ZM valuation

I’m researching DataDog as my sixth teleposition. I’ll write it up as soon as I can.


I was beginning to think the same thing and here’s why. Also related to Zoom.

Webex daily meeting volume has more than doubled since the beginning of March and expanded 2 1/2 times from February. At peak hours, volume is up 24 times where it would be normally, the company said.

The company typically deals with 39 billion events (logins, calls, videos initiated, messages sent, etc.) per day on its systems. Last week that number increased to 270 billion a day and is still rising.…

If WebEx is seeing that multiplier of normal business imagine what Zoom is doing. And all these other businesses that are increasing server and infrastructure and network demands the world over.

The amount of events occurring on these systems is 20, 30, 50 times or more the normal volume. That generates logs and events and metrics galore that needs to be analyzed in observability platforms for all that to run properly. Applications need to be monitored and are generating a tremendous amount of additional data.

So if you’re DataDog or Splunk your customers ingest rates are crazy and if you’re Elastic you have your customers rapidly increasing capacity. The observability space (largely ignored by the market right now) is probably seeing an explosion in demand.

That’s the start of my theory anyway.



Do DataDog and Splunk store their data/logs on the cloud? If so it would probably be positive for the cloud companies like MSFT, AWS as well?

Something I noticed as an engineer: In the Forbes article of March 13, Eric Yuan related a story of hooking up a school to use Zoom:

“They told me they’d connect with my team, and I said, ‘no, I’ll do that for you,’” said Yuan, reached by Zoom at the San Jose, California-area home that is now his office for the foreseeable future. “I did it manually myself.”

When the CEO is still this close to the product, it bodes well for his/her technical decisions going forward. When a developer comes into his office with an idea, it will be understood and probably decided correctly. Can’t say that about some of the other large tech firms.


The valuations of VZ and T are about 4 or 5 times ZM’s valuation, but over 100 times ZM’s revenue.

Mkt Cap
ZM - $47 billion
VZ - $208 billion
T - $192 billion

TTM Revenue
ZM - $623 million
VZ - $130 billion
T - $180 billion

I’m not disagreeing that ZM will pass their market cap, but how long do you think it will take?



Using P/S and revenue as a comparison isn’t going to be apples to apples when the gross margins are different. What are VZ’s and T’s margins. ZM’s gross margins are 83% (they will be lower for a while as they invest very heavily to grow and expand but margins probably still be above 70% during this extra spending period). Now, ZM is also FCF positive now and it will be that way when it its operations are fully leveraged. So ZM will be like a (CRM) with 85% gross margins and 25% growth. As investors we should be looking forward and valuing ZM on the a FCF multiple as it will be as a scaled company. CRM has had a FCF margin of 20%. What will ZM have once its operations get fully scaled. CRM has typically had a multiple of 35 on its FCF (as a mature company with FCF margin of 20% and a revenue growth rate of 25%). Bear, I would suggest you do that exercise for ZM making adjustments for growth rate (higher multiple on FCF if growth is above 25%), margins (higher multiple on FCF if gross margins are above the 82% that CRM has), and FCF margins (higher multiple on FCF if the FCF is above 20% as it is for CRM).



Bear, I would suggest you do that exercise for ZM making adjustments for growth rate (higher multiple on FCF if growth is above 25%), margins (higher multiple on FCF if gross margins are above the 82% that CRM has), and FCF margins (higher multiple on FCF if the FCF is above 20% as it is for CRM).

Or we could just compare ZM to CRM directly. My only point was it’s not particularly comparable to VZ or T.

CRM TTM revenue: ~20 billion
CRM Mkt Cap: $140 billion

ZM TTM revenue: 623 million
ZM Mkt Cap: $42 billion

~11% position in ZM (but short 4/17 call options at $150 and $160)


Just a tiny little additional data point. We were having a video chat with some of our friends in the south of France. Asked them about their granddaughter, age 10, who lives with her parents in Lyon. They said her school is shut down but she’s having school by video. They said her school was using Zoom. It appears to even be in France.


Within days of purchasing an annual Zoom plan, I received an e-mail from Zoom inviting me to a live online course for how to get started, with several options for days and times. They also have video tutorials. These folks are on it! Glad I started a position in January. I have since added.

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Another substantial influx of new users.

"In a remarkable ruling, senior Orthodox rabbis have given permission for people to use the Zoom video conferencing service at the Passover Seder to allow families separated by the coronavirus pandemic to connect with one another on what is one of the high points of the Jewish calendar.

Rabbi Eliyahu Abergel, a highly respected arbiter of Jewish law who served as the head of the Jerusalem Rabbinical Court for a decade, together with several other municipal chief rabbis, wrote in response to requests to use Zoom at the Passover Seder that it would be possible under certain restrictions due to the “time of emergency” currently being experienced.

The rabbis wrote that families that want to connect with each other at this upcoming Seder night could use Zoom if they turn on their electronic devices and the Zoom application before the holiday begins."

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Hi to all,

New here and I have to admit I know nothing about the intricate workings of the technology of the companies discussed on this board. The reason I post is to support Saul’s position of international use and exposure. I live in the Metro Atlanta area
and we have an international student staying with us due to her college closing (for the remainder of the semester). In a discussion last night I mentioned she and her friends (all displaced) might want to look into a product called Zoom.

She said “we all use it”.

These students are form Spain, UK, Thailand, Paraguay, Brazil and Columbia.

Thanks to the many members on this board for the knowledge they share.



First mention of the stock I have seen by non-stock follower, “How many members of Congress bought Zoom stock after they cashed out their other options…?”

I have not sold any yet, but I am starting to wonder if the run may take a break soon? It might be wise to trim the winning and redistribute to AYX? Or CRWD?

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2 universities in the UK where my friends attend to use zoom for online teaching and so are we to chat with friends and coworkers in Hungary. It is all over the world

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I first learned of Zoom while in the Middle East about 3 years ago, as it was one of the few solutions at the time that worked reasonably well in the region. It’s very common in Europe. I don’t think there is any doubt Zoom is widely used around the world, and has been for some time.

I am on 4-5 video conference calls each week that typically include participants from many European countries and the Middle East. Zoom, Microsoft Teams, Cisco’s Webex, GoToMeeting, and Skype for Business are probably the most used. Zoom was a niche solution 2 years ago, but that has definitely changed. When I get to choose, it’s Zoom, as there are usually fewer issues getting everyone on-line at the start. But usually I’m just clicking on someone’s link.

It’s very helpful when there is consolidation. People don’t like having 6 apps for video calling on their phones and computers, it can get confusing. I would say 50% of my video calls start late, because there is always one person who is new to a platform, and he/she is learning that only Chrome works, or his microphone is not recognized, or whatever… It’s really a mess. I tend to have less issues with Zoom. Skype is the worst.

You could do a case study on how Skype lost the market. It’s was all theirs for some time, and they just screwed it up.

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I just discovered that my 3 grandchildren are attending all their grade school and HS classes via Zoom including music and art.


Zoom sells user data to Facebook. Not sure how lucrative, but that’s one way to monetize all the free users.…