Zoom Video: Winning The Hybrid Workplace

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Zoom Video: Winning The Hybrid Workplace

seekingalpha2021-06-23

Summary Zoom Video is perhaps the biggest winner from the acceleration of digital transformation that has occurred because of the pandemic. Its Q1 earnings report saw Zoom beat consensus analyst ...

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Slee49
·2021-06-23
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Slee49
·2021-06-23
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Shihaoyap
·2021-06-23
Wow
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Ansonteck
·2021-06-23
Like and comment pls
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Stchua
·2021-06-23
Like please
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Mjoo
·2021-06-23
Work on zoom, yoga on zoom, art on zoom. LoveIt to moon
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J.G
·2021-06-23
Oh ya
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Ruzzer
·2021-06-23
Good
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CharlesKing
·2021-06-23
Like and comment plz???
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- J.G:
  done
  2021-06-23
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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nZoom Video: Winning The Hybrid Workplace\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-06-23 15:21 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4436146-zoom-video-stock-zm-winning-the-hybrid-workplace><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nZoom Video is perhaps the biggest winner from the acceleration of digital transformation that has occurred because of the pandemic.\nIts Q1 earnings report saw Zoom beat consensus analyst ...</p>\n\n<a href=\"https://seekingalpha.com/article/4436146-zoom-video-stock-zm-winning-the-hybrid-workplace\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"ZM","symbol_name":"Zoom","start_time":0,"source_url":"https://seekingalpha.com/article/4436146-zoom-video-stock-zm-winning-the-hybrid-workplace","article_id":"1113239280","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1113239280","pubTimestamp":1624432900,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Summary\n\nZoom Video is perhaps the biggest winner from the acceleration of digital transformation th","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"ZM":"Zoom"},"translate_title":"Zoom Video：赢得混合职场","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"ZM":0.9},"content_text":"Summary\n\nZoom Video is perhaps the biggest winner from the acceleration of digital transformation that has occurred because of the pandemic.\nIts Q1 earnings report saw Zoom beat consensus analyst estimates on revenues by displaying 191% YoY revenue growth and also beating analyst EPS Estimates.\nThe company continues to build out its platform with the recent launch of Zoom Video SDK.\nZoom continues building out its UCaaS capabilities with the introduction of Zoom Phone Appliances.\nAs one of the biggest potential winners of the new and evolving hybrid workplace, Zoom Video is a buy at current prices.\n\nZoom Video(NASDAQ:ZM)is perhaps the biggest winner from the acceleration of digital transformation that has occurred because of the pandemic. When COVID-19 reached American shores like a tidal wave in March 2020, social distancing directives forced large swaths of society online and one of the primary ways businesses of all types and schools functioned was through the use of Zoom Video's Meetings and Chat products, Rooms and Workspaces products, Phone System, and Video Webinars.\nJust to give an idea of Zoom's growth because of the pandemic, in December of 2019, Zoom was averaging 10 million daily meeting participants. And by April, that number had already grown to 300 million daily meeting participants, so 30-times growth within a matter of months.\nZoom Video's rapid expansion also brought a rapid expansion in the stock price. Zoom Video opened at $66.63 on January 6th, 2020 and by October 19, 2020 reached an all-time closing high of $568.34.\nSince reaching those highs in October, Zoom's stock has drastically backed off the highs, with some of the reason partially due to valuation but the other part of the reason was the introduction of the COVID-19 vaccine.\nData by YCharts\nOn December 11, 2020, the U.S. Food and Drug Administration issuedthe first emergency use authorization (EUA)for Pfizer-BioNTech's COVID-19 vaccine. Many investors believe that Zoom Video is only a \"COVID stock\", meaning that substantially all of the company's business over the past year was due to COVID and there is a perception that when the world goes \"back to normal\", that Zoom will encounter a substantial loss of business. That perception persisted into early May to the point where Zoom's stock closed at $288.49 on May 10th, 2021.\nSince the lows in May, Zoom has rebounded to close at $372.95 on June 17th, 2021. The question for investors now becomes whether the perception of Zoom being a \"COVID stock\" that will churn customers and lose a lot of business as the pandemic subsides is true or not? In this article I will go over Zoom Video's earnings and I will also highlight reasons why I believe that Zoom Video has a strong business beyond the pandemic and why Zoom is a buy at current prices.\nBigger Deals\nIn Q1, Zoom video closed their largest deal ever in terms ofAnnual recurring revenue or ARR, with a leading global financial services firm that selected Zoom Meetings to deploy for over 90,000 hosts. That was only one of the large deals closed by Zoom this past quarter.\nSource:Zoom Video Q1 FY22 Presentation\nThe other large deals that Zoom closed in Q1 were:\n\nKimberly-Clark (NYSE:KMB) is an American multinational personal care corporation that produces mostly paper-based consumer products and sells them in more than 175 countries. Kimberly is already an existing Zoom Meetings and Video Webinar customer but is now expanding the relationship with Zoom by adding approximately 25,000 Zoom Phone licenses. The sale of Zoom phone licenses was aided by Zoom partner British Telecom, who advocated for Zoom in the decision-making process at Kimberly-Clark.\nTarget Corporation (NYSE:TGT) is the eighth-largest retailer in the United States and serves customers at more than 1,900 stores and online atTarget.com. Target was already a longstanding Zoom Meetings customer that increased their commitment by expanding their Zoom platform solutions, while unifying their internal and external communications on Zoom technology.\nDenso is Japan’s largest and the world’s second largest automotive parts company, and a leading company in the Toyota Group. Denso first joined Zoom last year and last quarter, they decided to significantly expand their usage of Zoom Meetings and Zoom Video Webinars for internal and external communications. Zoom now connects 47,000 Denso employees across offices, factories and homes.\n\nZoom Video Q1 FY22 Earnings\nThe growth that Zoom has experienced over the last year continued as Zoom Video knocked it out of the park in Q1 by displaying 191% year-over-year revenue growth or a total of $956 million in revenues. These results exceeded the high end of company guidance of $905 million and beat consensus analyst estimates by $48.06M due to strong sales, marketing execution and lower than expected churn.\nThe lower than expected churn is a great thing to hear, as Zoom Video is perceived as a \"COVID-19 stock\" and with both businesses and schools reopening, more churn was certainly expected and the Zoom Video Management had given very conservative guidance because of that expected churn. The fact that Zoom is retaining more business than expected should help lower the perception that Zoom is only a \"COVID-19 stock\" over time, if Zoom proves that it can retain its customers over the next year.\nLet's talk about retention of customers, since it is highly important for Zoom to retain the customers they gained from the pandemic, in order to not be known as only a \"COVID-19 play\".\nZoom CFO Kelly Steckelberg has indicated that when investors look at retention, that it is best to segment the customer base into:\n\nCustomers with more than 10 employees.\nCustomers with fewer than 10 employees.\n\nCustomers that have more than 10 employees are generally handled by Zoom's direct sales organization. These type of companies typically buy annual or multi-year agreements.\nCustomers with fewer than 10 employees, however, are ones that typically buy the product online, and the vast majority of them are buying on monthly agreements. It is important to remember that most customers with fewer than 10 employees don't have a long-term committed contract.\nThe retention in the customers of greater than 10 also winds up being much higher than those in the customers with fewer than 10 employees. Hence, there is a lot more certainty about how customers with more than 10 employees will evolve for Zoom.\n\n We were very pleased with the retention and the renewals in the customers with greater than 10. It was actually stronger than we had forecast. So, that was great. And that part of that is what allowed us to increase our guidance for overachiever key one, but also increase our guidance for the full year.Source: Zoom CFO Kelly Steckelberg -Nasdaq 44th Virtual Investor Conference June 17, 2021 11:00 AM ET\n\nWhat is really interesting is how Zoom Video views the customers with fewer than 10 employees because that segment has grown in importance during the pandemic. Pre-pandemic customers with fewer than 10 employees was 20% of the revenue, however, the last couple of quarters it's been in the 36% and 37% of revenue area. So, 36% to 37% of Zoom's revenue comes from a volatile segment that is buying on a monthly basis.\nZoom has retention curves for customers with fewer than 10 employees that show that the highest rate of churn is within a two to three months time period, which is typical of most subscription businesses. Once a customer goes beyond this two to three months time period, a majority of them tend to enter a long tail of retention.\nEssentially, Zoom CFO Kelly Steckelberg expects that it is going to take a few quarters to get to a point where the less than 10 employees segment enters a period where the churn becomes stable as each new set of customers to Zoom rolls through that 2-3 months period to get to a stable retention point.