Zoom Q420

ZM - Q420

pre earnings

Saul on expected rev: https://discussion.fool.com/i-have-to-speak-up-about-the-asserti…
Bobby on whether new customers are free or paid: https://discussion.fool.com/zoom-had-1292-million-monthly-active…

PR: https://investors.zoom.us/news-releases/news-release-details…
Fool take (Sparks): https://www.fool.com/investing/2020/03/04/zooms-q4-earnings-…
Fool take (McKenna): https://www.fool.com/investing/2020/03/04/zoom-video-stock-d…
Buyn2Hold take: https://discussion.fool.com/4056/zoom-video-q4-earnings-34427320…
Hmc take: https://discussion.fool.com/quotimo-i-think-the-numbers-just-oka…
CC transcript: https://www.fool.com/premium/coverage/earnings/call-transcri…
Buyn2Hold with CC highlights on coronavirus impact: https://discussion.fool.com/4056/zoom-video-earnings-webinar-344…
TomG sees many positives: https://discussion.fool.com/4056/mliss-thanks-for-asking-my-firs…

Revenue 188.3M +78%

  • Americas +77%
  • APAC+EMEA +84% (…20% of ttl)
    Deferred Rev 231M +83%
    RPO 604M +94% !!
    Adj Op Inc 38.4M +292% !!
    … margin 20.4% +1110bps !! !! !!
    Adj Gross Margin 84.2% +210bps
    Adj Inc 43.2M +332% !!
    Adj EPS 0.15
    Opex 145.2M +79.7%
    CFFO 36.6M +129%
    FCF 26.6M +367% !!
    Cash 855.2M
    Empl >2500
    Custs 81.9k +61% !!
  • Custs >100K 641 +86%
  • Custs w Zoom Phone 2.9k
    $NER >130%

Revenue 622.7M +88%
Adj Op Inc 88.7M +487%
… margin 14.2%
Adj Inc 101.3M +514%
CFFO 151.9M +196%
FCF 113.8M +397%

  • new custs are 59% of growth, 41% is existing custs
  • reported custs are those >10 employees, represent 80% of rev +200bps
  • non-current RPO grew 120% w morE longer term deals
  • seeing usage spike due to outbreak, mostly on free side
  • has already added more new users in 2Mo of 2020 than in all of 2019
  • are proactively monitoring capacity to ensure reliability as usage scales up
  • lifted 40min free limit in China to help during outbreak
  • continue to add capacity- margins affected
  • new custs J&J, VMWare
  • 2900 custs w Zoom Phone in first year of release, logging 230M mins
  • Zoom Phone now GA in 17 countries (+11) and beta in 24 - striving for 50 by year end
  • partnering with contact center software solutions like Five9, inContact and Twilio
  • added new master agent and referral program for Zoom Phone
  • won highest rating in 2020 Gartner Peer Insights Cust Choice Award for Meeting Solutions
  • Okta report showed Zoom having 876% growth w/in Okta network over last 3yrs

My stance: I finally bit the bullet and got onboard with ZM, even with its already astronomical valuation — there are too many good trends. Unfortunately, this decision was made after most of the recent run-up … but better late than never. Way too many positives. Similar large cap range as SHOP and SQ but still growing revenue double what they are. Beyond that, they are rapidly scaling up their cash flow and profit while still having this massive hypergrowth. Great combination! Like TomG stated in his post above, easy to ultimately see the company hit 100B marketcap. Int’l expansion is major goal, now only 23% of rev. The high margins went higher — but they signaled it will drop back to low-80s w capacity additions this yr. That is a good problem to have. They’ve been strained by all the new users from this pandemic, and the mostly-free traffic they’ve generated — but we know from Zoom’s past that that massive influx of free users will only pay off going forward, as users use it more and more and ultimately convert to paying. They seem like they have a great handle on capacity and infrastructure needs. But it all boils down to how insanely profitable they are at this stage of hypergrowth. I like! Just wish I acted immediately when it finally went to top of watchlist back in December, instead of delaying til February - lesson learned.

long ZM 9%