I was wondering what you all thought Zoom’s revenue growth rate will be like in 2021? Clearly, Zoom has grown tremendously this year in terms of both revenue growth and stock appreciation which has resulted in a huge EV/S multiple. The EV/S is currently at 100 or so and based on their forecast for the remainder of the year, if there is no further stock appreciation, after Q4’s results they should have an EV/S of 56 or so. Obviously that won’t happen but given their huge growth this year and insanely tough comparisons next year, what kind of revenue growth do you guys see in 2021? Especially after the vaccine which will likely cause some churn in the SMB and potentially mid-market segments. Zoom has a lot of other revenue growth drivers, but it’s hard to see 100%+ growth next year which will likely contract the multiple pretty materially.
Q1 Q2 Q3 Q4 Total % YoY
27 33 41 51 152
60 75 90 106 331 117.7%
122 146 167 188 622 88.1%
328 664 690* 710* 2392 284.3%
* rough guidance from Q2 earnings call
Revenue % YoY Growth
Q1 Q2 Q3 Q4
122.2 127.0 119.5 107.8
103.3 94.7 85.1 77.4
169.0 355.1 314.2 277.7
Gary and Draj,
I’m sorry but politics is SOOOOO Off Topic or our board that I have to ask your posts be deleted.
I wanted to follow-up and see if any of you all have a POV for ZM come Q2 of 2021 when ZM faces some really tough comparables since ZM is a big part of many of our portfolios. Currently, they have some really strong DBNER of 130% for companies with > 10 employees but I would assume that would likely start trending downwards as they start facing tougher comparisons and potentially less of a use case when the vaccine comes sometime in 2021 (theoretically). Per the earnings call, regarding churn:
Before giving you the full-year outlook, let me provide some context on our assumptions. While better-than-expected churn was one of the drivers to our Q2 outperformance, we did experience a significantly higher level of overall churn in Q2 as compared to historical rates. As customers with 10 or fewer employees have increased to 36% of our revenue, we are assuming a higher rate of churn due to this mix shift
So, if churn is already starting to pick up pre-vaccine, I would assume it would ramp up materially post-vaccine. So, there’s a headwind there. However, I’ve been seeing more and more use cases of Zoom and the post by Rafes: https://discussion.fool.com/beyond-zoom-video-integrate-apps-pho… was really interesting about incremental use cases beyond Zoom Video. However, will these additional revenue drivers be enough to sustain strong revenue growth rates when comparing against really tough comparisons. Since we all know that multiple expansion is often at least partly a function of revenue growth rate, what do you all think ZM’s revenue growth could be next year? Personally, I was forecasting 50% by end of 2021, with 160% or so in Q1 with 38/33/31 for Q2-Q4, but if ZM starts doing ~35-40% growth rates, their multiple will fall a lot from the current 100+ EV/S it is at right now.
but if ZM starts doing ~35-40% growth rates, Zoom’s multiple will fall a lot from the current 100+ EV/S it is at right now.
I’m just curious where you get that 100+ EV/S value for Zoom that you are tossing around. I’ve never calculated it myself, but people on the board have quoted much lower values. I’m afraid you got it off Yahoo or something, or that you calculated it with TRAILING revenues that are so HOPELESSLY OUT OF DATE!!!
Look, If you used trailing revenues, that includes last Oct’s quarter with $167 million, and the Jan quarter with $188 million, and the April quarter with $328 million.
HOWEVER, last quarter, the July quarter, they had $664 million in revenue. Just four times that, their run rate, with no sequential gains at all, comes to $2 billion $656 million!!!
And they predicted $685-$690 million next quarter! That’s up $25 million sequentially. And last quarter they beat their $500 million guidance by $164 million!!!
NOW DOESN’T IT SEEM SILLY to use trailing twelve month revenue, instead of forward revenue like everyone else?
PS - I just looked up their EV which is $131 billion. Just dividing that by $2.656 billion gives a current run rate revenue EV/S of 49, and a realistic future four-quarter guess of probably 30-35.