\nCFO Kelly Steckelberg views it this way:\n\n I think we're going to settle into is a long tail of a stabilized renewal rate for these [fewer than 10] cohorts, but\n that's going to take a few more quarters to get to that stabilized period. And then I think this will be a really nice segment of our business that renew on a consistent basis.Source: Zoom CFO Kelly Steckelberg -Nasdaq 44th Virtual Investor Conference June 17, 2021 11:00 AM ET\n\nSo, in essence, it could take to the end of the calendar year before fully understanding how much business that Zoom Video will retain from customers with less than 10 employees but thereafter, wherever the number settles at, it should remain a solid piece of business for Zoom.\nCFO Kelly Steckelberg also went on to say that over time, it is expected that the customers with greater than 10 employees will likely grow faster and while the dollar amount of the customers with fewer than 10 employees will probably be consistent, the percentage of revenue is expected to decrease over time. In others words, not only will customers with fewer than 10 employees stabilize churn over the next several quarters but they will also be a less important percentage of Zoom's business over time.\nSource:Zoom Video Q1 FY22 Investor Presentation\nThe strong revenue growth accomplished by Zoom was in addition to posting strong profitability and cash flow numbers.\n\nSource:Zoom Video Q1 FY22 Investor Presentation\nZoom's Cost of Revenue was $264.99 million. Gross Profit was $691.24 with a Gross Margin of 72.29%.\nData by YCharts\nTotal Operating Expenses were $464.93 million, broken down as follows:\n\nResearch and development $65.19 Million\nSales and Marketing $245.67 Million\nGeneral and administrative $154.09 Million\n\nResearch and development expense grew by 97% year-over-year to approximately $41 million. As a percentage of total revenue, the Non-GAAP R&D expense was approximately 4.3%, which is lower than in Q1 of last year, mainly due to the strong top line growth. On a quarter-over-quarter basis, though, expenses grew by 33%, meaning that Zoom remains committed to investing to keep their products in \"best-in-class\" status.\nThe 84% year-over-year rise in Sales and Marketing reflects an additional $87 million over last year that was made primarily due to investments in hiring to drive future growth. The NON-GAAP S&M expense was approximately 20% of total revenue, a decrease from Q1 of last year, mainly due to strong top line growth. However, Zoom plans on increasing their marketing investment to add more global sales capacity and brand and product marketing programs in order to capitalize on the opportunity. The focus on marketing might change a little, however, as the Zoom CFO Kelly Steckelberg has indicated at theNasdaq 44th Virtual Investor Conferencethat the company will be moving away from their previous strategy of building brand awareness to focus more on targeted product marketing around products like Zoom Events and Zoom Apps in the future.\nG&A expense in the quarter grew by 51% to $73 million as Zoom continues to invest in systems, automation and compliance to meet their new scale that exploded higher over the past year. G&A expense was approximately 7.7% of total revenue, a decrease from Q1 of last year.\n\n For the long-term, you should expect our margins to be more in the range of 25% plus as today we're currently under investing in R&D, [Non-GAAP] R&D in Q1 was 4.3%. We really want that to be in the range of 8% to 10% for the long-term and then sales and marketing, we're also under investing currently today.Source: Zoom CFO Kelly Steckelberg -Nasdaq 44th Virtual Investor Conference June 17, 2021 11:00 AM ET\n\nZoom's Q1 GAAP Income from operations totaled $226.31 Million, with an Operating Margin of 23.7%.\nData by YCharts\nZoom recorded a GAAP Net Income of $227.53 Million and a GAAP Diluted EPS of $0.74 per share.\nData by YCharts\nA few customer metrics:\n\nApproximately 497,000 customers with more than 10 employees, up approximately 87% from the same quarter last fiscal year.\n1,999 customers contributing more than $100,000 in trailing 12 months revenue, up approximately 160% from the same quarter last fiscal year.\nA trailing 12-monthnet dollar expansion ratein customers with more than 10 employees above 130% for the 12th consecutive quarter.\nRevenue Performance Obligation or RPO totaled approximately $2.1 billion, up 94% year-over-year from $1.1 billion. RPO is simply billed and unbilled revenue that has yet to be recognized. Zoom management expects to recognize approximately 72% of the total RPO as revenue over the next 12 months, consistent with the level of this metric last year.\n\nAs far as RPO goes, It’s important that investors remember that deferred revenue and RPO trends arenot reliable predictors of future revenue growthdue to the large percent of monthly billings in the customer base from customers that have fewer than 10 employees.