Zoom Stock: What's The Outlook Once COVID Wanes

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Zoom Stock: What's The Outlook Once COVID Wanes

seekingalpha2021-04-16

Summary Zoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021. Zoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise ...

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TeflonTusk
·2021-04-16
Not tood bad
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Heemeng
·2021-04-16
Look and see.
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Joycechan84
·2021-04-16
Like and share
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JojoLee
·2021-04-16
[思考]
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1
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jw_la
·2021-04-16
Zoom is very convenient to use in online meeting, but for stock to appreciate, much more works need to be done
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mitsui
·2021-04-16
oooof
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Mochizuki
·2021-04-16
Zoom probably can’t sustain past the pandemic
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- AmosTeo:
  Hhahaaa
  2021-04-19
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- Auteur:
  ?
  2021-04-18
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Josca
·2021-04-16
Nice
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1
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- Egging:
  wow
  2021-04-16
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- GM33:
  Rigt
  2021-04-16
  Reply
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ThangCT
·2021-04-16
Cool
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1
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- Josca:
  Nice
  2021-04-16
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Barbarazhao
·2021-04-16
I believe Zoom will continue to do well after the pandemic
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- Clumsypig:
  嗯，好东西使用的人会越来越多，不是疫情过了就不用了
  2021-04-16
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- poonhoekit:
  up up
  2021-04-16
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- Barbarazhao:
  Yes
  2021-04-16
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dontlose
·2021-04-16
Overvalued
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- carceng:
  Yes i agree
  2021-04-16
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yung
·2021-04-16
High use during covid
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The slowdown in ZM's QoQ revenue growth in the most recent quarter could explain why the company's share price performance has been lackluster this year.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively. ZM's current valuations are not demanding on a relative basis as compared to peers, but the valuation de-rating of the technology sector might have just begun as investors switch to reopening plays in view of the ongoing vaccine roll-out program.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk factor. Also valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations. On the flip side, I am positive on Zoom's medium to long term growth drivers like international expansion and Zoom Phone.\nTaking into account all the factors highlighted above, I think that Zoom deserves a Neutral rating.\nCompany Description\nIn its FY 2021 10-K, Zoom Video Communications, Inc refers to itself as a provider of \"a video-first unified communications platform\" which helps to \"connect people through frictionless and secure video, phone, chat, and content sharing.\" The company's key products include Zoom Meetings, Zoom Rooms and Zoom Phone, which are detailed below.\n\nSource: Zoom's FY 2021 10-K And October 2020 Analyst Day Presentation Slides\nThe Americas, EMEA (Europe, the Middle East and Africa), and Asia-Pacific regions contributed 69%, 18% and 13% of Zoom's FY 2021 top line.\nZoom Stock Price\n2020 was a great year for Zoom with regards to share price performance, but the stock is still delivering negative share price returns in 2021 year-to-date.\nZM's share price almost quintupled from $68.04 as of the last day of 2019 to $337.32 as of end-2020. Notably, Zoom Video Communications, Inc's stock price reached an all-time high of $568.34 on October 19, 2020. Earlier, Zoom held its\"annual user conference\"known as Zoomtopia on October 14, 2020 where it disclosed updates to the Zoom platform, which led to a number of sell-side analysts increasing their respective target pricesfor the stock.\nHowever, Zoom's share price subsequently dropped by -41% to close at $337.32 as of December 31, 2020, aspositive news flow on vaccine development since November 2020 continued to put pressure on the share prices of Work-From-Home or WFH beneficiaries like ZM. The downward trend in Zoom's stock price continued into 2021, as ZM's stock price declined marginally by -2% from $337.32 as of December 31, 2020 to $329.20 as of April 14, 2021.\nAlthough Zoom's stock price rose by +10% from $373.61 as of February 26, 2021 to $409.66 as of March 1, 2021 prior to the company's release of 4Q FY 2021 results on the same day after trading hours. But ZM's share price fell by -9% to $372.79 as of March 2, 2021 a day after its results announcement.\nIf one delves deeper into Zoom's 4Q FY 2021 financial results, it is easy to understand why Zoom's share price dropped on March 2, 2021, and subsequently declined by an additional -10% over the next one and a half months post-results to close at $329.20 as of April 14, 2021.\nZoom Video Communications, Inc's revenue jumped by +369% YoY to $882 million in 4Q FY 2021, which was also +9% higher than market consensus' quarterly revenue forecast of around $811 million. But it is noteworthy that ZM's QoQ revenue growth narrowed from +17% in 3Q FY 2021 to +14% 4Q FY 2021. This also pales in comparison to Zoom's QoQ revenue growth rates of +102% and +74% for 2Q FY 2021 and 1Q FY 2021, respectively. The slowdown in QoQ top line expansion in the most recent quarter validates market concerns about WFH tailwinds easing for Zoom (when COVID wanes) to a large extent, which explains Zoom's poor share price performance post-results.\nValuation\nZoom Video Communications, Inc trades at 24.3 times consensus forward FY 2022 Enterprise Value-to-Revenue and 20.0 times consensus forward FY 2023 Enterprise Value-to-Revenue $329.20 as of April 14, 2021. The market also values the company at consensus forward FY 2022 and FY 2023 EV/EBITDA multiples of 77.5 times and 63.2 times, respectively. The company is expected to achieve revenue growth rates of +44% and +22% in the current fiscal year, and the next fiscal year, respectively according to S&P Capital IQ data.\nZM looks relatively more attractive on a forward EV/EBITDA basis, but its forward Enterprise Value-to-Revenue multiples and revenue growth rates are more or less in line with its peers. However, the valuations for Zoom and its peers are rather rich on an absolute basis, and there is no certainty that the de-rating for technology stocks and WFH beneficiaries has already run its full course.\nPeer Valuation Comparison For Zoom\n\n\n\nStock\nConsensus Current Year Enterprise Value-to-Revenue Multiple\nConsensus Forward One-Year Enterprise Value-to-Revenue Multiple\nConsensus Current Year EV/EBITDA\nConsensus Forward One-Year EV/EBITDA\nConsensus Current Year Revenue Growth Rate\nConsensus Forward One-Year Revenue Growth Rate\n\n\nSlack Technologies, Inc (WORK)\n15\n13\n283\n106\n+30%\n+28%\n\n\nTwilio Inc (TWLO)\n25\n19\n380\n218\n+38%\n+31%\n\n\nAtlassian Corporation Plc (TEAM)\n28\n24\n108\n94\n+24%\n+15%\n\n\n\nSource: Author\nZoom Forecast In 2021\nZoom Video Communications guided for revenue of $3,760-$3,780 million and non-GAAP core earnings per share of $3.59-$3.65 for calendar year 2021 or fiscal year 2022 (YE January 31). This translates to top line and bottom line growth of +42% and +8%, respectively this year, based on the mid-point of ZM's guidance.\nSell-side analysts are more optimistic, as they expect Zoom to achieve revenue and normalized earnings growth of +44% and +12%, respectively in the current fiscal year. Nevertheless, it is not surprising that Zoom is not expected to grow as fast this year as it did last year with WFH tailwinds easing. As a reference, ZM's revenue increased by +326% in the most recent fiscal year, while its core earnings per share jumped by +854% last year.\nThe key factor that will impact Zoom's financial performance this year is the churn rate for its customer cohort with less than 10 staff. The company's proportion of revenue derived from clients with under 10 staff doubled from 18% in FY 2020 to 36% in FY 2021, which it attributed to \"business owners and individual users\" using \"Zoom for many personal, professional, and social events\" in its 10-K. In other words, ZM's customer cohort with less than 10 staff was a significant driver of revenue growth for the company last year, as compared to its customer cohort with more than 10 employees.\nLooking forward into the current fiscal year, I expect Zoom's churn rate for its customer cohort with less than 10 staff to be significantly higher than its customer cohort with more than 10 employees for two key reasons.\nFirstly, fewer individuals will use Zoom for social purposes as COVID wanes, and there is a higher risk of business failure for smaller companies vis-a-vis their larger counterparts. Secondly, Zoom adopts a \"self-service\" model for its customer cohort with less than 10 staff, while there are sales teams to support its customer cohort with more than 10 employees, which makes this group of clients relatively more sticky.\nIn a nutshell, while ZM has set \"relatively modest\" growth target this year, there could still be room for disappointment (e.g. revenue miss), if COVID-19 is brought under control sooner than expected, and the churn rate for its customer cohort with less than 10 staff ends up higher than expected.\nIs Zoom Stock A Good Buy\nZoom stock is a HOLD for me now, but it could be a good buy in the medium to long term if there is a further correction in ZM's share price implying more attractive valuations, and the company delivers on its growth strategies.\nZoom Video Communications, Inc's key growth strategies are international expansion and increasing revenue from new products like Zoom Phone.\nThe company only generated 31% of its FY 2021 revenue from international markets outside the Americas, but these foreign markets are growing fast. Revenue for the Asia Pacific and EMEA markets grew by +551% and +587%, respectively last year, while the top line for ZM's Americas region increased by a lower +266% over the same period. Zoom highlighted at the company's FY 2021 earnings call on March 1, 2021 that \"we intend to make additional investments in international resources to further capitalize on the global opportunity.\"\nAnother key growth driver for Zoom in the medium term is Zoom Phone. In January 2021, ZM disclosed that \"it has sold one million Zoom Phone seats\" in less than two years of the product's launch. Based on my personal correspondence with the company, I was told that there are about hundreds of millions of commercial phones in the US running on legacy software that could potentially be migrating to cloud-based PBX (Private Branch Exchange) systems (like that of Zoom Phone) in time to come.\nZoom also noted at the Morgan Stanley (MS) Technology, Media and Telecom Conference on March 3, 2021 that \"on a percentage basis, Zoom Phone has been our fastest-growing product line in Q3 and Q4\", and the company sees Zoom Phone as \"a percentage of growth basis to outpace (Zoom) Meetings (company's core product)\" in the current fiscal year.\nOn the other hand, I am concerned that Zoom's revenue growth this year could disappoint the market, considering the possibility of a higher-than-expected churn rate for its customer cohort with less than 10 staff. As such, I see a Neutral rating for the stock as fair.\nZoom Video Communications, Inc's key risk factors are a shorter-than-expected time taken for the coronavirus pandemic to be effectively contained, and poor execution on key growth initiatives like international expansion and the Zoom Phone.","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":370380008,"gmtCreate":1618551935104,"gmtModify":1704712625491,"author":{"id":"3576998804963004","authorId":"3576998804963004","authorIdStr":"3576998804963004","name":"TeflonTusk","avatar":"https://static.tigerbbs.com/d26e5b87de0105f8968c3e86381c9a60","vip":1,"crmLevel":1,"crmLevelSwitch":0,"idStr":"3576998804963004"},"htmlText":"Not tood bad","listText":"Not tood bad","text":"Not tood bad","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/370380008","repostId":1117277782,"repostType":4,"repost":{"id":"1117277782","pubTimestamp":1618539309,"share":"https://ttm.financial/m/news/1117277782?lang=&edition=fundamental","pubTime":"2021-04-16 10:15","market":"us","language":"en","title":"Zoom Stock: What's The Outlook Once COVID Wanes","url":"https://stock-news.laohu8.com/highlight/detail?id=1117277782","media":"seekingalpha","summary":"Summary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% y","content":"Summary\n<ul>\n <li>Zoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.</li>\n <li>Zoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively.</li>\n <li>ZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of&nbsp;its customer cohort with under 10 staff being a key downside risk.</li>\n <li>I am positive on Zoom's medium to long-term growth drivers like international expansion and Zoom Phone.</li>\n <li>But I think Zoom is a HOLD rather than a BUY, as valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/cf695f0ee4625d58a734edbfe6cb7430\" tg-width=\"768\" tg-height=\"512\">Photo by Luis Alvarez/DigitalVision via Getty Images\nElevator Pitch\nI assign a Neutral rating to Zoom Video Communications, Inc (ZM).\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021. The slowdown in ZM's QoQ revenue growth in the most recent quarter could explain why the company's share price performance has been lackluster this year.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively. ZM's current valuations are not demanding on a relative basis as compared to peers, but the valuation de-rating of the technology sector might have just begun as investors switch to reopening plays in view of the ongoing vaccine roll-out program.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk factor. Also valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations. On the flip side, I am positive on Zoom's medium to long term growth drivers like international expansion and Zoom Phone.\nTaking into account all the factors highlighted above, I think that Zoom deserves a Neutral rating.\nCompany Description\nIn its FY 2021 10-K, Zoom Video Communications, Inc&nbsp;refers to itself&nbsp;as a provider of \"a video-first unified communications platform\" which helps to \"connect people through frictionless and secure video, phone, chat, and content sharing.\" The company's key products include Zoom Meetings, Zoom Rooms and Zoom Phone, which are detailed below.\n<img src=\"https://static.tigerbbs.com/b2ce8a0468e9ba4263d742190a82d70e\" tg-width=\"640\" tg-height=\"140\"><img src=\"https://static.tigerbbs.com/ca6f50d9ee74057e4a22fda98241529c\" tg-width=\"640\" tg-height=\"125\"><img src=\"https://static.tigerbbs.com/cfb55bbf89d56bb0584a5599b0453bb9\" tg-width=\"640\" tg-height=\"298\">\n<img src=\"https://static.tigerbbs.com/f4acfd03336743c0393a66d394665c36\" tg-width=\"640\" tg-height=\"309\">Source: Zoom's FY 2021 10-K And October 2020 Analyst Day Presentation Slides\nThe Americas, EMEA (Europe, the Middle East and Africa), and Asia-Pacific regions contributed&nbsp;69%, 18% and 13%&nbsp;of Zoom's FY 2021 top line.\nZoom Stock Price\n2020 was a great year for Zoom with regards to share price performance, but the stock is still delivering negative share price returns in 2021 year-to-date.\nZM's share price almost quintupled from $68.04 as of the last day of 2019 to&nbsp;$337.32&nbsp;as of end-2020. Notably, Zoom Video Communications, Inc's stock price reached an all-time high of $568.34 on October 19, 2020. Earlier, Zoom held its\"annual user conference\"known as Zoomtopia on October 14, 2020 where it disclosed updates to the Zoom platform, which led to a number of sell-side analysts&nbsp;increasing their respective target pricesfor the stock.\nHowever, Zoom's share price subsequently dropped by -41% to close at $337.32 as of December 31, 2020, aspositive news flow on vaccine development&nbsp;since November 2020 continued to put pressure on the share prices of Work-From-Home or WFH beneficiaries like ZM. The downward trend in Zoom's stock price continued into 2021, as ZM's stock price declined marginally by -2% from $337.32 as of December 31, 2020 to $329.20 as of April 14, 2021.\nAlthough Zoom's stock price rose by +10% from $373.61 as of February 26, 2021 to $409.66 as of March 1, 2021 prior to the company's&nbsp;release of 4Q FY 2021 results&nbsp;on the same day after trading hours. But ZM's share price fell by -9% to $372.79 as of March 2, 2021 a day after its results announcement.\nIf one delves deeper into Zoom's 4Q FY 2021 financial results, it is easy to understand why Zoom's share price dropped on March 2, 2021, and subsequently declined by an additional -10% over the next one and a half months post-results to close at $329.20 as of April 14, 2021.\nZoom Video Communications, Inc's revenue jumped by +369% YoY to $882 million in 4Q FY 2021, which was also +9% higher than market consensus' quarterly revenue forecast of around&nbsp;$811 million. But it is noteworthy that ZM's QoQ revenue growth narrowed from +17% in 3Q FY 2021 to +14% 4Q FY 2021. This also pales in comparison to Zoom's QoQ revenue growth rates of +102% and +74% for 2Q FY 2021 and 1Q FY 2021, respectively. The slowdown in QoQ top line expansion in the most recent quarter validates market concerns about WFH tailwinds easing for Zoom (when COVID wanes) to a large extent, which explains Zoom's poor share price performance post-results.