Zoom's Results Flew Past Expectations

Zoom's Results Flew Past Expectations

over 3 years ago2 mins

Mentioned in story

Zoom’s second-quarter results blew past even the most optimistic analysts’ expectations, proving it’s not just a one-hit wonder after all ⭐️

What does this mean?

By almost any measure – revenue, profit, customers, cash flow, you name it – Zoom’s numbers were way better than the same time last year, back when talk of coronaviruses was confined to obscure epidemiology seminars. So good was its update for the three months through July, in fact, that the company’s shares climbed by 40% on Tuesday.

Daily Brief Image

The only “but” was a drop in its gross profit margin from 81% to 71% as it won more small customers. Sales from businesses with fewer than 10 employees climbed to more than a third of the total, up from a fifth a year ago 🤷‍♀️ That may sound like a good thing, but these commercial tiddlers are more likely to take out monthly contracts over annual ones – and they're more expensive to look after too.

Why should I care?

The climb in Zoom’s share price gives the company more freedom to lock in extra cash, namely by selling new shares. That’s exactly what electric carmaker Tesla is doing: it announced plans on Tuesday to raise up to $5 billion after its valuation surged this year 🚘 Then again, with Zoom’s quarterly net profit jumping 30-fold to $186 million – and with software much cheaper to scale than car production – the company mightn’t be in the same kind of rush.

Daily Brief Image

Even though picking up Zoom shares after a blowout report might look tempting, the stock isn’t exactly cheap. The company’s share price has been climbing even faster than its revenue, which has more than quadrupled in the past year 🤔 That means Zoom is trading at more than 90 times its revenue – compared to an average of just over two times for the S&P 500 as a whole…

Daily Brief Image
Finimize

BECOME A SMARTER INVESTOR

All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

Finimize
© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG