Zoom Video (ZM) is scheduled to report results of its first fiscal quarter after the market close on Tuesday, June 2, with a conference call scheduled for 5:30 pm ET. What to watch for:
1. OUTLOOK: During the company's last earnings call, Zoom Video said it sees first quarter earnings per share of approximately 10c, which was above consensus at that time of 6c, and revenue between $199M-$201M, which was above the then-expected $185.7M. The company also said at that time that it foresaw fiscal year 2021 adjusted earnings per share between 42c-45c and revenue between $905M-$915M. The consensus forecasts for Q1 earnings and revenue have now moved up to 9c per share and about $202M, respectively.
2. EXPECTING 'STRONG' RESULTS: On May 27, Baird analyst William Power raised his price target on Zoom Video to $180 from $120, while keeping an Outperform rating on the shares, saying that expectations are for “strong” results and guidance when the company reports on Tuesday. The analyst highlighted that his positive thesis is based on the long-term platform opportunity and that he would be an aggressive buyer on any weakness.
3. EXPECTATIONS 'ELEVATED': Not as bullish on the stock, Morgan Stanley analyst Meta Marshall kept an Equal Weight rating ahead of quarterly results. While the analyst acknowledged that Zoom has been the "de facto WFH beneficiary amidst COVID-19," Marshall noted that expectations are elevated given growth in usage, metered by most of the uptick coming in the last month of the quarter. Further, the analyst argued that Zoom hasn't yet shown an "ability to fully monetize" its user base, but is likely to remain trading closer to the bull case in near-term.
Meanwhile, colleague Heather Bellini at Goldman Sachs took a look at comScore's unique visitor data to monitor underlying trends in collaboration and communication software companies and pointed out that the firm estimated that multi-platform U.S. unique visitors increased year-over-year for Docusign (DOCU), RingCentral (RNG) and Zoom, as DropBox (DBX) and Slack Technologies (WORK) experienced negative year-over-year growth rates in April. Similar to March, the greatest increases in year-over-year unique visitor growth rates in April were for RingCentral and Zoom, noted Bellini, who pointed out that comScore estimated that Zoom’s unique visitor growth accelerated to 1,098% in April from 607% in March.
4. USERS: Late last month, The Verge's Tom Warren said in an article that Zoom Video has admitted that "it doesn't have 300 million daily active users." According to the publication, the video conferencing company "had quietly edited a blog post making the claim earlier this month." Zoom originally said it had more "than 300 million daily users" and that "more than 300 million people around the world are using Zoom during this challenging time," The Verge noted, but has since removed those references from the original blog post, and now claims “300 million daily Zoom meeting participants."
5. SECURITY: With the COVID-19 pandemic, Zoom's videoconferencing business Eric Yuan founded nine years ago has gone from an enterprise-software provider little known outside the business world to a near-ubiquitous social lifeline for homebound Americans and, most recently, the subject of complaints about privacy problems and harassment on its platform, The Wall Street Journal's Aaron Tilley and Robert McMillan reported last month. The whiplash has left Yuan trying to appease upset users and figure out what went wrong-and rethinking a company culture that for nearly a decade was focused on ease of use. "'If we mess up again, it's done,' I thought a lot last night," he told The Wall Street Journal in an interview.
Zoom has since implemented new safety measures in Zoom meetings. According to the company, "We recognize that various security settings in the Zoom client, while extremely useful, were also extremely scattered. The addition of this persistent Security icon helps augment some of the default Zoom security features in your profile settings and enables Zoom users to more quickly take action to prevent meeting disruption. The Security icon replaces the Invite button in the meeting controls. The Invite button has been moved to the Participants panel, and hosts can add additional guests there."
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