\nValuation\nZoom Video Communications, Inc trades at 24.3 times consensus forward FY 2022 Enterprise Value-to-Revenue and 20.0 times consensus forward FY 2023 Enterprise Value-to-Revenue $329.20 as of April 14, 2021. The market also values the company at consensus forward FY 2022 and FY 2023 EV/EBITDA multiples of 77.5 times and 63.2 times, respectively. The company is expected to achieve revenue growth rates of +44% and +22% in the current fiscal year, and the next fiscal year, respectively according to S&amp;P Capital IQ data.\nZM looks relatively more attractive on a forward EV/EBITDA basis, but its forward Enterprise Value-to-Revenue multiples and revenue growth rates are more or less in line with its peers. However, the valuations for Zoom and its peers are rather rich on an absolute basis, and there is no certainty that the de-rating for technology stocks and WFH beneficiaries has already run its full course.\nPeer Valuation Comparison For Zoom\n<table>\n <tbody>\n <tr>\n <td>Stock</td>\n <td>Consensus Current Year Enterprise Value-to-Revenue Multiple</td>\n <td>Consensus Forward One-Year Enterprise Value-to-Revenue Multiple</td>\n <td>Consensus Current Year EV/EBITDA</td>\n <td>Consensus Forward One-Year EV/EBITDA</td>\n <td>Consensus Current Year Revenue Growth Rate</td>\n <td>Consensus Forward One-Year Revenue Growth Rate</td>\n </tr>\n <tr>\n <td>Slack Technologies, Inc (WORK)</td>\n <td>15</td>\n <td>13</td>\n <td>283</td>\n <td>106</td>\n <td>+30%</td>\n <td>+28%</td>\n </tr>\n <tr>\n <td>Twilio Inc (TWLO)</td>\n <td>25</td>\n <td>19</td>\n <td>380</td>\n <td>218</td>\n <td>+38%</td>\n <td>+31%</td>\n </tr>\n <tr>\n <td>Atlassian Corporation Plc (TEAM)</td>\n <td>28</td>\n <td>24</td>\n <td>108</td>\n <td>94</td>\n <td>+24%</td>\n <td>+15%</td>\n </tr>\n </tbody>\n</table>\nSource: Author\nZoom Forecast In 2021\nZoom Video Communications guided for revenue of&nbsp;$3,760-$3,780 million&nbsp;and non-GAAP core earnings per share of $3.59-$3.65 for calendar year 2021 or fiscal year 2022 (YE January 31). This translates to top line and bottom line growth of +42% and +8%, respectively this year, based on the mid-point of ZM's guidance.\nSell-side analysts are more optimistic, as they expect Zoom to achieve revenue and normalized earnings growth of +44% and +12%, respectively in the current fiscal year. Nevertheless, it is not surprising that Zoom is not expected to grow as fast this year as it did last year with WFH tailwinds easing. As a reference, ZM's revenue increased by +326% in the most recent fiscal year, while its core earnings per share jumped by +854% last year.\nThe key factor that will impact Zoom's financial performance this year is the churn rate for its customer cohort with less than 10 staff. The company's proportion of revenue derived from clients with under 10 staff doubled from 18% in FY 2020 to&nbsp;36%&nbsp;in FY 2021, which it attributed to \"business owners and individual users\" using \"Zoom for many personal, professional, and social events\" in its 10-K. In other words, ZM's customer cohort with less than 10 staff was a significant driver of revenue growth for the company last year, as compared to its customer cohort with more than 10 employees.\nLooking forward into the current fiscal year, I expect Zoom's churn rate for its customer cohort with less than 10 staff to be significantly higher than its customer cohort with more than 10 employees for two key reasons.\nFirstly, fewer individuals will use Zoom for social purposes as COVID wanes, and there is a higher risk of business failure for smaller companies vis-a-vis their larger counterparts. Secondly, Zoom adopts a \"self-service\" model for its customer cohort with less than 10 staff, while there are sales teams to support its customer cohort with more than 10 employees, which makes this group of clients relatively more sticky.\nIn a nutshell, while ZM has set \"relatively modest\" growth target this year, there could still be room for disappointment (e.g. revenue miss), if COVID-19 is brought under control sooner than expected, and the churn rate for its customer cohort with less than 10 staff ends up higher than expected.\nIs Zoom Stock A Good Buy\nZoom stock is a HOLD for me now, but it could be a good buy in the medium to long term if there is a further correction in ZM's share price implying more attractive valuations, and the company delivers on its growth strategies.\nZoom Video Communications, Inc's key growth strategies are international expansion and increasing revenue from new products like Zoom Phone.\nThe company only generated 31% of its FY 2021 revenue from international markets outside the Americas, but these foreign markets are growing fast. Revenue for the Asia Pacific and EMEA markets grew by&nbsp;+551% and +587%, respectively last year, while the top line for ZM's Americas region increased by a lower +266% over the same period. Zoom&nbsp;highlighted&nbsp;at the company's FY 2021 earnings call on March 1, 2021 that \"we intend to make additional investments in international resources to further capitalize on the global opportunity.\"\nAnother key growth driver for Zoom in the medium term is Zoom Phone. In January 2021, ZM&nbsp;disclosed&nbsp;that \"it has sold one million Zoom Phone seats\" in less than two years of the product's launch. Based on my personal correspondence with the company, I was told that there are about hundreds of millions of commercial phones in the US running on legacy software that could potentially be migrating to cloud-based PBX (Private Branch Exchange) systems (like that of Zoom Phone) in time to come.\nZoom also&nbsp;noted&nbsp;at the Morgan Stanley (MS) Technology, Media and Telecom Conference on March 3, 2021 that \"on a percentage basis, Zoom Phone has been our fastest-growing product line in Q3 and Q4\", and the company sees Zoom Phone as \"a percentage of growth basis to outpace (Zoom) Meetings (company's core product)\" in the current fiscal year.\nOn the other hand, I am concerned that Zoom's revenue growth this year could disappoint the market, considering the possibility of a higher-than-expected churn rate for its customer cohort with less than 10 staff. As such, I see a Neutral rating for the stock as fair.\nZoom Video Communications, Inc's key risk factors are a shorter-than-expected time taken for the coronavirus pandemic to be effectively contained, and poor execution on key growth initiatives like international expansion and the Zoom Phone.","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Zoom Stock: What's The Outlook Once COVID Wanes</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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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 Stock: What's The Outlook Once COVID Wanes\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-04-16 10:15 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise ...\n\n<a href=\"https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"ZM":"Zoom"},"source_url":"https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1117277782","content_text":"Summary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk.\nI am positive on Zoom's medium to long-term growth drivers like international expansion and Zoom Phone.\nBut I think Zoom is a HOLD rather than a BUY, as valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations.\n\nPhoto by Luis Alvarez/DigitalVision via Getty Images\nElevator Pitch\nI assign a Neutral rating to Zoom Video Communications, Inc (ZM).\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021. The slowdown in ZM's QoQ revenue growth in the most recent quarter could explain why the company's share price performance has been lackluster this year.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively. ZM's current valuations are not demanding on a relative basis as compared to peers, but the valuation de-rating of the technology sector might have just begun as investors switch to reopening plays in view of the ongoing vaccine roll-out program.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk factor. Also valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations. On the flip side, I am positive on Zoom's medium to long term growth drivers like international expansion and Zoom Phone.\nTaking into account all the factors highlighted above, I think that Zoom deserves a Neutral rating.\nCompany Description\nIn its FY 2021 10-K, Zoom Video Communications, Inc refers to itself as a provider of \"a video-first unified communications platform\" which helps to \"connect people through frictionless and secure video, phone, chat, and content sharing.\" The company's key products include Zoom Meetings, Zoom Rooms and Zoom Phone, which are detailed below.\n\nSource: Zoom's FY 2021 10-K And October 2020 Analyst Day Presentation Slides\nThe Americas, EMEA (Europe, the Middle East and Africa), and Asia-Pacific regions contributed 69%, 18% and 13% of Zoom's FY 2021 top line.\nZoom Stock Price\n2020 was a great year for Zoom with regards to share price performance, but the stock is still delivering negative share price returns in 2021 year-to-date.\nZM's share price almost quintupled from $68.04 as of the last day of 2019 to $337.32 as of end-2020. Notably, Zoom Video Communications, Inc's stock price reached an all-time high of $568.34 on October 19, 2020. Earlier, Zoom held its\"annual user conference\"known as Zoomtopia on October 14, 2020 where it disclosed updates to the Zoom platform, which led to a number of sell-side analysts increasing their respective target pricesfor the stock.\nHowever, Zoom's share price subsequently dropped by -41% to close at $337.32 as of December 31, 2020, aspositive news flow on vaccine development since November 2020 continued to put pressure on the share prices of Work-From-Home or WFH beneficiaries like ZM. The downward trend in Zoom's stock price continued into 2021, as ZM's stock price declined marginally by -2% from $337.32 as of December 31, 2020 to $329.20 as of April 14, 2021.\nAlthough Zoom's stock price rose by +10% from $373.61 as of February 26, 2021 to $409.66 as of March 1, 2021 prior to the company's release of 4Q FY 2021 results on the same day after trading hours. But ZM's share price fell by -9% to $372.79 as of March 2, 2021 a day after its results announcement.\nIf one delves deeper into Zoom's 4Q FY 2021 financial results, it is easy to understand why Zoom's share price dropped on March 2, 2021, and subsequently declined by an additional -10% over the next one and a half months post-results to close at $329.20 as of April 14, 2021.\nZoom Video Communications, Inc's revenue jumped by +369% YoY to $882 million in 4Q FY 2021, which was also +9% higher than market consensus' quarterly revenue forecast of around $811 million. But it is noteworthy that ZM's QoQ revenue growth narrowed from +17% in 3Q FY 2021 to +14% 4Q FY 2021. This also pales in comparison to Zoom's QoQ revenue growth rates of +102% and +74% for 2Q FY 2021 and 1Q FY 2021, respectively. The slowdown in QoQ top line expansion in the most recent quarter validates market concerns about WFH tailwinds easing for Zoom (when COVID wanes) to a large extent, which explains Zoom's poor share price performance post-results.\nValuation\nZoom Video Communications, Inc trades at 24.3 times consensus forward FY 2022 Enterprise Value-to-Revenue and 20.0 times consensus forward FY 2023 Enterprise Value-to-Revenue $329.20 as of April 14, 2021. The market also values the company at consensus forward FY 2022 and FY 2023 EV/EBITDA multiples of 77.5 times and 63.2 times, respectively. The company is expected to achieve revenue growth rates of +44% and +22% in the current fiscal year, and the next fiscal year, respectively according to S&P Capital IQ data.\nZM looks relatively more attractive on a forward EV/EBITDA basis, but its forward Enterprise Value-to-Revenue multiples and revenue growth rates are more or less in line with its peers. However, the valuations for Zoom and its peers are rather rich on an absolute basis, and there is no certainty that the de-rating for technology stocks and WFH beneficiaries has already run its full course.\nPeer Valuation Comparison For Zoom\n\n\n\nStock\nConsensus Current Year Enterprise Value-to-Revenue Multiple\nConsensus Forward One-Year Enterprise Value-to-Revenue Multiple\nConsensus Current Year EV/EBITDA\nConsensus Forward One-Year EV/EBITDA\nConsensus Current Year Revenue Growth Rate\nConsensus Forward One-Year Revenue Growth Rate\n\n\nSlack Technologies, Inc (WORK)\n15\n13\n283\n106\n+30%\n+28%\n\n\nTwilio Inc (TWLO)\n25\n19\n380\n218\n+38%\n+31%\n\n\nAtlassian Corporation Plc (TEAM)\n28\n24\n108\n94\n+24%\n+15%\n\n\n\nSource: Author\nZoom Forecast In 2021\nZoom Video Communications guided for revenue of $3,760-$3,780 million and non-GAAP core earnings per share of $3.59-$3.65 for calendar year 2021 or fiscal year 2022 (YE January 31). This translates to top line and bottom line growth of +42% and +8%, respectively this year, based on the mid-point of ZM's guidance.\nSell-side analysts are more optimistic, as they expect Zoom to achieve revenue and normalized earnings growth of +44% and +12%, respectively in the current fiscal year. Nevertheless, it is not surprising that Zoom is not expected to grow as fast this year as it did last year with WFH tailwinds easing. As a reference, ZM's revenue increased by +326% in the most recent fiscal year, while its core earnings per share jumped by +854% last year.\nThe key factor that will impact Zoom's financial performance this year is the churn rate for its customer cohort with less than 10 staff. The company's proportion of revenue derived from clients with under 10 staff doubled from 18% in FY 2020 to 36% in FY 2021, which it attributed to \"business owners and individual users\" using \"Zoom for many personal, professional, and social events\" in its 10-K. In other words, ZM's customer cohort with less than 10 staff was a significant driver of revenue growth for the company last year, as compared to its customer cohort with more than 10 employees.\nLooking forward into the current fiscal year, I expect Zoom's churn rate for its customer cohort with less than 10 staff to be significantly higher than its customer cohort with more than 10 employees for two key reasons.\nFirstly, fewer individuals will use Zoom for social purposes as COVID wanes, and there is a higher risk of business failure for smaller companies vis-a-vis their larger counterparts. Secondly, Zoom adopts a \"self-service\" model for its customer cohort with less than 10 staff, while there are sales teams to support its customer cohort with more than 10 employees, which makes this group of clients relatively more sticky.\nIn a nutshell, while ZM has set \"relatively modest\" growth target this year, there could still be room for disappointment (e.g. revenue miss), if COVID-19 is brought under control sooner than expected, and the churn rate for its customer cohort with less than 10 staff ends up higher than expected.\nIs Zoom Stock A Good Buy\nZoom stock is a HOLD for me now, but it could be a good buy in the medium to long term if there is a further correction in ZM's share price implying more attractive valuations, and the company delivers on its growth strategies.\nZoom Video Communications, Inc's key growth strategies are international expansion and increasing revenue from new products like Zoom Phone.\nThe company only generated 31% of its FY 2021 revenue from international markets outside the Americas, but these foreign markets are growing fast. Revenue for the Asia Pacific and EMEA markets grew by +551% and +587%, respectively last year, while the top line for ZM's Americas region increased by a lower +266% over the same period. Zoom highlighted at the company's FY 2021 earnings call on March 1, 2021 that \"we intend to make additional investments in international resources to further capitalize on the global opportunity.\"\nAnother key growth driver for Zoom in the medium term is Zoom Phone. In January 2021, ZM disclosed that \"it has sold one million Zoom Phone seats\" in less than two years of the product's launch. Based on my personal correspondence with the company, I was told that there are about hundreds of millions of commercial phones in the US running on legacy software that could potentially be migrating to cloud-based PBX (Private Branch Exchange) systems (like that of Zoom Phone) in time to come.\nZoom also noted at the Morgan Stanley (MS) Technology, Media and Telecom Conference on March 3, 2021 that \"on a percentage basis, Zoom Phone has been our fastest-growing product line in Q3 and Q4\", and the company sees Zoom Phone as \"a percentage of growth basis to outpace (Zoom) Meetings (company's core product)\" in the current fiscal year.\nOn the other hand, I am concerned that Zoom's revenue growth this year could disappoint the market, considering the possibility of a higher-than-expected churn rate for its customer cohort with less than 10 staff. As such, I see a Neutral rating for the stock as fair.\nZoom Video Communications, Inc's key risk factors are a shorter-than-expected time taken for the coronavirus pandemic to be effectively contained, and poor execution on key growth initiatives like international expansion and the Zoom Phone.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":370338660,"gmtCreate":1618550442950,"gmtModify":1704712604584,"author":{"id":"3580653303727490","authorId":"3580653303727490","authorIdStr":"3580653303727490","name":"Heemeng","avatar":"https://static.tigerbbs.com/233557b79108934fcf6cea2199c46012","vip":1,"hat":"https://static.tigerbbs.com/a3dee1aa3a3a3c1814833a4d3f8a5669","crmLevel":2,"crmLevelSwitch":1,"idStr":"3580653303727490"},"htmlText":"Look and see.","listText":"Look and see.","text":"Look and see.