\nIt is also important to be aware that the timing of the company's renewals has increasingly shifted to the beginning of the fiscal year, with Q1 now representing the largest renewal quarter. Each of the sequential increases in deferred revenue and RPO in each of the remaining quarters will be lower as the available population of annual renewals is smaller.\nCompany Guidance\n\nSource:Zoom Video Q1 FY22 Investor Presentation\nBalance Sheet\nZoom's balance sheet is in great shape. Zoom Video's total cash, cash equivalents, and marketable securities, excluding restricted cash, as of April 30, 2021 was $4.7 billion.\nZoom Video's total current liabilities is $1.5 billion. Zoom Video has a Debt To Equity ratio of .02 and aQuick Ratio (Acid Test)of 3.32. A Good Quick Ratio is any number above 1.0.\nAs for Cash flow, the net cash provided by operating activities was $533.3 million for the first quarter, compared to $259.0 million in the first quarter of fiscal year 2021. Free cash flow, which is net cash provided by operating activities less purchases of property and equipment, was $454.2 million, compared to $251.7 million in the first quarter of fiscal year 2021.\nData by YChartsZoom Aides A Hybrid Work Model For Customers\nShortly after COVID-19 hit American shores in March of 2020, it wasn't long before Zoom Video Communications became classified as a \"pandemic stock\", as \"shelter in place\" forced businesses to close offices and connect with employees in a work-at-home environment through the use of Zoom's products.\nNow that the pandemic is on the beginning edges of subsiding and offices are re-opening, companies have started to re-imagine the workplace. Many businesses have decided that rather than forcing employees to come back into the office, they should evolve the \"workplace\" intoa hybrid work model, by giving their employees the flexibility to choose whether they want to work in the office, remotely, or a combination of the two.\n\n As parts of the world reopened, a few things are clear. First, many customers I talk to are looking to create hybrid solutions as they seek to cautiously reopen some offices.Source: Founder and CEO Eric Yuan -Zoom Q1 FY22 Earnings Webinar\n\nDuring the Q1 earnings call, the Zoom CEO indicated that in a recent study that the company conducted, 80% of U.S. respondents agreed that all interactions will continue to have a virtual element post-pandemic, and that figure was even higher in many of the markets that Zoom is in. So The hybrid work model is likely here to stay.\nZoom is currently innovating new products to help their customers evolve into the hybrid work model. One such product isZoom Room. Zoom Room is a physical hardware setup that lets companies schedule and launchZoom Meetingsfrom their conference rooms.\nZoom Room has features such asvirtual receptionist (Kiosk Mode), participant counting, environmental sensors, voice commands and Smart Gallery which uses AI to create a gallery view of in-room participants, which puts in-room and remote participants on an equal footing.\nAnother product that Zoom created for the hybrid work environment that will soon be released isZoom Events, which is an all-in-one platform that gives customers the tools to create engaging virtual experiences. Some of the tools available on Zoom Events are the ability to build a branded event hub, manage ticketing and registration, use one dashboard to administer user access, and the ability to allow attendees to network during an event. The Zoom Events product will be focused on enterprise customers and help support an array of virtual event use cases.\nZoom Phone\nZoom Phone is a service designed for the hybrid work environment. In simple language, Zoom Phone is simply a modern cloud-based phone system that can make and receive calls directly from Zoom. This service also serves as the last piece that Zoom needed to become a full fledgedUCaaS platformdesigned to solve the needs of large enterprise customers.\nZoom Phoneruns on the same backbone as Zoom Meeting. The only difference between Zoom Phone and Zoom Meeting is that Zoom Phone has phone number management and can seamlessly make and receive phone calls, share content, participate in video meetings, and send chat messages from Zoom desktop and mobile apps. Zoom Phone was launched in January 2019 as a business phone solution that is as simple, reliable, and easy to use as the video platform. Zoom has recently announced surpassing1.5 million Zoom Phone seatssold worldwide, so the service is really starting to take off.\nThe company's strategy for selling Zoom Phone is to sell into the existing Zoom Meetings install base. In the first half of this year, Zoom Phones had slower growth as enterprises seemed to pause on considering the product, However, coming into the second half of the year, interest is starting to rise in Zoom Phone as companies want to continue the digital transformation process.