Zoom Earnings Quick Look = WOW!! +355%!

Investment Analysis Clubs Saul’s Investing Discussions
1

Its live! Looking forweard to the call at 2:30pm!

Filing: https://investors.zoom.us/static-files/e3610a57-4875-40b8-94…
“Call”: https://zoom.us/webinar/register/tJUqf-ispjksGNLVQXsP0DP21iN…

  • Second quarter total revenue of $663.5 million, up 355% year-over-year
  • Number of customers contributing more than $100,000 in TTM revenue up 112% year-over-year
  • Approximately 370,200 customers with more than 10 employees, up 458% year-over-year
  • Is GM just Gross Profit/Revenue? If so I calculate it at 71%
  • Cash and equiv. $1.5 billion

Financial Outlook: Zoom is providing the following guidance for its third quarter fiscal year 2021 and its full fiscal year 2021.
• Third Quarter Fiscal Year 2021: Total revenue is expected to be between $685.0 million and $690.0 million and non-GAAP income from operations is expected to be between $225.0 million and $230.0 million. Non-GAAP
Exhibit 99.1

diluted EPS is expected to be between $0.73 and $0.74 with approximately 300 million non-GAAP weighted average shares outstanding.
- Full Fiscal Year 2021: Total revenue is expected to be between $2.37 billion and $2.39 billion. This revenue outlook takes into consideration the demand for remote work solutions for businesses. It also assumed increased churn in the second half of the fiscal year when compared to historic churn levels due to a higher percentage of customers who purchased monthly subscriptions in the first quarter. Non-GAAP income from operations is expected to be between $730.0 million and $750.0 million. Non-GAAP diluted EPS is expected to be between $2.40 and $2.47 with approximately 300 million non-GAAP weighted average shares outstanding.

WOW!!! This is above my high-end guess of $2.12 billion and we aren’t even to Q4 yet!!! (from: https://discussion.fool.com/first-i-want-to-say-my-point-for-the…). If my other guesses were all right we could be over $650 per share by year-end.

9 Likes
2

“we aren’t even to Q4 yet”

I got Q-confusion… we are halfway there. The updated table with new guidance looks like this:


	     q1	            Q2	            Q3              Q4
2020			145,826,000	166,593,000	167,000,000
2021	328,167,000	**663,500,000**	_690,000,000	**708,000,000**_

Q4 is simply $2,390M minus the rest. As before, looks pretty flat quarter over quarter but still impressive revenue! The same story as last time. Someone pointed out that to get this flat they almost have to go negative on RPO growth, a pretty drastic change from being up 209% this quarter!! Kelly Steckelburg said this was just modeling in fear of churn. Churn was 4%/month when they filed their S1 but they saw an increase in Q2 and modeled this as the new normal rate going forwards. They didn’t say what it was expected to be though. Anyway, I think it is safe to say the revenue guidance is extremely conservative. I mean, how do you stay flat when this quarter’s numbers are like:

  • +458% with > 10 employees. 66k to 370k!
  • Net Dollar expansion rate greater than 130%!

The following are not notes. I’m sure we can read the transcript for that sort of thing. This is my own commentary. (Ok, with some minor notes mixed in.)

  • In general they seemed to have some phrasing prepared to shift messaging. They mentioned “unified communications platform” a lot. I love this! It is how I think of their future growth. They also touted mix of customer types as a diversified strength.

  • They spent more on everything yet every single number was down as a percent of revenue! Operating leverage was that good!! They said they continue to hire like crazy because they just don’t have enough people to attack everything they want to do. I believe they are around 3500 employees, which is not small but definitely not a huge company. They also noted they found they are able to spend less on Marketing because of their brand awareness (came up a couple of times).

  • Top priority is to keep people connected, up-time and reducing meeting fatigue. Top priority is NOT monetizing Zoom Meetings. This is not the same as expanding to strengthen the “unified communications platform”. This is about not doing things like advertising or selling SnapChat-like fun stuff (which is coming soon! They had some sunglasses and hats on for a few moments).

  • I was concerned that opening more of their own data centers would hurt margins but it sounds like this is actually a net benefit to margin because it is cheaper than bursting on to cloud provider infrastructure, like Amazon, etc.

  • Zoom phone updates might wait for anniversary but maybe at Zoomtopia in October. I was really hoping for some numbers here.

25 Likes