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/370338660","repostId":1117277782,"repostType":4,"repost":{"id":"1117277782","pubTimestamp":1618539309,"share":"https://ttm.financial/m/news/1117277782?lang=&edition=fundamental","pubTime":"2021-04-16 10:15","market":"us","language":"en","title":"Zoom Stock: What's The Outlook Once COVID Wanes","url":"https://stock-news.laohu8.com/highlight/detail?id=1117277782","media":"seekingalpha","summary":"Summary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% y","content":"Summary\n<ul>\n <li>Zoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.</li>\n <li>Zoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively.</li>\n <li>ZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of&nbsp;its customer cohort with under 10 staff being a key downside risk.</li>\n <li>I am positive on Zoom's medium to long-term growth drivers like international expansion and Zoom Phone.</li>\n <li>But I think Zoom is a HOLD rather than a BUY, as valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/cf695f0ee4625d58a734edbfe6cb7430\" tg-width=\"768\" tg-height=\"512\">Photo by Luis Alvarez/DigitalVision via Getty Images\nElevator Pitch\nI assign a Neutral rating to Zoom Video Communications, Inc (ZM).\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021. The slowdown in ZM's QoQ revenue growth in the most recent quarter could explain why the company's share price performance has been lackluster this year.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively. ZM's current valuations are not demanding on a relative basis as compared to peers, but the valuation de-rating of the technology sector might have just begun as investors switch to reopening plays in view of the ongoing vaccine roll-out program.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk factor. Also valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations. On the flip side, I am positive on Zoom's medium to long term growth drivers like international expansion and Zoom Phone.\nTaking into account all the factors highlighted above, I think that Zoom deserves a Neutral rating.\nCompany Description\nIn its FY 2021 10-K, Zoom Video Communications, Inc&nbsp;refers to itself&nbsp;as a provider of \"a video-first unified communications platform\" which helps to \"connect people through frictionless and secure video, phone, chat, and content sharing.\" The company's key products include Zoom Meetings, Zoom Rooms and Zoom Phone, which are detailed below.\n<img src=\"https://static.tigerbbs.com/b2ce8a0468e9ba4263d742190a82d70e\" tg-width=\"640\" tg-height=\"140\"><img src=\"https://static.tigerbbs.com/ca6f50d9ee74057e4a22fda98241529c\" tg-width=\"640\" tg-height=\"125\"><img src=\"https://static.tigerbbs.com/cfb55bbf89d56bb0584a5599b0453bb9\" tg-width=\"640\" tg-height=\"298\">\n<img src=\"https://static.tigerbbs.com/f4acfd03336743c0393a66d394665c36\" tg-width=\"640\" tg-height=\"309\">Source: Zoom's FY 2021 10-K And October 2020 Analyst Day Presentation Slides\nThe Americas, EMEA (Europe, the Middle East and Africa), and Asia-Pacific regions contributed&nbsp;69%, 18% and 13%&nbsp;of Zoom's FY 2021 top line.\nZoom Stock Price\n2020 was a great year for Zoom with regards to share price performance, but the stock is still delivering negative share price returns in 2021 year-to-date.\nZM's share price almost quintupled from $68.04 as of the last day of 2019 to&nbsp;$337.32&nbsp;as of end-2020. Notably, Zoom Video Communications, Inc's stock price reached an all-time high of $568.34 on October 19, 2020. Earlier, Zoom held its\"annual user conference\"known as Zoomtopia on October 14, 2020 where it disclosed updates to the Zoom platform, which led to a number of sell-side analysts&nbsp;increasing their respective target pricesfor the stock.\nHowever, Zoom's share price subsequently dropped by -41% to close at $337.32 as of December 31, 2020, aspositive news flow on vaccine development&nbsp;since November 2020 continued to put pressure on the share prices of Work-From-Home or WFH beneficiaries like ZM. The downward trend in Zoom's stock price continued into 2021, as ZM's stock price declined marginally by -2% from $337.32 as of December 31, 2020 to $329.20 as of April 14, 2021.\nAlthough Zoom's stock price rose by +10% from $373.61 as of February 26, 2021 to $409.66 as of March 1, 2021 prior to the company's&nbsp;release of 4Q FY 2021 results&nbsp;on the same day after trading hours. But ZM's share price fell by -9% to $372.79 as of March 2, 2021 a day after its results announcement.\nIf one delves deeper into Zoom's 4Q FY 2021 financial results, it is easy to understand why Zoom's share price dropped on March 2, 2021, and subsequently declined by an additional -10% over the next one and a half months post-results to close at $329.20 as of April 14, 2021.\nZoom Video Communications, Inc's revenue jumped by +369% YoY to $882 million in 4Q FY 2021, which was also +9% higher than market consensus' quarterly revenue forecast of around&nbsp;$811 million. But it is noteworthy that ZM's QoQ revenue growth narrowed from +17% in 3Q FY 2021 to +14% 4Q FY 2021. This also pales in comparison to Zoom's QoQ revenue growth rates of +102% and +74% for 2Q FY 2021 and 1Q FY 2021, respectively. The slowdown in QoQ top line expansion in the most recent quarter validates market concerns about WFH tailwinds easing for Zoom (when COVID wanes) to a large extent, which explains Zoom's poor share price performance post-results.\nValuation\nZoom Video Communications, Inc trades at 24.3 times consensus forward FY 2022 Enterprise Value-to-Revenue and 20.0 times consensus forward FY 2023 Enterprise Value-to-Revenue $329.20 as of April 14, 2021. The market also values the company at consensus forward FY 2022 and FY 2023 EV/EBITDA multiples of 77.5 times and 63.2 times, respectively. The company is expected to achieve revenue growth rates of +44% and +22% in the current fiscal year, and the next fiscal year, respectively according to S&amp;P Capital IQ data.\nZM looks relatively more attractive on a forward EV/EBITDA basis, but its forward Enterprise Value-to-Revenue multiples and revenue growth rates are more or less in line with its peers. However, the valuations for Zoom and its peers are rather rich on an absolute basis, and there is no certainty that the de-rating for technology stocks and WFH beneficiaries has already run its full course.\nPeer Valuation Comparison For Zoom\n<table>\n <tbody>\n <tr>\n <td>Stock</td>\n <td>Consensus Current Year Enterprise Value-to-Revenue Multiple</td>\n <td>Consensus Forward One-Year Enterprise Value-to-Revenue Multiple</td>\n <td>Consensus Current Year EV/EBITDA</td>\n <td>Consensus Forward One-Year EV/EBITDA</td>\n <td>Consensus Current Year Revenue Growth Rate</td>\n <td>Consensus Forward One-Year Revenue Growth Rate</td>\n </tr>\n <tr>\n <td>Slack Technologies, Inc (WORK)</td>\n <td>15</td>\n <td>13</td>\n <td>283</td>\n <td>106</td>\n <td>+30%</td>\n <td>+28%</td>\n </tr>\n <tr>\n <td>Twilio Inc (TWLO)</td>\n <td>25</td>\n <td>19</td>\n <td>380</td>\n <td>218</td>\n <td>+38%</td>\n <td>+31%</td>\n </tr>\n <tr>\n <td>Atlassian Corporation Plc (TEAM)</td>\n <td>28</td>\n <td>24</td>\n <td>108</td>\n <td>94</td>\n <td>+24%</td>\n <td>+15%</td>\n </tr>\n </tbody>\n</table>\nSource: Author\nZoom Forecast In 2021\nZoom Video Communications guided for revenue of&nbsp;$3,760-$3,780 million&nbsp;and non-GAAP core earnings per share of $3.59-$3.65 for calendar year 2021 or fiscal year 2022 (YE January 31). This translates to top line and bottom line growth of +42% and +8%, respectively this year, based on the mid-point of ZM's guidance.\nSell-side analysts are more optimistic, as they expect Zoom to achieve revenue and normalized earnings growth of +44% and +12%, respectively in the current fiscal year. Nevertheless, it is not surprising that Zoom is not expected to grow as fast this year as it did last year with WFH tailwinds easing. As a reference, ZM's revenue increased by +326% in the most recent fiscal year, while its core earnings per share jumped by +854% last year.\nThe key factor that will impact Zoom's financial performance this year is the churn rate for its customer cohort with less than 10 staff. The company's proportion of revenue derived from clients with under 10 staff doubled from 18% in FY 2020 to&nbsp;36%&nbsp;in FY 2021, which it attributed to \"business owners and individual users\" using \"Zoom for many personal, professional, and social events\" in its 10-K. In other words, ZM's customer cohort with less than 10 staff was a significant driver of revenue growth for the company last year, as compared to its customer cohort with more than 10 employees.\nLooking forward into the current fiscal year, I expect Zoom's churn rate for its customer cohort with less than 10 staff to be significantly higher than its customer cohort with more than 10 employees for two key reasons.\nFirstly, fewer individuals will use Zoom for social purposes as COVID wanes, and there is a higher risk of business failure for smaller companies vis-a-vis their larger counterparts. Secondly, Zoom adopts a \"self-service\" model for its customer cohort with less than 10 staff, while there are sales teams to support its customer cohort with more than 10 employees, which makes this group of clients relatively more sticky.\nIn a nutshell, while ZM has set \"relatively modest\" growth target this year, there could still be room for disappointment (e.g. revenue miss), if COVID-19 is brought under control sooner than expected, and the churn rate for its customer cohort with less than 10 staff ends up higher than expected.\nIs Zoom Stock A Good Buy\nZoom stock is a HOLD for me now, but it could be a good buy in the medium to long term if there is a further correction in ZM's share price implying more attractive valuations, and the company delivers on its growth strategies.\nZoom Video Communications, Inc's key growth strategies are international expansion and increasing revenue from new products like Zoom Phone.\nThe company only generated 31% of its FY 2021 revenue from international markets outside the Americas, but these foreign markets are growing fast. Revenue for the Asia Pacific and EMEA markets grew by&nbsp;+551% and +587%, respectively last year, while the top line for ZM's Americas region increased by a lower +266% over the same period. Zoom&nbsp;highlighted&nbsp;at the company's FY 2021 earnings call on March 1, 2021 that \"we intend to make additional investments in international resources to further capitalize on the global opportunity.\"\nAnother key growth driver for Zoom in the medium term is Zoom Phone. In January 2021, ZM&nbsp;disclosed&nbsp;that \"it has sold one million Zoom Phone seats\" in less than two years of the product's launch. Based on my personal correspondence with the company, I was told that there are about hundreds of millions of commercial phones in the US running on legacy software that could potentially be migrating to cloud-based PBX (Private Branch Exchange) systems (like that of Zoom Phone) in time to come.\nZoom also&nbsp;noted&nbsp;at the Morgan Stanley (MS) Technology, Media and Telecom Conference on March 3, 2021 that \"on a percentage basis, Zoom Phone has been our fastest-growing product line in Q3 and Q4\", and the company sees Zoom Phone as \"a percentage of growth basis to outpace (Zoom) Meetings (company's core product)\" in the current fiscal year.\nOn the other hand, I am concerned that Zoom's revenue growth this year could disappoint the market, considering the possibility of a higher-than-expected churn rate for its customer cohort with less than 10 staff. As such, I see a Neutral rating for the stock as fair.\nZoom Video Communications, Inc's key risk factors are a shorter-than-expected time taken for the coronavirus pandemic to be effectively contained, and poor execution on key growth initiatives like international expansion and the Zoom Phone.","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Zoom Stock: What's The Outlook Once COVID Wanes</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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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 Stock: What's The Outlook Once COVID Wanes\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-04-16 10:15 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise ...\n\n<a href=\"https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"ZM":"Zoom"},"source_url":"https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1117277782","content_text":"Summary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk.\nI am positive on Zoom's medium to long-term growth drivers like international expansion and Zoom Phone.\nBut I think Zoom is a HOLD rather than a BUY, as valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations.\n\nPhoto by Luis Alvarez/DigitalVision via Getty Images\nElevator Pitch\nI assign a Neutral rating to Zoom Video Communications, Inc (ZM).\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021. The slowdown in ZM's QoQ revenue growth in the most recent quarter could explain why the company's share price performance has been lackluster this year.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively. ZM's current valuations are not demanding on a relative basis as compared to peers, but the valuation de-rating of the technology sector might have just begun as investors switch to reopening plays in view of the ongoing vaccine roll-out program.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk factor. Also valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations. On the flip side, I am positive on Zoom's medium to long term growth drivers like international expansion and Zoom Phone.\nTaking into account all the factors highlighted above, I think that Zoom deserves a Neutral rating.\nCompany Description\nIn its FY 2021 10-K, Zoom Video Communications, Inc refers to itself as a provider of \"a video-first unified communications platform\" which helps to \"connect people through frictionless and secure video, phone, chat, and content sharing.\" The company's key products include Zoom Meetings, Zoom Rooms and Zoom Phone, which are detailed below.\n\nSource: Zoom's FY 2021 10-K And October 2020 Analyst Day Presentation Slides\nThe Americas, EMEA (Europe, the Middle East and Africa), and Asia-Pacific regions contributed 69%, 18% and 13% of Zoom's FY 2021 top line.\nZoom Stock Price\n2020 was a great year for Zoom with regards to share price performance, but the stock is still delivering negative share price returns in 2021 year-to-date.\nZM's share price almost quintupled from $68.04 as of the last day of 2019 to $337.32 as of end-2020. Notably, Zoom Video Communications, Inc's stock price reached an all-time high of $568.34 on October 19, 2020. Earlier, Zoom held its\"annual user conference\"known as Zoomtopia on October 14, 2020 where it disclosed updates to the Zoom platform, which led to a number of sell-side analysts increasing their respective target pricesfor the stock.\nHowever, Zoom's share price subsequently dropped by -41% to close at $337.32 as of December 31, 2020, aspositive news flow on vaccine development since November 2020 continued to put pressure on the share prices of Work-From-Home or WFH beneficiaries like ZM. The downward trend in Zoom's stock price continued into 2021, as ZM's stock price declined marginally by -2% from $337.32 as of December 31, 2020 to $329.20 as of April 14, 2021.\nAlthough Zoom's stock price rose by +10% from $373.61 as of February 26, 2021 to $409.66 as of March 1, 2021 prior to the company's release of 4Q FY 2021 results on the same day after trading hours. But ZM's share price fell by -9% to $372.79 as of March 2, 2021 a day after its results announcement.\nIf one delves deeper into Zoom's 4Q FY 2021 financial results, it is easy to understand why Zoom's share price dropped on March 2, 2021, and subsequently declined by an additional -10% over the next one and a half months post-results to close at $329.20 as of April 14, 2021.\nZoom Video Communications, Inc's revenue jumped by +369% YoY to $882 million in 4Q FY 2021, which was also +9% higher than market consensus' quarterly revenue forecast of around $811 million. But it is noteworthy that ZM's QoQ revenue growth narrowed from +17% in 3Q FY 2021 to +14% 4Q FY 2021. This also pales in comparison to Zoom's QoQ revenue growth rates of +102% and +74% for 2Q FY 2021 and 1Q FY 2021, respectively. The slowdown in QoQ top line expansion in the most recent quarter validates market concerns about WFH tailwinds easing for Zoom (when COVID wanes) to a large extent, which explains Zoom's poor share price performance post-results.\nValuation\nZoom Video Communications, Inc trades at 24.3 times consensus forward FY 2022 Enterprise Value-to-Revenue and 20.0 times consensus forward FY 2023 Enterprise Value-to-Revenue $329.20 as of April 14, 2021. The market also values the company at consensus forward FY 2022 and FY 2023 EV/EBITDA multiples of 77.5 times and 63.2 times, respectively. The company is expected to achieve revenue growth rates of +44% and +22% in the current fiscal year, and the next fiscal year, respectively according to S&P Capital IQ data.\nZM looks relatively more attractive on a forward EV/EBITDA basis, but its forward Enterprise Value-to-Revenue multiples and revenue growth rates are more or less in line with its peers. However, the valuations for Zoom and its peers are rather rich on an absolute basis, and there is no certainty that the de-rating for technology stocks and WFH beneficiaries has already run its full course.\nPeer Valuation Comparison For Zoom\n\n\n\nStock\nConsensus Current Year Enterprise Value-to-Revenue Multiple\nConsensus Forward One-Year Enterprise Value-to-Revenue Multiple\nConsensus Current Year EV/EBITDA\nConsensus Forward One-Year EV/EBITDA\nConsensus Current Year Revenue Growth Rate\nConsensus Forward One-Year Revenue Growth Rate\n\n\nSlack Technologies, Inc (WORK)\n15\n13\n283\n106\n+30%\n+28%\n\n\nTwilio Inc (TWLO)\n25\n19\n380\n218\n+38%\n+31%\n\n\nAtlassian Corporation Plc (TEAM)\n28\n24\n108\n94\n+24%\n+15%\n\n\n\nSource: Author\nZoom Forecast In 2021\nZoom Video Communications guided for revenue of $3,760-$3,780 million and non-GAAP core earnings per share of $3.59-$3.65 for calendar year 2021 or fiscal year 2022 (YE January 31). This translates to top line and bottom line growth of +42% and +8%, respectively this year, based on the mid-point of ZM's guidance.\nSell-side analysts are more optimistic, as they expect Zoom to achieve revenue and normalized earnings growth of +44% and +12%, respectively in the current fiscal year. Nevertheless, it is not surprising that Zoom is not expected to grow as fast this year as it did last year with WFH tailwinds easing. As a reference, ZM's revenue increased by +326% in the most recent fiscal year, while its core earnings per share jumped by +854% last year.\nThe key factor that will impact Zoom's financial performance this year is the churn rate for its customer cohort with less than 10 staff. The company's proportion of revenue derived from clients with under 10 staff doubled from 18% in FY 2020 to 36% in FY 2021, which it attributed to \"business owners and individual users\" using \"Zoom for many personal, professional, and social events\" in its 10-K. In other words, ZM's customer cohort with less than 10 staff was a significant driver of revenue growth for the company last year, as compared to its customer cohort with more than 10 employees.\nLooking forward into the current fiscal year, I expect Zoom's churn rate for its customer cohort with less than 10 staff to be significantly higher than its customer cohort with more than 10 employees for two key reasons.\nFirstly, fewer individuals will use Zoom for social purposes as COVID wanes, and there is a higher risk of business failure for smaller companies vis-a-vis their larger counterparts. Secondly, Zoom adopts a \"self-service\" model for its customer cohort with less than 10 staff, while there are sales teams to support its customer cohort with more than 10 employees, which makes this group of clients relatively more sticky.\nIn a nutshell, while ZM has set \"relatively modest\" growth target this year, there could still be room for disappointment (e.g. revenue miss), if COVID-19 is brought under control sooner than expected, and the churn rate for its customer cohort with less than 10 staff ends up higher than expected.\nIs Zoom Stock A Good Buy\nZoom stock is a HOLD for me now, but it could be a good buy in the medium to long term if there is a further correction in ZM's share price implying more attractive valuations, and the company delivers on its growth strategies.\nZoom Video Communications, Inc's key growth strategies are international expansion and increasing revenue from new products like Zoom Phone.\nThe company only generated 31% of its FY 2021 revenue from international markets outside the Americas, but these foreign markets are growing fast. Revenue for the Asia Pacific and EMEA markets grew by +551% and +587%, respectively last year, while the top line for ZM's Americas region increased by a lower +266% over the same period. Zoom highlighted at the company's FY 2021 earnings call on March 1, 2021 that \"we intend to make additional investments in international resources to further capitalize on the global opportunity.\"\nAnother key growth driver for Zoom in the medium term is Zoom Phone. In January 2021, ZM disclosed that \"it has sold one million Zoom Phone seats\" in less than two years of the product's launch. Based on my personal correspondence with the company, I was told that there are about hundreds of millions of commercial phones in the US running on legacy software that could potentially be migrating to cloud-based PBX (Private Branch Exchange) systems (like that of Zoom Phone) in time to come.\nZoom also noted at the Morgan Stanley (MS) Technology, Media and Telecom Conference on March 3, 2021 that \"on a percentage basis, Zoom Phone has been our fastest-growing product line in Q3 and Q4\", and the company sees Zoom Phone as \"a percentage of growth basis to outpace (Zoom) Meetings (company's core product)\" in the current fiscal year.\nOn the other hand, I am concerned that Zoom's revenue growth this year could disappoint the market, considering the possibility of a higher-than-expected churn rate for its customer cohort with less than 10 staff. As such, I see a Neutral rating for the stock as fair.\nZoom Video Communications, Inc's key risk factors are a shorter-than-expected time taken for the coronavirus pandemic to be effectively contained, and poor execution on key growth initiatives like international expansion and the Zoom Phone.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":370977015,"gmtCreate":1618547901737,"gmtModify":1704712568376,"author":{"id":"3578477133421337","authorId":"3578477133421337","authorIdStr":"3578477133421337","name":"Joycechan84","avatar":"https://static.tigerbbs.com/9d28271c533a57ef3744a5d1a37de0fa","vip":1,"crmLevel":1,"crmLevelSwitch":0,"idStr":"3578477133421337"},"htmlText":"Like and share","listText":"Like and share","text":"Like and share","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/370977015","repostId":1117277782,"repostType":4,"repost":{"id":"1117277782","pubTimestamp":1618539309,"share":"https://ttm.financial/m/news/1117277782?lang=&edition=fundamental","pubTime":"2021-04-16 10:15","market":"us","language":"en","title":"Zoom Stock: What's The Outlook Once COVID Wanes","url":"https://stock-news.laohu8.com/highlight/detail?id=1117277782","media":"seekingalpha","summary":"Summary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% y","content":"Summary\n<ul>\n <li>Zoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.</li>\n <li>Zoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively.</li>\n <li>ZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of&nbsp;its customer cohort with under 10 staff being a key downside risk.</li>\n <li>I am positive on Zoom's medium to long-term growth drivers like international expansion and Zoom Phone.</li>\n <li>But I think Zoom is a HOLD rather than a BUY, as valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/cf695f0ee4625d58a734edbfe6cb7430\" tg-width=\"768\" tg-height=\"512\">Photo by Luis Alvarez/DigitalVision via Getty Images\nElevator Pitch\nI assign a Neutral rating to Zoom Video Communications, Inc (ZM).\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021. The slowdown in ZM's QoQ revenue growth in the most recent quarter could explain why the company's share price performance has been lackluster this year.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively. ZM's current valuations are not demanding on a relative basis as compared to peers, but the valuation de-rating of the technology sector might have just begun as investors switch to reopening plays in view of the ongoing vaccine roll-out program.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk factor. Also valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations. On the flip side, I am positive on Zoom's medium to long term growth drivers like international expansion and Zoom Phone.\nTaking into account all the factors highlighted above, I think that Zoom deserves a Neutral rating.\nCompany Description\nIn its FY 2021 10-K, Zoom Video Communications, Inc&nbsp;refers to itself&nbsp;as a provider of \"a video-first unified communications platform\" which helps to \"connect people through frictionless and secure video, phone, chat, and content sharing.\" The company's key products include Zoom Meetings, Zoom Rooms and Zoom Phone, which are detailed below.\n<img src=\"https://static.tigerbbs.com/b2ce8a0468e9ba4263d742190a82d70e\" tg-width=\"640\" tg-height=\"140\"><img src=\"https://static.tigerbbs.com/ca6f50d9ee74057e4a22fda98241529c\" tg-width=\"640\" tg-height=\"125\"><img src=\"https://static.tigerbbs.com/cfb55bbf89d56bb0584a5599b0453bb9\" tg-width=\"640\" tg-height=\"298\">\n<img src=\"https://static.tigerbbs.com/f4acfd03336743c0393a66d394665c36\" tg-width=\"640\" tg-height=\"309\">Source: Zoom's FY 2021 10-K And October 2020 Analyst Day Presentation Slides\nThe Americas, EMEA (Europe, the Middle East and Africa), and Asia-Pacific regions contributed&nbsp;69%, 18% and 13%&nbsp;of Zoom's FY 2021 top line.\nZoom Stock Price\n2020 was a great year for Zoom with regards to share price performance, but the stock is still delivering negative share price returns in 2021 year-to-date.\nZM's share price almost quintupled from $68.04 as of the last day of 2019 to&nbsp;$337.32&nbsp;as of end-2020. Notably, Zoom Video Communications, Inc's stock price reached an all-time high of $568.34 on October 19, 2020. Earlier, Zoom held its\"annual user conference\"known as Zoomtopia on October 14, 2020 where it disclosed updates to the Zoom platform, which led to a number of sell-side analysts&nbsp;increasing their respective target pricesfor the stock.\nHowever, Zoom's share price subsequently dropped by -41% to close at $337.32 as of December 31, 2020, aspositive news flow on vaccine development&nbsp;since November 2020 continued to put pressure on the share prices of Work-From-Home or WFH beneficiaries like ZM. The downward trend in Zoom's stock price continued into 2021, as ZM's stock price declined marginally by -2% from $337.32 as of December 31, 2020 to $329.20 as of April 14, 2021.\nAlthough Zoom's stock price rose by +10% from $373.61 as of February 26, 2021 to $409.66 as of March 1, 2021 prior to the company's&nbsp;release of 4Q FY 2021 results&nbsp;on the same day after trading hours. But ZM's share price fell by -9% to $372.79 as of March 2, 2021 a day after its results announcement.\nIf one delves deeper into Zoom's 4Q FY 2021 financial results, it is easy to understand why Zoom's share price dropped on March 2, 2021, and subsequently declined by an additional -10% over the next one and a half months post-results to close at $329.20 as of April 14, 2021.\nZoom Video Communications, Inc's revenue jumped by +369% YoY to $882 million in 4Q FY 2021, which was also +9% higher than market consensus' quarterly revenue forecast of around&nbsp;$811 million. But it is noteworthy that ZM's QoQ revenue growth narrowed from +17% in 3Q FY 2021 to +14% 4Q FY 2021. This also pales in comparison to Zoom's QoQ revenue growth rates of +102% and +74% for 2Q FY 2021 and 1Q FY 2021, respectively. The slowdown in QoQ top line expansion in the most recent quarter validates market concerns about WFH tailwinds easing for Zoom (when COVID wanes) to a large extent, which explains Zoom's poor share price performance post-results.\nValuation\nZoom Video Communications, Inc trades at 24.3 times consensus forward FY 2022 Enterprise Value-to-Revenue and 20.0 times consensus forward FY 2023 Enterprise Value-to-Revenue $329.20 as of April 14, 2021. The market also values the company at consensus forward FY 2022 and FY 2023 EV/EBITDA multiples of 77.5 times and 63.2 times, respectively. The company is expected to achieve revenue growth rates of +44% and +22% in the current fiscal year, and the next fiscal year, respectively according to S&amp;P Capital IQ data.\nZM looks relatively more attractive on a forward EV/EBITDA basis, but its forward Enterprise Value-to-Revenue multiples and revenue growth rates are more or less in line with its peers. However, the valuations for Zoom and its peers are rather rich on an absolute basis, and there is no certainty that the de-rating for technology stocks and WFH beneficiaries has already run its full course.\nPeer Valuation Comparison For Zoom\n<table>\n <tbody>\n <tr>\n <td>Stock</td>\n <td>Consensus Current Year Enterprise Value-to-Revenue Multiple</td>\n <td>Consensus Forward One-Year Enterprise Value-to-Revenue Multiple</td>\n <td>Consensus Current Year EV/EBITDA</td>\n <td>Consensus Forward One-Year EV/EBITDA</td>\n <td>Consensus Current Year Revenue Growth Rate</td>\n <td>Consensus Forward One-Year Revenue Growth Rate</td>\n </tr>\n <tr>\n <td>Slack Technologies, Inc (WORK)</td>\n <td>15</td>\n <td>13</td>\n <td>283</td>\n <td>106</td>\n <td>+30%</td>\n <td>+28%</td>\n </tr>\n <tr>\n <td>Twilio Inc (TWLO)</td>\n <td>25</td>\n <td>19</td>\n <td>380</td>\n <td>218</td>\n <td>+38%</td>\n <td>+31%</td>\n </tr>\n <tr>\n <td>Atlassian Corporation Plc (TEAM)</td>\n <td>28</td>\n <td>24</td>\n <td>108</td>\n <td>94</td>\n <td>+24%</td>\n <td>+15%</td>\n </tr>\n </tbody>\n</table>\nSource: Author\nZoom Forecast In 2021\nZoom Video Communications guided for revenue of&nbsp;$3,760-$3,780 million&nbsp;and non-GAAP core earnings per share of $3.59-$3.65 for calendar year 2021 or fiscal year 2022 (YE January 31). This translates to top line and bottom line growth of +42% and +8%, respectively this year, based on the mid-point of ZM's guidance.\nSell-side analysts are more optimistic, as they expect Zoom to achieve revenue and normalized earnings growth of +44% and +12%, respectively in the current fiscal year. Nevertheless, it is not surprising that Zoom is not expected to grow as fast this year as it did last year with WFH tailwinds easing. As a reference, ZM's revenue increased by +326% in the most recent fiscal year, while its core earnings per share jumped by +854% last year.\nThe key factor that will impact Zoom's financial performance this year is the churn rate for its customer cohort with less than 10 staff. The company's proportion of revenue derived from clients with under 10 staff doubled from 18% in FY 2020 to&nbsp;36%&nbsp;in FY 2021, which it attributed to \"business owners and individual users\" using \"Zoom for many personal, professional, and social events\" in its 10-K. In other words, ZM's customer cohort with less than 10 staff was a significant driver of revenue growth for the company last year, as compared to its customer cohort with more than 10 employees.\nLooking forward into the current fiscal year, I expect Zoom's churn rate for its customer cohort with less than 10 staff to be significantly higher than its customer cohort with more than 10 employees for two key reasons.\nFirstly, fewer individuals will use Zoom for social purposes as COVID wanes, and there is a higher risk of business failure for smaller companies vis-a-vis their larger counterparts. Secondly, Zoom adopts a \"self-service\" model for its customer cohort with less than 10 staff, while there are sales teams to support its customer cohort with more than 10 employees, which makes this group of clients relatively more sticky.\nIn a nutshell, while ZM has set \"relatively modest\" growth target this year, there could still be room for disappointment (e.g. revenue miss), if COVID-19 is brought under control sooner than expected, and the churn rate for its customer cohort with less than 10 staff ends up higher than expected.\nIs Zoom Stock A Good Buy\nZoom stock is a HOLD for me now, but it could be a good buy in the medium to long term if there is a further correction in ZM's share price implying more attractive valuations, and the company delivers on its growth strategies.\nZoom Video Communications, Inc's key growth strategies are international expansion and increasing revenue from new products like Zoom Phone.\nThe company only generated 31% of its FY 2021 revenue from international markets outside the Americas, but these foreign markets are growing fast. Revenue for the Asia Pacific and EMEA markets grew by&nbsp;+551% and +587%, respectively last year, while the top line for ZM's Americas region increased by a lower +266% over the same period. Zoom&nbsp;highlighted&nbsp;at the company's FY 2021 earnings call on March 1, 2021 that \"we intend to make additional investments in international resources to further capitalize on the global opportunity.\"\nAnother key growth driver for Zoom in the medium term is Zoom Phone. In January 2021, ZM&nbsp;disclosed&nbsp;that \"it has sold one million Zoom Phone seats\" in less than two years of the product's launch. Based on my personal correspondence with the company, I was told that there are about hundreds of millions of commercial phones in the US running on legacy software that could potentially be migrating to cloud-based PBX (Private Branch Exchange) systems (like that of Zoom Phone) in time to come.\nZoom also&nbsp;noted&nbsp;at the Morgan Stanley (MS) Technology, Media and Telecom Conference on March 3, 2021 that \"on a percentage basis, Zoom Phone has been our fastest-growing product line in Q3 and Q4\", and the company sees Zoom Phone as \"a percentage of growth basis to outpace (Zoom) Meetings (company's core product)\" in the current fiscal year.\nOn the other hand, I am concerned that Zoom's revenue growth this year could disappoint the market, considering the possibility of a higher-than-expected churn rate for its customer cohort with less than 10 staff. As such, I see a Neutral rating for the stock as fair.\nZoom Video Communications, Inc's key risk factors are a shorter-than-expected time taken for the coronavirus pandemic to be effectively contained, and poor execution on key growth initiatives like international expansion and the Zoom Phone.","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Zoom Stock: What's The Outlook Once COVID Wanes</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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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 Stock: What's The Outlook Once COVID Wanes\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-04-16 10:15 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise ...\n\n<a href=\"https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"ZM":"Zoom"},"source_url":"https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1117277782","content_text":"Summary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk.\nI am positive on Zoom's medium to long-term growth drivers like international expansion and Zoom Phone.\nBut I think Zoom is a HOLD rather than a BUY, as valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations.\n\nPhoto by Luis Alvarez/DigitalVision via Getty Images\nElevator Pitch\nI assign a Neutral rating to Zoom Video Communications, Inc (ZM).\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021. The slowdown in ZM's QoQ revenue growth in the most recent quarter could explain why the company's share price performance has been lackluster this year.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively. ZM's current valuations are not demanding on a relative basis as compared to peers, but the valuation de-rating of the technology sector might have just begun as investors switch to reopening plays in view of the ongoing vaccine roll-out program.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk factor. Also valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations. On the flip side, I am positive on Zoom's medium to long term growth drivers like international expansion and Zoom Phone.\nTaking into account all the factors highlighted above, I think that Zoom deserves a Neutral rating.\nCompany Description\nIn its FY 2021 10-K, Zoom Video Communications, Inc refers to itself as a provider of \"a video-first unified communications platform\" which helps to \"connect people through frictionless and secure video, phone, chat, and content sharing.\" The company's key products include Zoom Meetings, Zoom Rooms and Zoom Phone, which are detailed below.\n\nSource: Zoom's FY 2021 10-K And October 2020 Analyst Day Presentation Slides\nThe Americas, EMEA (Europe, the Middle East and Africa), and Asia-Pacific regions contributed 69%, 18% and 13% of Zoom's FY 2021 top line.\nZoom Stock Price\n2020 was a great year for Zoom with regards to share price performance, but the stock is still delivering negative share price returns in 2021 year-to-date.\nZM's share price almost quintupled from $68.04 as of the last day of 2019 to $337.32 as of end-2020. Notably, Zoom Video Communications, Inc's stock price reached an all-time high of $568.34 on October 19, 2020. Earlier, Zoom held its\"annual user conference\"known as Zoomtopia on October 14, 2020 where it disclosed updates to the Zoom platform, which led to a number of sell-side analysts increasing their respective target pricesfor the stock.\nHowever, Zoom's share price subsequently dropped by -41% to close at $337.32 as of December 31, 2020, aspositive news flow on vaccine development since November 2020 continued to put pressure on the share prices of Work-From-Home or WFH beneficiaries like ZM. The downward trend in Zoom's stock price continued into 2021, as ZM's stock price declined marginally by -2% from $337.32 as of December 31, 2020 to $329.20 as of April 14, 2021.\nAlthough Zoom's stock price rose by +10% from $373.61 as of February 26, 2021 to $409.66 as of March 1, 2021 prior to the company's release of 4Q FY 2021 results on the same day after trading hours. But ZM's share price fell by -9% to $372.79 as of March 2, 2021 a day after its results announcement.\nIf one delves deeper into Zoom's 4Q FY 2021 financial results, it is easy to understand why Zoom's share price dropped on March 2, 2021, and subsequently declined by an additional -10% over the next one and a half months post-results to close at $329.20 as of April 14, 2021.\nZoom Video Communications, Inc's revenue jumped by +369% YoY to $882 million in 4Q FY 2021, which was also +9% higher than market consensus' quarterly revenue forecast of around $811 million. But it is noteworthy that ZM's QoQ revenue growth narrowed from +17% in 3Q FY 2021 to +14% 4Q FY 2021. This also pales in comparison to Zoom's QoQ revenue growth rates of +102% and +74% for 2Q FY 2021 and 1Q FY 2021, respectively. The slowdown in QoQ top line expansion in the most recent quarter validates market concerns about WFH tailwinds easing for Zoom (when COVID wanes) to a large extent, which explains Zoom's poor share price performance post-results.\nValuation\nZoom Video Communications, Inc trades at 24.3 times consensus forward FY 2022 Enterprise Value-to-Revenue and 20.0 times consensus forward FY 2023 Enterprise Value-to-Revenue $329.20 as of April 14, 2021. The market also values the company at consensus forward FY 2022 and FY 2023 EV/EBITDA multiples of 77.5 times and 63.2 times, respectively. The company is expected to achieve revenue growth rates of +44% and +22% in the current fiscal year, and the next fiscal year, respectively according to S&P Capital IQ data.\nZM looks relatively more attractive on a forward EV/EBITDA basis, but its forward Enterprise Value-to-Revenue multiples and revenue growth rates are more or less in line with its peers. However, the valuations for Zoom and its peers are rather rich on an absolute basis, and there is no certainty that the de-rating for technology stocks and WFH beneficiaries has already run its full course.\nPeer Valuation Comparison For Zoom\n\n\n\nStock\nConsensus Current Year Enterprise Value-to-Revenue Multiple\nConsensus Forward One-Year Enterprise Value-to-Revenue Multiple\nConsensus Current Year EV/EBITDA\nConsensus Forward One-Year EV/EBITDA\nConsensus Current Year Revenue Growth Rate\nConsensus Forward One-Year Revenue Growth Rate\n\n\nSlack Technologies, Inc (WORK)\n15\n13\n283\n106\n+30%\n+28%\n\n\nTwilio Inc (TWLO)\n25\n19\n380\n218\n+38%\n+31%\n\n\nAtlassian Corporation Plc (TEAM)\n28\n24\n108\n94\n+24%\n+15%\n\n\n\nSource: Author\nZoom Forecast In 2021\nZoom Video Communications guided for revenue of $3,760-$3,780 million and non-GAAP core earnings per share of $3.59-$3.65 for calendar year 2021 or fiscal year 2022 (YE January 31). This translates to top line and bottom line growth of +42% and +8%, respectively this year, based on the mid-point of ZM's guidance.\nSell-side analysts are more optimistic, as they expect Zoom to achieve revenue and normalized earnings growth of +44% and +12%, respectively in the current fiscal year. Nevertheless, it is not surprising that Zoom is not expected to grow as fast this year as it did last year with WFH tailwinds easing. As a reference, ZM's revenue increased by +326% in the most recent fiscal year, while its core earnings per share jumped by +854% last year.\nThe key factor that will impact Zoom's financial performance this year is the churn rate for its customer cohort with less than 10 staff. The company's proportion of revenue derived from clients with under 10 staff doubled from 18% in FY 2020 to 36% in FY 2021, which it attributed to \"business owners and individual users\" using \"Zoom for many personal, professional, and social events\" in its 10-K. In other words, ZM's customer cohort with less than 10 staff was a significant driver of revenue growth for the company last year, as compared to its customer cohort with more than 10 employees.\nLooking forward into the current fiscal year, I expect Zoom's churn rate for its customer cohort with less than 10 staff to be significantly higher than its customer cohort with more than 10 employees for two key reasons.\nFirstly, fewer individuals will use Zoom for social purposes as COVID wanes, and there is a higher risk of business failure for smaller companies vis-a-vis their larger counterparts. Secondly, Zoom adopts a \"self-service\" model for its customer cohort with less than 10 staff, while there are sales teams to support its customer cohort with more than 10 employees, which makes this group of clients relatively more sticky.\nIn a nutshell, while ZM has set \"relatively modest\" growth target this year, there could still be room for disappointment (e.g. revenue miss), if COVID-19 is brought under control sooner than expected, and the churn rate for its customer cohort with less than 10 staff ends up higher than expected.\nIs Zoom Stock A Good Buy\nZoom stock is a HOLD for me now, but it could be a good buy in the medium to long term if there is a further correction in ZM's share price implying more attractive valuations, and the company delivers on its growth strategies.\nZoom Video Communications, Inc's key growth strategies are international expansion and increasing revenue from new products like Zoom Phone.\nThe company only generated 31% of its FY 2021 revenue from international markets outside the Americas, but these foreign markets are growing fast. Revenue for the Asia Pacific and EMEA markets grew by +551% and +587%, respectively last year, while the top line for ZM's Americas region increased by a lower +266% over the same period. Zoom highlighted at the company's FY 2021 earnings call on March 1, 2021 that \"we intend to make additional investments in international resources to further capitalize on the global opportunity.\"\nAnother key growth driver for Zoom in the medium term is Zoom Phone. In January 2021, ZM disclosed that \"it has sold one million Zoom Phone seats\" in less than two years of the product's launch. Based on my personal correspondence with the company, I was told that there are about hundreds of millions of commercial phones in the US running on legacy software that could potentially be migrating to cloud-based PBX (Private Branch Exchange) systems (like that of Zoom Phone) in time to come.\nZoom also noted at the Morgan Stanley (MS) Technology, Media and Telecom Conference on March 3, 2021 that \"on a percentage basis, Zoom Phone has been our fastest-growing product line in Q3 and Q4\", and the company sees Zoom Phone as \"a percentage of growth basis to outpace (Zoom) Meetings (company's core product)\" in the current fiscal year.\nOn the other hand, I am concerned that Zoom's revenue growth this year could disappoint the market, considering the possibility of a higher-than-expected churn rate for its customer cohort with less than 10 staff. As such, I see a Neutral rating for the stock as fair.\nZoom Video Communications, Inc's key risk factors are a shorter-than-expected time taken for the coronavirus pandemic to be effectively contained, and poor execution on key growth initiatives like international expansion and the Zoom Phone.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":370950214,"gmtCreate":1618545749838,"gmtModify":1704712527543,"author":{"id":"3575672525273340","authorId":"3575672525273340","authorIdStr":"3575672525273340","name":"JojoLee","avatar":"https://static.tigerbbs.com/375f4f98dcf7820b563e694fb4f5ce9e","vip":1,"crmLevel":1,"crmLevelSwitch":0,"idStr":"3575672525273340"},"htmlText":"[思考]&nbsp;","listText":"[思考]&nbsp;","text":"[思考]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/370950214","repostId":1117277782,"repostType":4,"repost":{"id":"1117277782","pubTimestamp":1618539309,"share":"https://ttm.financial/m/news/1117277782?lang=&edition=fundamental","pubTime":"2021-04-16 10:15","market":"us","language":"en","title":"Zoom Stock: What's The Outlook Once COVID Wanes","url":"https://stock-news.laohu8.com/highlight/detail?id=1117277782","media":"seekingalpha","summary":"Summary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% y","content":"Summary\n<ul>\n <li>Zoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.</li>\n <li>Zoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively.</li>\n <li>ZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of&nbsp;its customer cohort with under 10 staff being a key downside risk.</li>\n <li>I am positive on Zoom's medium to long-term growth drivers like international expansion and Zoom Phone.</li>\n <li>But I think Zoom is a HOLD rather than a BUY, as valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/cf695f0ee4625d58a734edbfe6cb7430\" tg-width=\"768\" tg-height=\"512\">Photo by Luis Alvarez/DigitalVision via Getty Images\nElevator Pitch\nI assign a Neutral rating to Zoom Video Communications, Inc (ZM).\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021. The slowdown in ZM's QoQ revenue growth in the most recent quarter could explain why the company's share price performance has been lackluster this year.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively. ZM's current valuations are not demanding on a relative basis as compared to peers, but the valuation de-rating of the technology sector might have just begun as investors switch to reopening plays in view of the ongoing vaccine roll-out program.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk factor. Also valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations. On the flip side, I am positive on Zoom's medium to long term growth drivers like international expansion and Zoom Phone.\nTaking into account all the factors highlighted above, I think that Zoom deserves a Neutral rating.\nCompany Description\nIn its FY 2021 10-K, Zoom Video Communications, Inc&nbsp;refers to itself&nbsp;as a provider of \"a video-first unified communications platform\" which helps to \"connect people through frictionless and secure video, phone, chat, and content sharing.\" The company's key products include Zoom Meetings, Zoom Rooms and Zoom Phone, which are detailed below.\n<img src=\"https://static.tigerbbs.com/b2ce8a0468e9ba4263d742190a82d70e\" tg-width=\"640\" tg-height=\"140\"><img src=\"https://static.tigerbbs.com/ca6f50d9ee74057e4a22fda98241529c\" tg-width=\"640\" tg-height=\"125\"><img src=\"https://static.tigerbbs.com/cfb55bbf89d56bb0584a5599b0453bb9\" tg-width=\"640\" tg-height=\"298\">\n<img src=\"https://static.tigerbbs.com/f4acfd03336743c0393a66d394665c36\" tg-width=\"640\" tg-height=\"309\">Source: Zoom's FY 2021 10-K And October 2020 Analyst Day Presentation Slides\nThe Americas, EMEA (Europe, the Middle East and Africa), and Asia-Pacific regions contributed&nbsp;69%, 18% and 13%&nbsp;of Zoom's FY 2021 top line.\nZoom Stock Price\n2020 was a great year for Zoom with regards to share price performance, but the stock is still delivering negative share price returns in 2021 year-to-date.\nZM's share price almost quintupled from $68.04 as of the last day of 2019 to&nbsp;$337.32&nbsp;as of end-2020. Notably, Zoom Video Communications, Inc's stock price reached an all-time high of $568.34 on October 19, 2020. Earlier, Zoom held its\"annual user conference\"known as Zoomtopia on October 14, 2020 where it disclosed updates to the Zoom platform, which led to a number of sell-side analysts&nbsp;increasing their respective target pricesfor the stock.\nHowever, Zoom's share price subsequently dropped by -41% to close at $337.32 as of December 31, 2020, aspositive news flow on vaccine development&nbsp;since November 2020 continued to put pressure on the share prices of Work-From-Home or WFH beneficiaries like ZM. The downward trend in Zoom's stock price continued into 2021, as ZM's stock price declined marginally by -2% from $337.32 as of December 31, 2020 to $329.20 as of April 14, 2021.\nAlthough Zoom's stock price rose by +10% from $373.61 as of February 26, 2021 to $409.66 as of March 1, 2021 prior to the company's&nbsp;release of 4Q FY 2021 results&nbsp;on the same day after trading hours. But ZM's share price fell by -9% to $372.79 as of March 2, 2021 a day after its results announcement.\nIf one delves deeper into Zoom's 4Q FY 2021 financial results, it is easy to understand why Zoom's share price dropped on March 2, 2021, and subsequently declined by an additional -10% over the next one and a half months post-results to close at $329.20 as of April 14, 2021.\nZoom Video Communications, Inc's revenue jumped by +369% YoY to $882 million in 4Q FY 2021, which was also +9% higher than market consensus' quarterly revenue forecast of around&nbsp;$811 million. But it is noteworthy that ZM's QoQ revenue growth narrowed from +17% in 3Q FY 2021 to +14% 4Q FY 2021. This also pales in comparison to Zoom's QoQ revenue growth rates of +102% and +74% for 2Q FY 2021 and 1Q FY 2021, respectively. The slowdown in QoQ top line expansion in the most recent quarter validates market concerns about WFH tailwinds easing for Zoom (when COVID wanes) to a large extent, which explains Zoom's poor share price performance post-results.\nValuation\nZoom Video Communications, Inc trades at 24.3 times consensus forward FY 2022 Enterprise Value-to-Revenue and 20.0 times consensus forward FY 2023 Enterprise Value-to-Revenue $329.20 as of April 14, 2021. The market also values the company at consensus forward FY 2022 and FY 2023 EV/EBITDA multiples of 77.5 times and 63.2 times, respectively. The company is expected to achieve revenue growth rates of +44% and +22% in the current fiscal year, and the next fiscal year, respectively according to S&amp;P Capital IQ data.\nZM looks relatively more attractive on a forward EV/EBITDA basis, but its forward Enterprise Value-to-Revenue multiples and revenue growth rates are more or less in line with its peers. However, the valuations for Zoom and its peers are rather rich on an absolute basis, and there is no certainty that the de-rating for technology stocks and WFH beneficiaries has already run its full course.\nPeer Valuation Comparison For Zoom\n<table>\n <tbody>\n <tr>\n <td>Stock</td>\n <td>Consensus Current Year Enterprise Value-to-Revenue Multiple</td>\n <td>Consensus Forward One-Year Enterprise Value-to-Revenue Multiple</td>\n <td>Consensus Current Year EV/EBITDA</td>\n <td>Consensus Forward One-Year EV/EBITDA</td>\n <td>Consensus Current Year Revenue Growth Rate</td>\n <td>Consensus Forward One-Year Revenue Growth Rate</td>\n </tr>\n <tr>\n <td>Slack Technologies, Inc (WORK)</td>\n <td>15</td>\n <td>13</td>\n <td>283</td>\n <td>106</td>\n <td>+30%</td>\n <td>+28%</td>\n </tr>\n <tr>\n <td>Twilio Inc (TWLO)</td>\n <td>25</td>\n <td>19</td>\n <td>380</td>\n <td>218</td>\n <td>+38%</td>\n <td>+31%</td>\n </tr>\n <tr>\n <td>Atlassian Corporation Plc (TEAM)</td>\n <td>28</td>\n <td>24</td>\n <td>108</td>\n <td>94</td>\n <td>+24%</td>\n <td>+15%</td>\n </tr>\n </tbody>\n</table>\nSource: Author\nZoom Forecast In 2021\nZoom Video Communications guided for revenue of&nbsp;$3,760-$3,780 million&nbsp;and non-GAAP core earnings per share of $3.59-$3.65 for calendar year 2021 or fiscal year 2022 (YE January 31). This translates to top line and bottom line growth of +42% and +8%, respectively this year, based on the mid-point of ZM's guidance.\nSell-side analysts are more optimistic, as they expect Zoom to achieve revenue and normalized earnings growth of +44% and +12%, respectively in the current fiscal year. Nevertheless, it is not surprising that Zoom is not expected to grow as fast this year as it did last year with WFH tailwinds easing. As a reference, ZM's revenue increased by +326% in the most recent fiscal year, while its core earnings per share jumped by +854% last year.