\nMany large enterprises are just beginning to realize that there are thousands of phones and phone lines sitting in offices unused because of the COVID-induced work from home trend. Even with the re-opening of offices, the evolvement of the workplace into a hybrid environment where people can work from anywhere, is finally making it click in enterprise leader's minds that by shifting the phone system from being on-prem to being located in the cloud will have the advantage of allowing people to use their company phone lines no matter where they are. Zoom Phone allows employees to carry their phone service on their mobile device or they can have the service on their laptop or desktop.\nIn addition, the company hasrecently announcedthis month a new device category called Zoom Phone Appliances to help empower a hybrid workforce by providing an All-In-One Desk Phone Solution for Calls and Meetings. Zoom Phone Appliances will now allow customers to take advantage of all the powerful audio and video capabilities of the Zoom Phone cloud solution on a purpose built hardware solution.\nSource:Zoom Video Website\nZoom Phone Appliances will launch with three models, the Poly CCX 600 with Camera, the Poly CCX 700, and the Yealink VP59. This new hardware isalready available today on Zoom's website.\nWhat's Next For Zoom?\nSome analyst have speculated that with $4.7 billion on the balance sheet that Zoom could make a possible acquisition, possibly in theContact Center as a Service or CCaaSspace. CCaaS is essentially a virtual call center based in the cloud which aids a customer support function.\n\n \"At some point we believe it makes sense for ZM to buy or build a cloud contact center solution to bundle with Zoom Phone and video, which could add to growth.\"Source: Baird analyst William Power -Investors.com\n\nZoom Platform Strategy\nIn February, really started to invest in a developer ecosystem bylaunching the Zoom Video SDK, which helps developers build and embed fully customizable Zoom video services inside other applications.\nZoom had already introduced Zoom Apps and the Marketplace to help distribute and sell the apps last year at the virtualZoomtopia user conference.\nIn April, Zoom enhanced Zoom Apps by announcing a $100 million Zoom Apps Fund to further build the app ecosystem. This is an attempt by Zoom to integrate apps directly into the Zoom experience so that users don’t have to switch back and forth between multiple applications, which should help collaboration and boost efficiency.\nInternational Opportunities\nInternational has always been one of the key growth strategies for the last several years. In recent quarters, Zoom made significant investments in their international teams, and the progress from those investments can already be seen.\nInternational markets showed strong growth during the quarter. Americas revenue grew 159% year-over-year. The combined APAC and EMEA revenue grew 288% year-over-year to become approximately 34% of revenue, up from 25% a year ago.\nPre-pandemic Europe was a couple of years behind the U.S. in terms of video adoption. But that's likely not the case anymore. Globally, video adoption has become a communication mode that everybody is now comfortable with. The global opportunity remains large and Zoom plans to capitalize on their opportunities.\nThe pandemic has raised Zoom's brand awareness and what that has done is really open up markets worldwide that pre-pandemic would have not been on Zoom's roadmap for a few years. An example of one market that the pandemic opened up for Zoom is Latin America. If the pandemic had never happened, Zoom would have probably only considered entering the area several years down the road. The pandemic has greatly accelerated the timetable on Latin America, as Zoom is already hiring reps in the area. Zoom Video is already seeing results in Latin America., as it was one of the company's strongest performing regions in Q1.\nInternational as a whole was a little over 30% of Zoom's revenue in Q1 and management expects over the long term that international revenue could make up 40% to 50% of the revenue, so expect Zoom to continue to invest strongly in international opportunities.\nSo Exactly How Does Zoom Make Those Sales?\nZoom uses a freemium model to make potential customers aware of their Zoom Meeting product, which helped the company to grow significantly during the pandemic.\nThe way the freemium model works for Zoom is that every time a free host starts a meeting, it often exposes some other potential customer to the Zoom Meetings product. This is the way many people have become initially aware of Zoom and this method of introduction to Zoom continues to happen on a global basis. Zoom has a very viral nature that has always been a very important part of the company's go to market strategy.\nAfter people become aware of Zoom, the most common reason people would decide to upgrade from free to paid is due to the 40 minutes time limit. This means that promoting more usage on the platform has the side effect of motivating people to upgrade to paid. Zoom will also market to free users things like Zoom Phone and try to encourage them to become a multi-product user, which often also motivates them to upgrade.