I know Saul has pounded the table on ZM. I think he’s right. The challenge is figuring out how much revenue Zoom will get from their 190M + new users since Dec’19 and then deciding whether or not these security issues are concerning.
My take on the security issues. There’s nothing mischievous going on. Zoom did absolutely everything they could to innovate and scale to support the user growth.
User growth far surpassed everyone’s wildest dreams so they moved even faster and made some mistakes along the way. This is FAR different than intentionally misleading people. I’m giving Zoom the benefit of the doubt here and I applaud their transparency, accountability, and decision to focus only on security for 90 days.
Links about this oldest to newest.
My conclusion on security: This is providing investors with an incredible buying opportunity.
Now onto monetizing users. How much revenue will they bring in from previous + new customers? That’s what no one knows for sure. So I ran two scenarios. Please check my math here and let me know if I missed up.
Dec '19: 10M users, $188.3M rev, 130% expansion
Let’s be conservative and assume they go from 130% net expansion to previous customers only spending 75% of what they did before (I think they’ll actually increase net expansion to 140%+)
Revenue from previous users if cut to 75% = $141M rev.
Add 190m users and cut rev/10M users to $14M (from $188M)
Q1’21 rev: $407M
What if we keep the 75% current user spend so $141M but then make new users worth $28M per 10M users?
Q1’21 rev: $673M = 250%+ revenue growth.
You can continue with the estimations of monetizing at $42M per 10M new users and even up to $60M per 10M new users which is the highest I’d be comfortable assuming since we know they gave so many licenses away for free…
I previously though $ZM was outrageously valued at $150/share. Now I think it might be the most undervalued company around.
Again, I know I’m repeating a lot of what Saul and others have already said, but this helps me think through it… thoughts?