\nThe key factor that will impact Zoom's financial performance this year is the churn rate for its customer cohort with less than 10 staff. The company's proportion of revenue derived from clients with under 10 staff doubled from 18% in FY 2020 to&nbsp;36%&nbsp;in FY 2021, which it attributed to \"business owners and individual users\" using \"Zoom for many personal, professional, and social events\" in its 10-K. In other words, ZM's customer cohort with less than 10 staff was a significant driver of revenue growth for the company last year, as compared to its customer cohort with more than 10 employees.\nLooking forward into the current fiscal year, I expect Zoom's churn rate for its customer cohort with less than 10 staff to be significantly higher than its customer cohort with more than 10 employees for two key reasons.\nFirstly, fewer individuals will use Zoom for social purposes as COVID wanes, and there is a higher risk of business failure for smaller companies vis-a-vis their larger counterparts. Secondly, Zoom adopts a \"self-service\" model for its customer cohort with less than 10 staff, while there are sales teams to support its customer cohort with more than 10 employees, which makes this group of clients relatively more sticky.\nIn a nutshell, while ZM has set \"relatively modest\" growth target this year, there could still be room for disappointment (e.g. revenue miss), if COVID-19 is brought under control sooner than expected, and the churn rate for its customer cohort with less than 10 staff ends up higher than expected.\nIs Zoom Stock A Good Buy\nZoom stock is a HOLD for me now, but it could be a good buy in the medium to long term if there is a further correction in ZM's share price implying more attractive valuations, and the company delivers on its growth strategies.\nZoom Video Communications, Inc's key growth strategies are international expansion and increasing revenue from new products like Zoom Phone.\nThe company only generated 31% of its FY 2021 revenue from international markets outside the Americas, but these foreign markets are growing fast. Revenue for the Asia Pacific and EMEA markets grew by&nbsp;+551% and +587%, respectively last year, while the top line for ZM's Americas region increased by a lower +266% over the same period. Zoom&nbsp;highlighted&nbsp;at the company's FY 2021 earnings call on March 1, 2021 that \"we intend to make additional investments in international resources to further capitalize on the global opportunity.\"\nAnother key growth driver for Zoom in the medium term is Zoom Phone. In January 2021, ZM&nbsp;disclosed&nbsp;that \"it has sold one million Zoom Phone seats\" in less than two years of the product's launch. Based on my personal correspondence with the company, I was told that there are about hundreds of millions of commercial phones in the US running on legacy software that could potentially be migrating to cloud-based PBX (Private Branch Exchange) systems (like that of Zoom Phone) in time to come.\nZoom also&nbsp;noted&nbsp;at the Morgan Stanley (MS) Technology, Media and Telecom Conference on March 3, 2021 that \"on a percentage basis, Zoom Phone has been our fastest-growing product line in Q3 and Q4\", and the company sees Zoom Phone as \"a percentage of growth basis to outpace (Zoom) Meetings (company's core product)\" in the current fiscal year.\nOn the other hand, I am concerned that Zoom's revenue growth this year could disappoint the market, considering the possibility of a higher-than-expected churn rate for its customer cohort with less than 10 staff. As such, I see a Neutral rating for the stock as fair.\nZoom Video Communications, Inc's key risk factors are a shorter-than-expected time taken for the coronavirus pandemic to be effectively contained, and poor execution on key growth initiatives like international expansion and the Zoom Phone.","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Zoom Stock: What's The Outlook Once COVID Wanes</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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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 Stock: What's The Outlook Once COVID Wanes\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-04-16 10:15 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise ...\n\n<a href=\"https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"ZM":"Zoom"},"source_url":"https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1117277782","content_text":"Summary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk.\nI am positive on Zoom's medium to long-term growth drivers like international expansion and Zoom Phone.\nBut I think Zoom is a HOLD rather than a BUY, as valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations.\n\nPhoto by Luis Alvarez/DigitalVision via Getty Images\nElevator Pitch\nI assign a Neutral rating to Zoom Video Communications, Inc (ZM).\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021. The slowdown in ZM's QoQ revenue growth in the most recent quarter could explain why the company's share price performance has been lackluster this year.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively. ZM's current valuations are not demanding on a relative basis as compared to peers, but the valuation de-rating of the technology sector might have just begun as investors switch to reopening plays in view of the ongoing vaccine roll-out program.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk factor. Also valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations. On the flip side, I am positive on Zoom's medium to long term growth drivers like international expansion and Zoom Phone.\nTaking into account all the factors highlighted above, I think that Zoom deserves a Neutral rating.\nCompany Description\nIn its FY 2021 10-K, Zoom Video Communications, Inc refers to itself as a provider of \"a video-first unified communications platform\" which helps to \"connect people through frictionless and secure video, phone, chat, and content sharing.\" The company's key products include Zoom Meetings, Zoom Rooms and Zoom Phone, which are detailed below.\n\nSource: Zoom's FY 2021 10-K And October 2020 Analyst Day Presentation Slides\nThe Americas, EMEA (Europe, the Middle East and Africa), and Asia-Pacific regions contributed 69%, 18% and 13% of Zoom's FY 2021 top line.\nZoom Stock Price\n2020 was a great year for Zoom with regards to share price performance, but the stock is still delivering negative share price returns in 2021 year-to-date.\nZM's share price almost quintupled from $68.04 as of the last day of 2019 to $337.32 as of end-2020. Notably, Zoom Video Communications, Inc's stock price reached an all-time high of $568.34 on October 19, 2020. Earlier, Zoom held its\"annual user conference\"known as Zoomtopia on October 14, 2020 where it disclosed updates to the Zoom platform, which led to a number of sell-side analysts increasing their respective target pricesfor the stock.\nHowever, Zoom's share price subsequently dropped by -41% to close at $337.32 as of December 31, 2020, aspositive news flow on vaccine development since November 2020 continued to put pressure on the share prices of Work-From-Home or WFH beneficiaries like ZM. The downward trend in Zoom's stock price continued into 2021, as ZM's stock price declined marginally by -2% from $337.32 as of December 31, 2020 to $329.20 as of April 14, 2021.\nAlthough Zoom's stock price rose by +10% from $373.61 as of February 26, 2021 to $409.66 as of March 1, 2021 prior to the company's release of 4Q FY 2021 results on the same day after trading hours. But ZM's share price fell by -9% to $372.79 as of March 2, 2021 a day after its results announcement.\nIf one delves deeper into Zoom's 4Q FY 2021 financial results, it is easy to understand why Zoom's share price dropped on March 2, 2021, and subsequently declined by an additional -10% over the next one and a half months post-results to close at $329.20 as of April 14, 2021.\nZoom Video Communications, Inc's revenue jumped by +369% YoY to $882 million in 4Q FY 2021, which was also +9% higher than market consensus' quarterly revenue forecast of around $811 million. But it is noteworthy that ZM's QoQ revenue growth narrowed from +17% in 3Q FY 2021 to +14% 4Q FY 2021. This also pales in comparison to Zoom's QoQ revenue growth rates of +102% and +74% for 2Q FY 2021 and 1Q FY 2021, respectively. The slowdown in QoQ top line expansion in the most recent quarter validates market concerns about WFH tailwinds easing for Zoom (when COVID wanes) to a large extent, which explains Zoom's poor share price performance post-results.\nValuation\nZoom Video Communications, Inc trades at 24.3 times consensus forward FY 2022 Enterprise Value-to-Revenue and 20.0 times consensus forward FY 2023 Enterprise Value-to-Revenue $329.20 as of April 14, 2021. The market also values the company at consensus forward FY 2022 and FY 2023 EV/EBITDA multiples of 77.5 times and 63.2 times, respectively. The company is expected to achieve revenue growth rates of +44% and +22% in the current fiscal year, and the next fiscal year, respectively according to S&P Capital IQ data.\nZM looks relatively more attractive on a forward EV/EBITDA basis, but its forward Enterprise Value-to-Revenue multiples and revenue growth rates are more or less in line with its peers. However, the valuations for Zoom and its peers are rather rich on an absolute basis, and there is no certainty that the de-rating for technology stocks and WFH beneficiaries has already run its full course.\nPeer Valuation Comparison For Zoom\n\n\n\nStock\nConsensus Current Year Enterprise Value-to-Revenue Multiple\nConsensus Forward One-Year Enterprise Value-to-Revenue Multiple\nConsensus Current Year EV/EBITDA\nConsensus Forward One-Year EV/EBITDA\nConsensus Current Year Revenue Growth Rate\nConsensus Forward One-Year Revenue Growth Rate\n\n\nSlack Technologies, Inc (WORK)\n15\n13\n283\n106\n+30%\n+28%\n\n\nTwilio Inc (TWLO)\n25\n19\n380\n218\n+38%\n+31%\n\n\nAtlassian Corporation Plc (TEAM)\n28\n24\n108\n94\n+24%\n+15%\n\n\n\nSource: Author\nZoom Forecast In 2021\nZoom Video Communications guided for revenue of $3,760-$3,780 million and non-GAAP core earnings per share of $3.59-$3.65 for calendar year 2021 or fiscal year 2022 (YE January 31). This translates to top line and bottom line growth of +42% and +8%, respectively this year, based on the mid-point of ZM's guidance.\nSell-side analysts are more optimistic, as they expect Zoom to achieve revenue and normalized earnings growth of +44% and +12%, respectively in the current fiscal year. Nevertheless, it is not surprising that Zoom is not expected to grow as fast this year as it did last year with WFH tailwinds easing. As a reference, ZM's revenue increased by +326% in the most recent fiscal year, while its core earnings per share jumped by +854% last year.\nThe key factor that will impact Zoom's financial performance this year is the churn rate for its customer cohort with less than 10 staff. The company's proportion of revenue derived from clients with under 10 staff doubled from 18% in FY 2020 to 36% in FY 2021, which it attributed to \"business owners and individual users\" using \"Zoom for many personal, professional, and social events\" in its 10-K. In other words, ZM's customer cohort with less than 10 staff was a significant driver of revenue growth for the company last year, as compared to its customer cohort with more than 10 employees.\nLooking forward into the current fiscal year, I expect Zoom's churn rate for its customer cohort with less than 10 staff to be significantly higher than its customer cohort with more than 10 employees for two key reasons.\nFirstly, fewer individuals will use Zoom for social purposes as COVID wanes, and there is a higher risk of business failure for smaller companies vis-a-vis their larger counterparts. Secondly, Zoom adopts a \"self-service\" model for its customer cohort with less than 10 staff, while there are sales teams to support its customer cohort with more than 10 employees, which makes this group of clients relatively more sticky.\nIn a nutshell, while ZM has set \"relatively modest\" growth target this year, there could still be room for disappointment (e.g. revenue miss), if COVID-19 is brought under control sooner than expected, and the churn rate for its customer cohort with less than 10 staff ends up higher than expected.\nIs Zoom Stock A Good Buy\nZoom stock is a HOLD for me now, but it could be a good buy in the medium to long term if there is a further correction in ZM's share price implying more attractive valuations, and the company delivers on its growth strategies.\nZoom Video Communications, Inc's key growth strategies are international expansion and increasing revenue from new products like Zoom Phone.\nThe company only generated 31% of its FY 2021 revenue from international markets outside the Americas, but these foreign markets are growing fast. Revenue for the Asia Pacific and EMEA markets grew by +551% and +587%, respectively last year, while the top line for ZM's Americas region increased by a lower +266% over the same period. Zoom highlighted at the company's FY 2021 earnings call on March 1, 2021 that \"we intend to make additional investments in international resources to further capitalize on the global opportunity.\"\nAnother key growth driver for Zoom in the medium term is Zoom Phone. In January 2021, ZM disclosed that \"it has sold one million Zoom Phone seats\" in less than two years of the product's launch. Based on my personal correspondence with the company, I was told that there are about hundreds of millions of commercial phones in the US running on legacy software that could potentially be migrating to cloud-based PBX (Private Branch Exchange) systems (like that of Zoom Phone) in time to come.\nZoom also noted at the Morgan Stanley (MS) Technology, Media and Telecom Conference on March 3, 2021 that \"on a percentage basis, Zoom Phone has been our fastest-growing product line in Q3 and Q4\", and the company sees Zoom Phone as \"a percentage of growth basis to outpace (Zoom) Meetings (company's core product)\" in the current fiscal year.\nOn the other hand, I am concerned that Zoom's revenue growth this year could disappoint the market, considering the possibility of a higher-than-expected churn rate for its customer cohort with less than 10 staff. As such, I see a Neutral rating for the stock as fair.\nZoom Video Communications, Inc's key risk factors are a shorter-than-expected time taken for the coronavirus pandemic to be effectively contained, and poor execution on key growth initiatives like international expansion and the Zoom Phone.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"CN"},{"id":370922662,"gmtCreate":1618545426656,"gmtModify":1704712521341,"author":{"id":"3581249355493993","authorId":"3581249355493993","authorIdStr":"3581249355493993","name":"jw_la","avatar":"https://static.tigerbbs.com/417de586d09c5aa961c7f9b7477ca049","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3581249355493993"},"htmlText":"Zoom is very convenient to use in online meeting, but for stock to appreciate, much more works need to be done&nbsp;","listText":"Zoom is very convenient to use in online meeting, but for stock to appreciate, much more works need to be done&nbsp;","text":"Zoom is very convenient to use in online meeting, but for stock to appreciate, much more works need to be done","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/370922662","repostId":1117277782,"repostType":4,"repost":{"id":"1117277782","pubTimestamp":1618539309,"share":"https://ttm.financial/m/news/1117277782?lang=&edition=fundamental","pubTime":"2021-04-16 10:15","market":"us","language":"en","title":"Zoom Stock: What's The Outlook Once COVID Wanes","url":"https://stock-news.laohu8.com/highlight/detail?id=1117277782","media":"seekingalpha","summary":"Summary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% y","content":"Summary\n<ul>\n <li>Zoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.</li>\n <li>Zoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively.</li>\n <li>ZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of&nbsp;its customer cohort with under 10 staff being a key downside risk.</li>\n <li>I am positive on Zoom's medium to long-term growth drivers like international expansion and Zoom Phone.</li>\n <li>But I think Zoom is a HOLD rather than a BUY, as valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/cf695f0ee4625d58a734edbfe6cb7430\" tg-width=\"768\" tg-height=\"512\">Photo by Luis Alvarez/DigitalVision via Getty Images\nElevator Pitch\nI assign a Neutral rating to Zoom Video Communications, Inc (ZM).\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021. The slowdown in ZM's QoQ revenue growth in the most recent quarter could explain why the company's share price performance has been lackluster this year.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively. ZM's current valuations are not demanding on a relative basis as compared to peers, but the valuation de-rating of the technology sector might have just begun as investors switch to reopening plays in view of the ongoing vaccine roll-out program.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk factor. Also valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations. On the flip side, I am positive on Zoom's medium to long term growth drivers like international expansion and Zoom Phone.\nTaking into account all the factors highlighted above, I think that Zoom deserves a Neutral rating.\nCompany Description\nIn its FY 2021 10-K, Zoom Video Communications, Inc&nbsp;refers to itself&nbsp;as a provider of \"a video-first unified communications platform\" which helps to \"connect people through frictionless and secure video, phone, chat, and content sharing.\" The company's key products include Zoom Meetings, Zoom Rooms and Zoom Phone, which are detailed below.\n<img src=\"https://static.tigerbbs.com/b2ce8a0468e9ba4263d742190a82d70e\" tg-width=\"640\" tg-height=\"140\"><img src=\"https://static.tigerbbs.com/ca6f50d9ee74057e4a22fda98241529c\" tg-width=\"640\" tg-height=\"125\"><img src=\"https://static.tigerbbs.com/cfb55bbf89d56bb0584a5599b0453bb9\" tg-width=\"640\" tg-height=\"298\">\n<img src=\"https://static.tigerbbs.com/f4acfd03336743c0393a66d394665c36\" tg-width=\"640\" tg-height=\"309\">Source: Zoom's FY 2021 10-K And October 2020 Analyst Day Presentation Slides\nThe Americas, EMEA (Europe, the Middle East and Africa), and Asia-Pacific regions contributed&nbsp;69%, 18% and 13%&nbsp;of Zoom's FY 2021 top line.\nZoom Stock Price\n2020 was a great year for Zoom with regards to share price performance, but the stock is still delivering negative share price returns in 2021 year-to-date.\nZM's share price almost quintupled from $68.04 as of the last day of 2019 to&nbsp;$337.32&nbsp;as of end-2020. Notably, Zoom Video Communications, Inc's stock price reached an all-time high of $568.34 on October 19, 2020. Earlier, Zoom held its\"annual user conference\"known as Zoomtopia on October 14, 2020 where it disclosed updates to the Zoom platform, which led to a number of sell-side analysts&nbsp;increasing their respective target pricesfor the stock.\nHowever, Zoom's share price subsequently dropped by -41% to close at $337.32 as of December 31, 2020, aspositive news flow on vaccine development&nbsp;since November 2020 continued to put pressure on the share prices of Work-From-Home or WFH beneficiaries like ZM. The downward trend in Zoom's stock price continued into 2021, as ZM's stock price declined marginally by -2% from $337.32 as of December 31, 2020 to $329.20 as of April 14, 2021.\nAlthough Zoom's stock price rose by +10% from $373.61 as of February 26, 2021 to $409.66 as of March 1, 2021 prior to the company's&nbsp;release of 4Q FY 2021 results&nbsp;on the same day after trading hours. But ZM's share price fell by -9% to $372.79 as of March 2, 2021 a day after its results announcement.\nIf one delves deeper into Zoom's 4Q FY 2021 financial results, it is easy to understand why Zoom's share price dropped on March 2, 2021, and subsequently declined by an additional -10% over the next one and a half months post-results to close at $329.20 as of April 14, 2021.\nZoom Video Communications, Inc's revenue jumped by +369% YoY to $882 million in 4Q FY 2021, which was also +9% higher than market consensus' quarterly revenue forecast of around&nbsp;$811 million. But it is noteworthy that ZM's QoQ revenue growth narrowed from +17% in 3Q FY 2021 to +14% 4Q FY 2021. This also pales in comparison to Zoom's QoQ revenue growth rates of +102% and +74% for 2Q FY 2021 and 1Q FY 2021, respectively. The slowdown in QoQ top line expansion in the most recent quarter validates market concerns about WFH tailwinds easing for Zoom (when COVID wanes) to a large extent, which explains Zoom's poor share price performance post-results.\nValuation\nZoom Video Communications, Inc trades at 24.3 times consensus forward FY 2022 Enterprise Value-to-Revenue and 20.0 times consensus forward FY 2023 Enterprise Value-to-Revenue $329.20 as of April 14, 2021. The market also values the company at consensus forward FY 2022 and FY 2023 EV/EBITDA multiples of 77.5 times and 63.2 times, respectively. The company is expected to achieve revenue growth rates of +44% and +22% in the current fiscal year, and the next fiscal year, respectively according to S&amp;P Capital IQ data.\nZM looks relatively more attractive on a forward EV/EBITDA basis, but its forward Enterprise Value-to-Revenue multiples and revenue growth rates are more or less in line with its peers. However, the valuations for Zoom and its peers are rather rich on an absolute basis, and there is no certainty that the de-rating for technology stocks and WFH beneficiaries has already run its full course.\nPeer Valuation Comparison For Zoom\n<table>\n <tbody>\n <tr>\n <td>Stock</td>\n <td>Consensus Current Year Enterprise Value-to-Revenue Multiple</td>\n <td>Consensus Forward One-Year Enterprise Value-to-Revenue Multiple</td>\n <td>Consensus Current Year EV/EBITDA</td>\n <td>Consensus Forward One-Year EV/EBITDA</td>\n <td>Consensus Current Year Revenue Growth Rate</td>\n <td>Consensus Forward One-Year Revenue Growth Rate</td>\n </tr>\n <tr>\n <td>Slack Technologies, Inc (WORK)</td>\n <td>15</td>\n <td>13</td>\n <td>283</td>\n <td>106</td>\n <td>+30%</td>\n <td>+28%</td>\n </tr>\n <tr>\n <td>Twilio Inc (TWLO)</td>\n <td>25</td>\n <td>19</td>\n <td>380</td>\n <td>218</td>\n <td>+38%</td>\n <td>+31%</td>\n </tr>\n <tr>\n <td>Atlassian Corporation Plc (TEAM)</td>\n <td>28</td>\n <td>24</td>\n <td>108</td>\n <td>94</td>\n <td>+24%</td>\n <td>+15%</td>\n </tr>\n </tbody>\n</table>\nSource: Author\nZoom Forecast In 2021\nZoom Video Communications guided for revenue of&nbsp;$3,760-$3,780 million&nbsp;and non-GAAP core earnings per share of $3.59-$3.65 for calendar year 2021 or fiscal year 2022 (YE January 31). This translates to top line and bottom line growth of +42% and +8%, respectively this year, based on the mid-point of ZM's guidance.\nSell-side analysts are more optimistic, as they expect Zoom to achieve revenue and normalized earnings growth of +44% and +12%, respectively in the current fiscal year. Nevertheless, it is not surprising that Zoom is not expected to grow as fast this year as it did last year with WFH tailwinds easing. As a reference, ZM's revenue increased by +326% in the most recent fiscal year, while its core earnings per share jumped by +854% last year.\nThe key factor that will impact Zoom's financial performance this year is the churn rate for its customer cohort with less than 10 staff. The company's proportion of revenue derived from clients with under 10 staff doubled from 18% in FY 2020 to&nbsp;36%&nbsp;in FY 2021, which it attributed to \"business owners and individual users\" using \"Zoom for many personal, professional, and social events\" in its 10-K. In other words, ZM's customer cohort with less than 10 staff was a significant driver of revenue growth for the company last year, as compared to its customer cohort with more than 10 employees.\nLooking forward into the current fiscal year, I expect Zoom's churn rate for its customer cohort with less than 10 staff to be significantly higher than its customer cohort with more than 10 employees for two key reasons.\nFirstly, fewer individuals will use Zoom for social purposes as COVID wanes, and there is a higher risk of business failure for smaller companies vis-a-vis their larger counterparts. Secondly, Zoom adopts a \"self-service\" model for its customer cohort with less than 10 staff, while there are sales teams to support its customer cohort with more than 10 employees, which makes this group of clients relatively more sticky.\nIn a nutshell, while ZM has set \"relatively modest\" growth target this year, there could still be room for disappointment (e.g. revenue miss), if COVID-19 is brought under control sooner than expected, and the churn rate for its customer cohort with less than 10 staff ends up higher than expected.\nIs Zoom Stock A Good Buy\nZoom stock is a HOLD for me now, but it could be a good buy in the medium to long term if there is a further correction in ZM's share price implying more attractive valuations, and the company delivers on its growth strategies.\nZoom Video Communications, Inc's key growth strategies are international expansion and increasing revenue from new products like Zoom Phone.\nThe company only generated 31% of its FY 2021 revenue from international markets outside the Americas, but these foreign markets are growing fast. Revenue for the Asia Pacific and EMEA markets grew by&nbsp;+551% and +587%, respectively last year, while the top line for ZM's Americas region increased by a lower +266% over the same period. Zoom&nbsp;highlighted&nbsp;at the company's FY 2021 earnings call on March 1, 2021 that \"we intend to make additional investments in international resources to further capitalize on the global opportunity.\"\nAnother key growth driver for Zoom in the medium term is Zoom Phone. In January 2021, ZM&nbsp;disclosed&nbsp;that \"it has sold one million Zoom Phone seats\" in less than two years of the product's launch. Based on my personal correspondence with the company, I was told that there are about hundreds of millions of commercial phones in the US running on legacy software that could potentially be migrating to cloud-based PBX (Private Branch Exchange) systems (like that of Zoom Phone) in time to come.\nZoom also&nbsp;noted&nbsp;at the Morgan Stanley (MS) Technology, Media and Telecom Conference on March 3, 2021 that \"on a percentage basis, Zoom Phone has been our fastest-growing product line in Q3 and Q4\", and the company sees Zoom Phone as \"a percentage of growth basis to outpace (Zoom) Meetings (company's core product)\" in the current fiscal year.\nOn the other hand, I am concerned that Zoom's revenue growth this year could disappoint the market, considering the possibility of a higher-than-expected churn rate for its customer cohort with less than 10 staff. As such, I see a Neutral rating for the stock as fair.\nZoom Video Communications, Inc's key risk factors are a shorter-than-expected time taken for the coronavirus pandemic to be effectively contained, and poor execution on key growth initiatives like international expansion and the Zoom Phone.","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Zoom Stock: What's The Outlook Once COVID Wanes</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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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 Stock: What's The Outlook Once COVID Wanes\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-04-16 10:15 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise ...\n\n<a href=\"https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"ZM":"Zoom"},"source_url":"https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1117277782","content_text":"Summary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk.\nI am positive on Zoom's medium to long-term growth drivers like international expansion and Zoom Phone.\nBut I think Zoom is a HOLD rather than a BUY, as valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations.\n\nPhoto by Luis Alvarez/DigitalVision via Getty Images\nElevator Pitch\nI assign a Neutral rating to Zoom Video Communications, Inc (ZM).\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021. The slowdown in ZM's QoQ revenue growth in the most recent quarter could explain why the company's share price performance has been lackluster this year.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively. ZM's current valuations are not demanding on a relative basis as compared to peers, but the valuation de-rating of the technology sector might have just begun as investors switch to reopening plays in view of the ongoing vaccine roll-out program.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk factor. Also valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations. On the flip side, I am positive on Zoom's medium to long term growth drivers like international expansion and Zoom Phone.\nTaking into account all the factors highlighted above, I think that Zoom deserves a Neutral rating.\nCompany Description\nIn its FY 2021 10-K, Zoom Video Communications, Inc refers to itself as a provider of \"a video-first unified communications platform\" which helps to \"connect people through frictionless and secure video, phone, chat, and content sharing.\" The company's key products include Zoom Meetings, Zoom Rooms and Zoom Phone, which are detailed below.\n\nSource: Zoom's FY 2021 10-K And October 2020 Analyst Day Presentation Slides\nThe Americas, EMEA (Europe, the Middle East and Africa), and Asia-Pacific regions contributed 69%, 18% and 13% of Zoom's FY 2021 top line.\nZoom Stock Price\n2020 was a great year for Zoom with regards to share price performance, but the stock is still delivering negative share price returns in 2021 year-to-date.\nZM's share price almost quintupled from $68.04 as of the last day of 2019 to $337.32 as of end-2020. Notably, Zoom Video Communications, Inc's stock price reached an all-time high of $568.34 on October 19, 2020. Earlier, Zoom held its\"annual user conference\"known as Zoomtopia on October 14, 2020 where it disclosed updates to the Zoom platform, which led to a number of sell-side analysts increasing their respective target pricesfor the stock.\nHowever, Zoom's share price subsequently dropped by -41% to close at $337.32 as of December 31, 2020, aspositive news flow on vaccine development since November 2020 continued to put pressure on the share prices of Work-From-Home or WFH beneficiaries like ZM. The downward trend in Zoom's stock price continued into 2021, as ZM's stock price declined marginally by -2% from $337.32 as of December 31, 2020 to $329.20 as of April 14, 2021.\nAlthough Zoom's stock price rose by +10% from $373.61 as of February 26, 2021 to $409.66 as of March 1, 2021 prior to the company's release of 4Q FY 2021 results on the same day after trading hours. But ZM's share price fell by -9% to $372.79 as of March 2, 2021 a day after its results announcement.\nIf one delves deeper into Zoom's 4Q FY 2021 financial results, it is easy to understand why Zoom's share price dropped on March 2, 2021, and subsequently declined by an additional -10% over the next one and a half months post-results to close at $329.20 as of April 14, 2021.\nZoom Video Communications, Inc's revenue jumped by +369% YoY to $882 million in 4Q FY 2021, which was also +9% higher than market consensus' quarterly revenue forecast of around $811 million. But it is noteworthy that ZM's QoQ revenue growth narrowed from +17% in 3Q FY 2021 to +14% 4Q FY 2021. This also pales in comparison to Zoom's QoQ revenue growth rates of +102% and +74% for 2Q FY 2021 and 1Q FY 2021, respectively. The slowdown in QoQ top line expansion in the most recent quarter validates market concerns about WFH tailwinds easing for Zoom (when COVID wanes) to a large extent, which explains Zoom's poor share price performance post-results.\nValuation\nZoom Video Communications, Inc trades at 24.3 times consensus forward FY 2022 Enterprise Value-to-Revenue and 20.0 times consensus forward FY 2023 Enterprise Value-to-Revenue $329.20 as of April 14, 2021. The market also values the company at consensus forward FY 2022 and FY 2023 EV/EBITDA multiples of 77.5 times and 63.2 times, respectively. The company is expected to achieve revenue growth rates of +44% and +22% in the current fiscal year, and the next fiscal year, respectively according to S&P Capital IQ data.\nZM looks relatively more attractive on a forward EV/EBITDA basis, but its forward Enterprise Value-to-Revenue multiples and revenue growth rates are more or less in line with its peers. However, the valuations for Zoom and its peers are rather rich on an absolute basis, and there is no certainty that the de-rating for technology stocks and WFH beneficiaries has already run its full course.\nPeer Valuation Comparison For Zoom\n\n\n\nStock\nConsensus Current Year Enterprise Value-to-Revenue Multiple\nConsensus Forward One-Year Enterprise Value-to-Revenue Multiple\nConsensus Current Year EV/EBITDA\nConsensus Forward One-Year EV/EBITDA\nConsensus Current Year Revenue Growth Rate\nConsensus Forward One-Year Revenue Growth Rate\n\n\nSlack Technologies, Inc (WORK)\n15\n13\n283\n106\n+30%\n+28%\n\n\nTwilio Inc (TWLO)\n25\n19\n380\n218\n+38%\n+31%\n\n\nAtlassian Corporation Plc (TEAM)\n28\n24\n108\n94\n+24%\n+15%\n\n\n\nSource: Author\nZoom Forecast In 2021\nZoom Video Communications guided for revenue of $3,760-$3,780 million and non-GAAP core earnings per share of $3.59-$3.65 for calendar year 2021 or fiscal year 2022 (YE January 31). This translates to top line and bottom line growth of +42% and +8%, respectively this year, based on the mid-point of ZM's guidance.\nSell-side analysts are more optimistic, as they expect Zoom to achieve revenue and normalized earnings growth of +44% and +12%, respectively in the current fiscal year. Nevertheless, it is not surprising that Zoom is not expected to grow as fast this year as it did last year with WFH tailwinds easing. As a reference, ZM's revenue increased by +326% in the most recent fiscal year, while its core earnings per share jumped by +854% last year.\nThe key factor that will impact Zoom's financial performance this year is the churn rate for its customer cohort with less than 10 staff. The company's proportion of revenue derived from clients with under 10 staff doubled from 18% in FY 2020 to 36% in FY 2021, which it attributed to \"business owners and individual users\" using \"Zoom for many personal, professional, and social events\" in its 10-K. In other words, ZM's customer cohort with less than 10 staff was a significant driver of revenue growth for the company last year, as compared to its customer cohort with more than 10 employees.\nLooking forward into the current fiscal year, I expect Zoom's churn rate for its customer cohort with less than 10 staff to be significantly higher than its customer cohort with more than 10 employees for two key reasons.\nFirstly, fewer individuals will use Zoom for social purposes as COVID wanes, and there is a higher risk of business failure for smaller companies vis-a-vis their larger counterparts. Secondly, Zoom adopts a \"self-service\" model for its customer cohort with less than 10 staff, while there are sales teams to support its customer cohort with more than 10 employees, which makes this group of clients relatively more sticky.\nIn a nutshell, while ZM has set \"relatively modest\" growth target this year, there could still be room for disappointment (e.g. revenue miss), if COVID-19 is brought under control sooner than expected, and the churn rate for its customer cohort with less than 10 staff ends up higher than expected.\nIs Zoom Stock A Good Buy\nZoom stock is a HOLD for me now, but it could be a good buy in the medium to long term if there is a further correction in ZM's share price implying more attractive valuations, and the company delivers on its growth strategies.