\nGenerally, the way things work upmarket with enterprise customers is that Zoom account reps work on anamed account basis. The way it works is Zoom sales teams will look into the free user base to see if they can find domains with account names that can be recognized, and the sales teams will reach out to those account names, especially if the team starts to see a concentration of free users within a certain domain, then the Zoom sales team will reach out to the head of IT or the CIO and say, \"Hey, can we talk about putting an enterprise license agreement in place?\" That's essentially how Zoom sales teams operate with many new potential major enterprise customers.\nRisks\nAmong the biggest risks Zoom Video has involves security. Last year, security researchers foundseveral major vulnerabilitieswith Zoom Meeting. Zoom hasrapidly addressed all of the security issuesthat plagued the company in 2020. However, any major security issues Zoom has in the future could substantially damage the company's reputation and cause customers to be lost.\nAnother risk that Zoom will face in 2021 is the possibility of high churn as the pandemic ends, especially in the group of customers with less than 10 employees. Companies with less than 10 customers usually only have month to month subscriptions. It will probably take to the end of 2021 before the churn rate of the less than 10 customers stabilizes.\nLast but not least, Zoom's competitors are now aware that video teleconferencing is a major market opportunity and companies ranging from Google and Microsoft to LogMeIn and Fuze are all making attempts to enter the market. Zoom will likely have to invest heavily to stay ahead of its competitors.\nCompetition\nZoom hasmany competitorsthat include Microsoft (NASDAQ:MSFT) Teams and Google(NASDAQ:GOOG)(NASDAQ:GOOGL) Hangouts. Zoom Video has differentiated itself from all of their competitors from the beginning by having the best combination of usability, reliability, performance, focus on the user experience, and remote work features. Also, many companies favor Zoom because the company's tools usually don't require a lot of support from tech staff. It is the combination of all of those above things which makes Zoom Meeting a favorite from the kindergarten class room setting, all the way up to the largest Fortune 10 company. Zoom has been generally acknowledged by most people to be thebest video-conferencing service.\nZoom was founded in 2011 by Eric Yuan, a former corporate vice president for Cisco (NASDAQ:CSCO) Webex. Eric Yuan left Cisco Webex because he was disappointed that whenever he would talk to Cisco Webex’s customers about the video-conferencing product that he’d helped build, that the feedback was always negative and customers were not happy.\nWebex was ultimately a flawed product that was too slow in developing into a product that customers loved and Cisco also didn't put a whole lot of effort into the development of the software during the time of Yuan's employment. So, Yuan left Cisco with 40 engineers with a vision to develop a videoconferencing software platform focused from the ground up to make customers happy. The original company was named Saasbee but the name later changed to Zoom Video in May 2012. The full story of the founding of Zoomcan be read here.\nThe reason why I referenced the founding of Zoom Video here is to illustrate that the very founding of the company was built on a foundation of a desire to solve customer's pain points with videoconferencing software and make customers happy. Previous to Zoom, most videoconferencing software companies were not really in the business of solving customer pain points and many were only offering clunky, hard to use software.\nIn the long-term, the competitor that Zoom Video management really thinks the most of is Microsoft Teams. Currently, Zoom management believes that Meetings is the preferred product that most users want to use, however, there are some customers that want to use Microsoft Teams for certain aspects of their suite, but also want it to be used in conjunction with Zoom. For instance, a customer might prefer to use Microsoft Teams Chat, but they also might prefer to use Zoom for meetings and for phone. For that reason, Zoom offers an integration with Microsoft that allows customers to do things like launch a Zoom Meeting from within the Teams interface or launch a Zoom Meeting within a Microsoft enabled conference room.\nSo, Microsoft and Zoom have a frenemy type relationship. While Zoom Video will continue to work with Microsoft Teams, Zoom wants to remain the overall preferred choice in a category known asUnified Communications as a Service or UCaaS, which is why Zoom continues to invest heavily in innovation. Zoom spends a lot of time listening to their customers' needs, especially in areas likehybrid work environmentand innovation in the conference room with products like Smart Gallery.\nAs for Google Meet, it is part of Google Workspace (Formerly G Suite), along with Google chat. Google Meet is a very good video-conferencing service. People that are very heavy users of Google products might be satisfied with Google Meet, however,Zoom is often a better optionfor large enterprises that want 250 people or more people on the calls or need things like conference room support or whiteboards.