Morgan Stanley believes Zoom will continue to hold its leadership position for the foreseeable future
Zoom Video (ZM) is expected to report third quarter results after market close on Monday, November 30, with a conference call scheduled for 5:30 pm ET. What to watch for:
1. OUTLOOK: During the company's last earnings conference call, Zoom Video said it sees third quarter earnings per share of 73c-74c and revenue between $685M-$690M. Consensus estimates for Q3 are 76c and $693.95M, respectively. The company also said it sees fiscal year 2021 earnings per share of $2.40-$2.47, and revenue between $2.37B-$2.39B.
2. LOTS OF ROOM LEFT FOR GROWTH: In a research note to investors ahead of Zoom's quarterly results, Morgan Stanley analyst Meta Marshall said he believes there's "lots of room left for growth, particularly in the near-term." Zoom has a still largely untapped $100B-plus UC opportunity ahead of it as it becomes the de facto video platform, Marshall contended. The analyst thinks the company will continue to hold its leadership position for the foreseeable future given continued investments in improving the product and low penetration still within the Global 2000.
His hesitation in being more positive is not that the company will not continue to outperform expectations in the third quarter, or that it is nearing the end of its growth window, with an estimated 15M paid subscribers out of a 500M-700M user market. Rather, it is how valuation will react as sequential adds revert to a more normal level into the next calendar year as employees return to work, given $127B valuation, he contended. Marshall has an Equal-Weight rating and a $350 price target on the shares.
3. PARTNERSHIPS: Last month, Facebook (FB) said in a post on its website that it was adding Netflix (NFLX) and Zoom on Portal for working remotely and connecting with friends. Meanwhile, Lumen Technologies (LUMN) and Zoom announced that they were expanding their partnership and offering customers Zoom delivered by Lumen. Zoom delivered by Lumen will rollout new service features and enhancements over the coming months, including Zoom Phone and Lumen Cloud Connect for Zoom.
Earlier this month, Upwork (UPWK) and Zoom announced they were joining forces to power video communications for businesses and independent talent within Upwork's marketplace. This new collaboration integrates Zoom's video and voice communication tool into Upwork's work marketplace.
SurveyMonkey (SVMK) has also announced it will team up with Zoom to expand its integration and "help organizations improve the virtual employee feedback experience." "We're pleased to be included as a key launch partner at Zoomtopia, and we look forward to innovating together to bring a powerful integration to our customers," said Samantha Bufton, SVP of product management at SurveyMonkey.
Back in September, Oracle (ORCL) had announced new integrations between Oracle fusion cloud customer experience, or CX, and Zoom to help sales, marketing, and customer service teams incorporate video into existing processes and workflows. A week before, PagerDuty (PD) had also announced a new integration with Zoom that it said enabled DigitalOps teams to "quickly initiate Zoom meetings from within the PagerDuty platform, in one click."