integrated platform. That is still a story. I still think it can go higher if we see this narrative fleshed out during the earnings call and we get some evidence of this story becoming a reality.
A more interesting question to me – which will be answered tomorrow, is what is the new PS ratio for ZM?
Bear, How will you know? This earnings report will only have one and a half months of the “totally transformed” new Zoom in it (mid-March to end April). So how can you derive the 12 months of Revenue that you would need to calculate a 12 month EV/S? You can’t even do a run-rate from this quarter that will make sense, because first, you will only have a month and a half of the new revenue, and second, the revenue will probably keep growing each quarter (we keep hearing of more and more large businesses signing up in anecdotal reports from board members who work for the companies). I suggest just sitting back and enjoying the ride, and not over-analyzing.
Best,
Saul
Zoom Video Communications (NASDAQ:ZM) is scheduled to announce Q1 earnings results on Tuesday, June 2nd, after market close.
The consensus EPS Estimate is $0.10 (+233.3% Y/Y) and the consensus Revenue Estimate is $203.53M (+66.8% Y/Y).
Over the last 1 year, ZM has beaten EPS estimates 100% of the time and has beaten revenue estimates 100% of the time.
The last four quarters their revenue has risen sequentially by $16 million, $24 million, $21 million, and $21 million,… all BEFORE the “Covid 19 and Work from Home” existential event which increased their number of participants by 30 times!!! That’s not 30%, or 300%, it’s 30 TIMES!!!
And the analysts want us to believe that revenue this time, with those 30 times participants for half the quarter, will only be up $15.5 million??? Lower than any of the last four quarters’ rises!!! Does that make ANY sense at all ???
And you are worried about their price points. Do you really expect the price targets to make any more sense than their revenue estimates?
Best
Saul
the analysts want us to believe that revenue this time, with those 30
times participants for half the quarter, will only be up $15.5 million?
How many of those 30x are paid subscribers vs free?
Anyway, Saul, it seems to me like LOTS of investors are thinking like you, expecting tomorrow’s report to be the biggest blowout in the history of mankind. If ZM beats expectations by only a reasonable amount, investors are likely to see that as a big disappointment and send ZM shares south in a hurry.
We’ll see. Like I said earlier, I’m almost always wrong about this stuff. But I freed up some money to jump in on any dip, just in case.
Eric (long ZM)
Anyway, Saul, it seems to me like LOTS of investors are thinking like you, expecting tomorrow’s report to be the biggest blowout in the history of mankind.
I thought that in my post to Bear, I made it clear that I didn’t think that at all. I emphasized that there were only one and a half months of super revenue in that quarter, if that.
How many of those 30x are paid subscribers vs free?
Do you really think that Zoom is setting up two new engineering centers with 500 hires in each, plus all these management superstars, if they weren’t having a lot more revenue.
What’s true, Eric, is that Zoom went up so much in anticipation of earnings that it may sell off after earnings. But I don’t invest short term like that, or try to guess what the market’s reaction will be. I can see that Zoom is becoming a much, MUCH, bigger company.
Saul
I think the 40min time limit caused a lot of teachers and coaches to signup for individual accounts at the very least. Speaking from experience, I know a swim coach who was responsible for “dry land” practices via Zoom these past months, and someone sprung for an account because getting kids back on if you reached the time limit was a total disaster.
Now, was that absolutely necessary? No. But it also doesn’t “fly” for paid coaches and instructors to inconvenience their students, athletes, dancers, etc. by ‘cheaping out’ on the only tool (video conferencing with groups) they can use to justify their class fees during the time when classes were not acceptable. (Zoom was not the only group-video-conferencing tool, but it has some nameshare and simplicity that many others do not.)
So, yeah, I think revenues are up ‘a bunch’, but can that last or will Zoom need to find more and new subscribers in 3 months’ time?
-Another Rob
Private coaches are one thing and I think that they will be a big driver for Zoom’s incremental revenue growth.
Actual schools all have free licenses with no 40 minute time limit. Zoom has actually said that they have 90,000 schools using the service for free. If Zoom decides to withdraw those free licenses, a lot of schools will just transition to Hangouts.
I’m not a bear on Zoom. I just think it is a speculation play. I consider them like Tesla. They might become one of the biggest companies in the world. Any investment in either one at this point is a bet in that direction.
30x daily meeting participants really doesn’t mean anything to me in terms of revenue.
If Zoom told you that every already existing paid account had 30x utilization during these months, would you be shocked? That would account for all of the new participants and not give them a single dollar more in revenue.
Of course their revenue will go up in actual fact. My guestimation is that they will likely have around 200mil in revenue this quarter and 320mil next quarter. That’s pure gut feeling. It’s really impossible to divine how much their revenue is growing.
In the end I agree with Saul and Cramer - Zoom is a market cap play. You invest based on the idea that this is going to be a much bigger company moving forward. Cramer’s bullish on Tesla for the same reason. For me it’s clear that they fall into the same investing bucket. I like both companies. I want to own both companies. I don’t and maybe its to my detriment.
My music teacher tried teaching online to his 80+ kids over Skype for 2 months and gave up last week. Moved to Zoom with a paid account.
I moved to a paid account in April. Even if 20% of the new non-enterprise users are paid, it will be a substantial addition to the total revenues. Plus real growth will be coming from enterprise customers anyway.
Of course their revenue will go up in actual fact. My guestimation is that they will likely have around 200mil in revenue this quarter and 320mil next quarter. That’s pure gut feeling. It’s really impossible to divine how much their revenue is growing.
Agreed that guessing what revenue might be and or the reaction to revenue or guidance is a crapshoot. But $200m is what they guided in early March. You think they will only meet guidance, or that somehow they predicted the extent to which their user growth and usage would explode? Or that virtually all of their new users are not paying anything?
I do think that virtually all their new users are paying nothing. The previous reply said, “even if only 20% of their new enterprise meeting participants are paid.” I think that’s a very generous “even if”. 20% is way more than I would imagine. I’m thinking more like 2%.
I think it’s reasonable to expect they will report something close to their March guidance. I didn’t know that was what they guided for. That makes me more confident I’m reading the situation correctly. I’m sure they’ll beat it by a bit. I’ll up my estimate to 215 million for the quarter.
ZM’s revenue increased 78% last quarter YOY. Analyst estimates are 81% growth this quarter, according to Yahoo!
Not sure if there are more up to date estimates than that, but I find it hard to believe they would only go up 3% sequentially. From what I have seen with ZScaler, it wouldn’t take much for the market to get excited about ZM’s earnings results. ZS made a new high on Friday, followed through with 11% more today, on so-so results. All ZS really did, according to their earnings call transcript, was sell ZPA to existing customers to grow revenue. ZS was up 63% YTD heading into earnings, now up 136% YTD. ZM is up 200% and they are performing much better financially. DOCU is up 99% YTD and reports 6/4. MDB up 81% YTD and they also report 6/4. They have Fortnite as a customer and online gaming has seen big growth since the lockdowns. TWLO is now up 102% YTD. Even WORK is up 65% YTD and, I know they were discussed here recently as to someone thinking their fears are overblown and they hold shares, all they have done since going public is report slower and slower rev, billings and RPO growth. So that AND the Teams issue is why I don’t hold shares but they keep talking about Shared Channels as a future growth driver so I keep my tabs on them. CRWD is up 89% YTD.
So from what I see, ZM’s YTD gains are actually not out of line from other Remote Working stocks I checked, because ZM had such an increase in usage. OKTA’s report even showed this.
I checked LogMeIn (who owns Go2Meeting) and their report they announced on 4/23 was pretty lackluster. Reporting 5% growth. They announced Quarter end 3/31 earnings on 4/23. They are being acquired by a private equity firm.
Cisco Applications division (where WebEx is lumped into), reported 5% YOY growth to $1.363 billion. Not sure how much of that was WebEx. But I know they talked a lot about large increases in usage. That’s the main question. For their year end July 2019, Applications sales were up 15% YOY. If all this increase in usage/users is just existing users using more… that’s going to be a big setup for a disappointing quarter.
So put into context, ZM’s rally is not out of hand with other stocks. And here ZS is rallying very strong to within range of ZM on what my opinion is a pretty weak report that does not warrant the rally, the outlook for that company has not really changed.
I guess at the end of the day, we’ll find out tomorrow. But the two videoconferencing company alternatives did not really do much. LogMeIn really only had about 2 weeks worth of Coronavirus in their numbers. Cisco had about half the quarter’s worth and if anything slowed down growth that quarter.
I’ve been following Zoom closely for about 6 months and am particularly grateful for the insights I have gleaned from this board. I suspect that Saul is correct and that the setting up of the new engineering centers is the clearest present signal we have regarding their growth since the last earnings report. However, the stock is, in my opinion, priced for perfection at the moment and the slightest concern may cause a large correction. As a result, I sold 80% of my position this morning after a 92% rise from my average purchase price. I am hoping for a correction following the earnings report tomorrow, but will not be surprised if they report blow-out numbers that drives the stock higher. Nearing retirement and with a very uncertain near-term work environment this was the prudent thing to do – but I suspect I will be kicking myself tomorrow evening.
Not sure if there are more up to date estimates than that, but I find it hard to believe they would only go up 3% sequentially.
Barron’s has an article on Zoom out earlier today: https://www.barrons.com/articles/zoom-video-stock-soars-past…
It’s behind a paywall, but if you have Apple News or similar you might be able to get it.
In it Morgan Stanley Analyst Meta Marshall says:
• Everyone agrees that the video conferencing market has permanently grown from its prior base of 50M user to between 75M and 100M daily active users, but it’s less certain how many of those new users are paying, and how many will continue after the shelter in place orders are lifted.
• Many investors are expecting revenue growth of 100% to 200% for the second quarter.
• YoY, many are expecting 100% to 110% growth, which suggests a Q2 revenue number of $234M.
• The “Street” is being too conservative for Zoom in the near term.
• She estimates Zoom’s paid user base at the end of Jan was about 4.25M. Combine that with a 7%-10% monetization of the users at the end of April implies about 7M daily active paid users.
• Paying enterprises have had to increase their licenses this past quarter.
She has a $105 target price, believing that usage will drop as people return to work and social distancing measures are relaxed.
Wow. Interesting day for ZM, so far. Up to 210, down to 197, back up to 209. Almost takes me back to my day trading days (durig the dotcom bubble/bust).
After-hours tonight is going to be fun to watch… 