\nAnother advantage that Zoom Video has is that the pandemic helped make the name ‘Zoom’ become the‘Kleenex’ of video calling. Zoom Video is now branded in such a way that the perception of many people is that Zoom is the best option (whether that happens to be true for a specific situation or not). Zoom's powerful viral nature has also seemed to create somewhat of a network effect that often influences people when making a decision on which videoconferencing software to use.\nThere are many, many competitors out there, including the nowrebranded WebexandVerizon's Bluejeansbut in almost all cases Zoom either has better features, better usability or is technically superior in some way. In addition, no company has quite the branding in videoconferencing that Zoom has, which often makes the company the first choice to be considered when a company desires videoconferencing software.\nValuation\n\n\n\nCompany\nMkt Cap\nPrice/Sales\nFree Cash Flow Margin %\nEV/Revenues (FWD)\nRevenue Growth (Y/Y) %\nGross Margins %\nRevenues\n\n\nZoom Video (ZM)\n$109.89B\n34.28\n47.50%\n26.37\n191.4%\n72.29%\n$956.24M\n\n\nSnowflake (SNOW)\n$73.85B\n89.74\n1.09%\n62.71\n123.60%\n57.74%\n$228.91M\n\n\nTwilio (TWLO)\n$62.95B\n28.43\n-1.85%\n23.20\n61.70%\n50.56%\n$589.99M\n\n\nRingCentral (RNG)\n$25.91B\n20.72\n2.87%\n18.02\n31.72%\n72.48%\n$352.36M\n\n\nNice Ltd. (NICE)\n$13.39B\n8.74\n33.36%\n7.28\n10.87%\n67.50%\n$455.02M\n\n\nVonage (VG)\n$3.65B\n2.83\n9.26%\n3.06\n11.92%\n52.90%\n$332.90M\n\n\n\nIt is hard to find comparable videoconferencing software companies to compare to Zoom because almost all of the major ones are part of larger corporations.\nThe above companies are the closest ones to what Zoom does without being part of a larger conglomerate. I also included Snowflake (NYSE:SNOW) to compare Zoom to perhaps the most highly valued company in the market. Zoom compares very, very well against Snowflake as Zoom is currently growing faster and is far more profitable currently than Snowflake.\nAt its size, Zoom Video is still among the fastest growing companies in the market. I find it amazing that Zoom made near $1B in revenues in the quarter and still had 191% revenue growth with 47.50% Free Cash Flow margin. Zoom very much deserves its high valuation in comparison to other companies in cloud communication and videoconferencing industry.\nData by YCharts\nSource:Seeking Alpha\nIn 2021, Zoom Video recorded Annual YoY Revenue growth of 325.8%. According to analyst projections, Zoom should make $4.0B in annual revenues for 2022 for an Annual YoY Revenue growth of 51%. So Zoom Video is still growing revenue briskly. Zoom Video has a very good history of beating analysts' estimates on both Revenues and EPS.\nSource:Seeking Alpha\nThe following is based on 21 Wall Street analysts offering 12-month price targets for Snowflake in the last 3 months. The average price target is $414.97 with a high forecast of $540.00 and a low forecast of $242.00. The average price target represents a 10.88% from the last price of $240.60.\nSource:Yahoo Finance\nRBC recently highlighted Zoom as itstop pickwith commentary suggesting that Zoom's \"sharp pullback\" has created an attractive entry point for a company that will be a \"critical component\" of the coming hybrid work environment.\nConclusion\nPeople that invest in Zoom Video are counting on the company to retain many small business accounts as the pandemic eases, as well as continuing the strong gains in larger corporate accounts. In addition, another thing we want to see is Zoom's go-to-market efforts result in successfully converting more free users into paying subscribers.\nInvestors will also want to see Zoom continuing to build out their platform by attracting more developers with Zoom Video SDK, while also enticing more customers to use Zoom apps. Furthermore, Zoom needs to show strong growth in the company's newer products like Zoom Events and Zoom Phone to capture more of the growing hybrid work tools market, in order for investors to see a Zoom investment be profitable from current prices.\nAs one of the premier growth companies in the market today and one of the biggest potential winners of emerging hybrid work environment, Zoom Video is a buy at current prices for those investors looking to add a high growth stock to their portfolio.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":123477963,"gmtCreate":1624437043252,"gmtModify":1703836651540,"author":{"id":"3581993357014262","authorId":"3581993357014262","authorIdStr":"3581993357014262","name":"Slee49","avatar":"https://static.tigerbbs.com/a4a9c556617a3ec3446f5c1c667b4aa0","vip":1,"hat":"https://static.tigerbbs.com/f84d87792f02cf78e80ee34979fd31e5","crmLevel":5,"crmLevelSwitch":1,"idStr":"3581993357014262"},"htmlText":"Like","listText":"Like","text":"Like","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/123477963","repostId":1113239280,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":123477079,"gmtCreate":1624437029891,"gmtModify":1703836652191,"author":{"id":"3581993357014262","authorId":"3581993357014262","authorIdStr":"3581993357014262","name":"Slee49","avatar":"https://static.tigerbbs.com/a4a9c556617a3ec3446f5c1c667b4aa0","vip":1,"hat":"https://static.tigerbbs.com/f84d87792f02cf78e80ee34979fd31e5","crmLevel":5,"crmLevelSwitch":1,"idStr":"3581993357014262"},"htmlText":"Like","listText":"Like","text":"Like","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/123477079","repostId":1113239280,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":123458419,"gmtCreate":1624436086731,"gmtModify":1703836617132,"author":{"id":"3570658912643767","authorId":"3570658912643767","authorIdStr":"3570658912643767","name":"Shihaoyap","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":3,"crmLevelSwitch":0,"idStr":"3570658912643767"},"htmlText":"Wow","listText":"Wow","text":"Wow","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/123458419","repostId":1113239280,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":123458673,"gmtCreate":1624436076692,"gmtModify":1703836616481,"author":{"id":"3583811997319940","authorId":"3583811997319940","authorIdStr":"3583811997319940","name":"Ansonteck","avatar":"https://static.tigerbbs.com/dc6ff1362b23a6a88bd3772087aab417","vip":1,"crmLevel":1,"crmLevelSwitch":0,"idStr":"3583811997319940"},"htmlText":"Like and comment pls","listText":"Like and comment pls","text":"Like and comment pls","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/123458673","repostId":1113239280,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":123465422,"gmtCreate":1624435366966,"gmtModify":1703836594822,"author":{"id":"3586774718687945","authorId":"3586774718687945","authorIdStr":"3586774718687945","name":"Stchua","avatar":"https://static.tigerbbs.com/9c6da38be819096178bf3d64e02165e0","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3586774718687945"},"htmlText":"Like please&nbsp;","listText":"Like please&nbsp;","text":"Like please","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/123465422","repostId":1113239280,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":123417148,"gmtCreate":1624434378684,"gmtModify":1703836564704,"author":{"id":"3585568973332418","authorId":"3585568973332418","authorIdStr":"3585568973332418","name":"Mjoo","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3585568973332418"},"htmlText":"Work on zoom, yoga on zoom, art on zoom. LoveIt to moon","listText":"Work on zoom, yoga on zoom, art on zoom. LoveIt to moon","text":"Work on zoom, yoga on zoom, art on zoom. LoveIt to moon","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/123417148","repostId":1113239280,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":123432536,"gmtCreate":1624433684825,"gmtModify":1703836547235,"author":{"id":"3550452395291547","authorId":"3550452395291547","authorIdStr":"3550452395291547","name":"J.G","avatar":"https://community-static.tradeup.com/news/f3b7e4a1bdc8b3dbace47c5425c0f42a","vip":1,"crmLevel":3,"crmLevelSwitch":1,"idStr":"3550452395291547"},"htmlText":"Oh ya","listText":"Oh ya","text":"Oh ya","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/123432536","repostId":1113239280,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":123436805,"gmtCreate":1624433625407,"gmtModify":1703836545119,"author":{"id":"3564564201334764","authorId":"3564564201334764","authorIdStr":"3564564201334764","name":"Ruzzer","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":4,"crmLevelSwitch":0,"idStr":"3564564201334764"},"htmlText":"Good","listText":"Good","text":"Good","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/123436805","repostId":1113239280,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":123433801,"gmtCreate":1624433475303,"gmtModify":1703836540751,"author":{"id":"3579391265651951","authorId":"3579391265651951","authorIdStr":"3579391265651951","name":"CharlesKing","avatar":"https://static.tigerbbs.com/d8fbdcf3295ba7f84c1f2205610ea968","vip":1,"crmLevel":1,"crmLevelSwitch":0,"idStr":"3579391265651951"},"htmlText":"Like and comment plz???","listText":"Like and comment plz???","text":"Like and comment plz???","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/123433801","repostId":1113239280,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":4971647,"gmtCreate":1624433698543,"gmtModify":1663229795636,"authorId":3550452395291547,"author":{"id":3550452395291547,"authorId":3550452395291547,"name":"J.G","avatar":"https://community-static.tradeup.com/news/f3b7e4a1bdc8b3dbace47c5425c0f42a","vip":1,"currentWearingBadge":{"badgeId":"972123088c9646f7b6091ae0662215be-3","templateUuid":"972123088c9646f7b6091ae0662215be","name":"Legendary Trader","description":"Total number of securities or futures transactions reached 300","bigImgUrl":"https://static.tigerbbs.com/656db16598a0b8f21429e10d6c1cb033","smallImgUrl":"https://static.tigerbbs.com/03f10910d4dd9234f9b5702a3342193a","grayImgUrl":"https://static.tigerbbs.com/0c767e35268feb729d50d3fa9a386c5a","redirectLinkEnabled":0,"hasAllocated":1,"isWearing":1,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2021.12.28","exceedPercentage":"93.49%","individualDisplayEnabled":0,"individualDisplaySort":0,"categoryType":1100},"crmLevel":3,"crmLevelSwitch":1,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":123433801,"type":1,"supId":0,"prevId":0,"content":"done","text":"done","html":"done"}],"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":35,"commentSize":9,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}