\nZoom Video Communications, Inc's key growth strategies are international expansion and increasing revenue from new products like Zoom Phone.\nThe company only generated 31% of its FY 2021 revenue from international markets outside the Americas, but these foreign markets are growing fast. Revenue for the Asia Pacific and EMEA markets grew by +551% and +587%, respectively last year, while the top line for ZM's Americas region increased by a lower +266% over the same period. Zoom highlighted at the company's FY 2021 earnings call on March 1, 2021 that \"we intend to make additional investments in international resources to further capitalize on the global opportunity.\"\nAnother key growth driver for Zoom in the medium term is Zoom Phone. In January 2021, ZM disclosed that \"it has sold one million Zoom Phone seats\" in less than two years of the product's launch. Based on my personal correspondence with the company, I was told that there are about hundreds of millions of commercial phones in the US running on legacy software that could potentially be migrating to cloud-based PBX (Private Branch Exchange) systems (like that of Zoom Phone) in time to come.\nZoom also noted at the Morgan Stanley (MS) Technology, Media and Telecom Conference on March 3, 2021 that \"on a percentage basis, Zoom Phone has been our fastest-growing product line in Q3 and Q4\", and the company sees Zoom Phone as \"a percentage of growth basis to outpace (Zoom) Meetings (company's core product)\" in the current fiscal year.\nOn the other hand, I am concerned that Zoom's revenue growth this year could disappoint the market, considering the possibility of a higher-than-expected churn rate for its customer cohort with less than 10 staff. As such, I see a Neutral rating for the stock as fair.\nZoom Video Communications, Inc's key risk factors are a shorter-than-expected time taken for the coronavirus pandemic to be effectively contained, and poor execution on key growth initiatives like international expansion and the Zoom Phone.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":370984330,"gmtCreate":1618543944120,"gmtModify":1704712497988,"author":{"id":"3568225093869310","authorId":"3568225093869310","authorIdStr":"3568225093869310","name":"mitsui","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":1,"idStr":"3568225093869310"},"htmlText":"oooof","listText":"oooof","text":"oooof","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/370984330","repostId":1117277782,"repostType":4,"repost":{"id":"1117277782","pubTimestamp":1618539309,"share":"https://ttm.financial/m/news/1117277782?lang=&edition=fundamental","pubTime":"2021-04-16 10:15","market":"us","language":"en","title":"Zoom Stock: What's The Outlook Once COVID Wanes","url":"https://stock-news.laohu8.com/highlight/detail?id=1117277782","media":"seekingalpha","summary":"Summary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% y","content":"Summary\n<ul>\n <li>Zoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.</li>\n <li>Zoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively.</li>\n <li>ZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of&nbsp;its customer cohort with under 10 staff being a key downside risk.</li>\n <li>I am positive on Zoom's medium to long-term growth drivers like international expansion and Zoom Phone.</li>\n <li>But I think Zoom is a HOLD rather than a BUY, as valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/cf695f0ee4625d58a734edbfe6cb7430\" tg-width=\"768\" tg-height=\"512\">Photo by Luis Alvarez/DigitalVision via Getty Images\nElevator Pitch\nI assign a Neutral rating to Zoom Video Communications, Inc (ZM).\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021. The slowdown in ZM's QoQ revenue growth in the most recent quarter could explain why the company's share price performance has been lackluster this year.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively. ZM's current valuations are not demanding on a relative basis as compared to peers, but the valuation de-rating of the technology sector might have just begun as investors switch to reopening plays in view of the ongoing vaccine roll-out program.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk factor. Also valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations. On the flip side, I am positive on Zoom's medium to long term growth drivers like international expansion and Zoom Phone.\nTaking into account all the factors highlighted above, I think that Zoom deserves a Neutral rating.\nCompany Description\nIn its FY 2021 10-K, Zoom Video Communications, Inc&nbsp;refers to itself&nbsp;as a provider of \"a video-first unified communications platform\" which helps to \"connect people through frictionless and secure video, phone, chat, and content sharing.\" The company's key products include Zoom Meetings, Zoom Rooms and Zoom Phone, which are detailed below.\n<img src=\"https://static.tigerbbs.com/b2ce8a0468e9ba4263d742190a82d70e\" tg-width=\"640\" tg-height=\"140\"><img src=\"https://static.tigerbbs.com/ca6f50d9ee74057e4a22fda98241529c\" tg-width=\"640\" tg-height=\"125\"><img src=\"https://static.tigerbbs.com/cfb55bbf89d56bb0584a5599b0453bb9\" tg-width=\"640\" tg-height=\"298\">\n<img src=\"https://static.tigerbbs.com/f4acfd03336743c0393a66d394665c36\" tg-width=\"640\" tg-height=\"309\">Source: Zoom's FY 2021 10-K And October 2020 Analyst Day Presentation Slides\nThe Americas, EMEA (Europe, the Middle East and Africa), and Asia-Pacific regions contributed&nbsp;69%, 18% and 13%&nbsp;of Zoom's FY 2021 top line.\nZoom Stock Price\n2020 was a great year for Zoom with regards to share price performance, but the stock is still delivering negative share price returns in 2021 year-to-date.\nZM's share price almost quintupled from $68.04 as of the last day of 2019 to&nbsp;$337.32&nbsp;as of end-2020. Notably, Zoom Video Communications, Inc's stock price reached an all-time high of $568.34 on October 19, 2020. Earlier, Zoom held its\"annual user conference\"known as Zoomtopia on October 14, 2020 where it disclosed updates to the Zoom platform, which led to a number of sell-side analysts&nbsp;increasing their respective target pricesfor the stock.\nHowever, Zoom's share price subsequently dropped by -41% to close at $337.32 as of December 31, 2020, aspositive news flow on vaccine development&nbsp;since November 2020 continued to put pressure on the share prices of Work-From-Home or WFH beneficiaries like ZM. The downward trend in Zoom's stock price continued into 2021, as ZM's stock price declined marginally by -2% from $337.32 as of December 31, 2020 to $329.20 as of April 14, 2021.\nAlthough Zoom's stock price rose by +10% from $373.61 as of February 26, 2021 to $409.66 as of March 1, 2021 prior to the company's&nbsp;release of 4Q FY 2021 results&nbsp;on the same day after trading hours. But ZM's share price fell by -9% to $372.79 as of March 2, 2021 a day after its results announcement.\nIf one delves deeper into Zoom's 4Q FY 2021 financial results, it is easy to understand why Zoom's share price dropped on March 2, 2021, and subsequently declined by an additional -10% over the next one and a half months post-results to close at $329.20 as of April 14, 2021.\nZoom Video Communications, Inc's revenue jumped by +369% YoY to $882 million in 4Q FY 2021, which was also +9% higher than market consensus' quarterly revenue forecast of around&nbsp;$811 million. But it is noteworthy that ZM's QoQ revenue growth narrowed from +17% in 3Q FY 2021 to +14% 4Q FY 2021. This also pales in comparison to Zoom's QoQ revenue growth rates of +102% and +74% for 2Q FY 2021 and 1Q FY 2021, respectively. The slowdown in QoQ top line expansion in the most recent quarter validates market concerns about WFH tailwinds easing for Zoom (when COVID wanes) to a large extent, which explains Zoom's poor share price performance post-results.\nValuation\nZoom Video Communications, Inc trades at 24.3 times consensus forward FY 2022 Enterprise Value-to-Revenue and 20.0 times consensus forward FY 2023 Enterprise Value-to-Revenue $329.20 as of April 14, 2021. The market also values the company at consensus forward FY 2022 and FY 2023 EV/EBITDA multiples of 77.5 times and 63.2 times, respectively. The company is expected to achieve revenue growth rates of +44% and +22% in the current fiscal year, and the next fiscal year, respectively according to S&amp;P Capital IQ data.\nZM looks relatively more attractive on a forward EV/EBITDA basis, but its forward Enterprise Value-to-Revenue multiples and revenue growth rates are more or less in line with its peers. However, the valuations for Zoom and its peers are rather rich on an absolute basis, and there is no certainty that the de-rating for technology stocks and WFH beneficiaries has already run its full course.\nPeer Valuation Comparison For Zoom\n<table>\n <tbody>\n <tr>\n <td>Stock</td>\n <td>Consensus Current Year Enterprise Value-to-Revenue Multiple</td>\n <td>Consensus Forward One-Year Enterprise Value-to-Revenue Multiple</td>\n <td>Consensus Current Year EV/EBITDA</td>\n <td>Consensus Forward One-Year EV/EBITDA</td>\n <td>Consensus Current Year Revenue Growth Rate</td>\n <td>Consensus Forward One-Year Revenue Growth Rate</td>\n </tr>\n <tr>\n <td>Slack Technologies, Inc (WORK)</td>\n <td>15</td>\n <td>13</td>\n <td>283</td>\n <td>106</td>\n <td>+30%</td>\n <td>+28%</td>\n </tr>\n <tr>\n <td>Twilio Inc (TWLO)</td>\n <td>25</td>\n <td>19</td>\n <td>380</td>\n <td>218</td>\n <td>+38%</td>\n <td>+31%</td>\n </tr>\n <tr>\n <td>Atlassian Corporation Plc (TEAM)</td>\n <td>28</td>\n <td>24</td>\n <td>108</td>\n <td>94</td>\n <td>+24%</td>\n <td>+15%</td>\n </tr>\n </tbody>\n</table>\nSource: Author\nZoom Forecast In 2021\nZoom Video Communications guided for revenue of&nbsp;$3,760-$3,780 million&nbsp;and non-GAAP core earnings per share of $3.59-$3.65 for calendar year 2021 or fiscal year 2022 (YE January 31). This translates to top line and bottom line growth of +42% and +8%, respectively this year, based on the mid-point of ZM's guidance.\nSell-side analysts are more optimistic, as they expect Zoom to achieve revenue and normalized earnings growth of +44% and +12%, respectively in the current fiscal year. Nevertheless, it is not surprising that Zoom is not expected to grow as fast this year as it did last year with WFH tailwinds easing. As a reference, ZM's revenue increased by +326% in the most recent fiscal year, while its core earnings per share jumped by +854% last year.\nThe key factor that will impact Zoom's financial performance this year is the churn rate for its customer cohort with less than 10 staff. The company's proportion of revenue derived from clients with under 10 staff doubled from 18% in FY 2020 to&nbsp;36%&nbsp;in FY 2021, which it attributed to \"business owners and individual users\" using \"Zoom for many personal, professional, and social events\" in its 10-K. In other words, ZM's customer cohort with less than 10 staff was a significant driver of revenue growth for the company last year, as compared to its customer cohort with more than 10 employees.\nLooking forward into the current fiscal year, I expect Zoom's churn rate for its customer cohort with less than 10 staff to be significantly higher than its customer cohort with more than 10 employees for two key reasons.\nFirstly, fewer individuals will use Zoom for social purposes as COVID wanes, and there is a higher risk of business failure for smaller companies vis-a-vis their larger counterparts. Secondly, Zoom adopts a \"self-service\" model for its customer cohort with less than 10 staff, while there are sales teams to support its customer cohort with more than 10 employees, which makes this group of clients relatively more sticky.\nIn a nutshell, while ZM has set \"relatively modest\" growth target this year, there could still be room for disappointment (e.g. revenue miss), if COVID-19 is brought under control sooner than expected, and the churn rate for its customer cohort with less than 10 staff ends up higher than expected.\nIs Zoom Stock A Good Buy\nZoom stock is a HOLD for me now, but it could be a good buy in the medium to long term if there is a further correction in ZM's share price implying more attractive valuations, and the company delivers on its growth strategies.\nZoom Video Communications, Inc's key growth strategies are international expansion and increasing revenue from new products like Zoom Phone.\nThe company only generated 31% of its FY 2021 revenue from international markets outside the Americas, but these foreign markets are growing fast. Revenue for the Asia Pacific and EMEA markets grew by&nbsp;+551% and +587%, respectively last year, while the top line for ZM's Americas region increased by a lower +266% over the same period. Zoom&nbsp;highlighted&nbsp;at the company's FY 2021 earnings call on March 1, 2021 that \"we intend to make additional investments in international resources to further capitalize on the global opportunity.\"\nAnother key growth driver for Zoom in the medium term is Zoom Phone. In January 2021, ZM&nbsp;disclosed&nbsp;that \"it has sold one million Zoom Phone seats\" in less than two years of the product's launch. Based on my personal correspondence with the company, I was told that there are about hundreds of millions of commercial phones in the US running on legacy software that could potentially be migrating to cloud-based PBX (Private Branch Exchange) systems (like that of Zoom Phone) in time to come.\nZoom also&nbsp;noted&nbsp;at the Morgan Stanley (MS) Technology, Media and Telecom Conference on March 3, 2021 that \"on a percentage basis, Zoom Phone has been our fastest-growing product line in Q3 and Q4\", and the company sees Zoom Phone as \"a percentage of growth basis to outpace (Zoom) Meetings (company's core product)\" in the current fiscal year.\nOn the other hand, I am concerned that Zoom's revenue growth this year could disappoint the market, considering the possibility of a higher-than-expected churn rate for its customer cohort with less than 10 staff. As such, I see a Neutral rating for the stock as fair.\nZoom Video Communications, Inc's key risk factors are a shorter-than-expected time taken for the coronavirus pandemic to be effectively contained, and poor execution on key growth initiatives like international expansion and the Zoom Phone.","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Zoom Stock: What's The Outlook Once COVID Wanes</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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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 Stock: What's The Outlook Once COVID Wanes\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-04-16 10:15 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise ...\n\n<a href=\"https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"ZM":"Zoom"},"source_url":"https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1117277782","content_text":"Summary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk.\nI am positive on Zoom's medium to long-term growth drivers like international expansion and Zoom Phone.\nBut I think Zoom is a HOLD rather than a BUY, as valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations.\n\nPhoto by Luis Alvarez/DigitalVision via Getty Images\nElevator Pitch\nI assign a Neutral rating to Zoom Video Communications, Inc (ZM).\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021. The slowdown in ZM's QoQ revenue growth in the most recent quarter could explain why the company's share price performance has been lackluster this year.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively. ZM's current valuations are not demanding on a relative basis as compared to peers, but the valuation de-rating of the technology sector might have just begun as investors switch to reopening plays in view of the ongoing vaccine roll-out program.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk factor. Also valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations. On the flip side, I am positive on Zoom's medium to long term growth drivers like international expansion and Zoom Phone.\nTaking into account all the factors highlighted above, I think that Zoom deserves a Neutral rating.\nCompany Description\nIn its FY 2021 10-K, Zoom Video Communications, Inc refers to itself as a provider of \"a video-first unified communications platform\" which helps to \"connect people through frictionless and secure video, phone, chat, and content sharing.\" The company's key products include Zoom Meetings, Zoom Rooms and Zoom Phone, which are detailed below.\n\nSource: Zoom's FY 2021 10-K And October 2020 Analyst Day Presentation Slides\nThe Americas, EMEA (Europe, the Middle East and Africa), and Asia-Pacific regions contributed 69%, 18% and 13% of Zoom's FY 2021 top line.\nZoom Stock Price\n2020 was a great year for Zoom with regards to share price performance, but the stock is still delivering negative share price returns in 2021 year-to-date.\nZM's share price almost quintupled from $68.04 as of the last day of 2019 to $337.32 as of end-2020. Notably, Zoom Video Communications, Inc's stock price reached an all-time high of $568.34 on October 19, 2020. Earlier, Zoom held its\"annual user conference\"known as Zoomtopia on October 14, 2020 where it disclosed updates to the Zoom platform, which led to a number of sell-side analysts increasing their respective target pricesfor the stock.\nHowever, Zoom's share price subsequently dropped by -41% to close at $337.32 as of December 31, 2020, aspositive news flow on vaccine development since November 2020 continued to put pressure on the share prices of Work-From-Home or WFH beneficiaries like ZM. The downward trend in Zoom's stock price continued into 2021, as ZM's stock price declined marginally by -2% from $337.32 as of December 31, 2020 to $329.20 as of April 14, 2021.\nAlthough Zoom's stock price rose by +10% from $373.61 as of February 26, 2021 to $409.66 as of March 1, 2021 prior to the company's release of 4Q FY 2021 results on the same day after trading hours. But ZM's share price fell by -9% to $372.79 as of March 2, 2021 a day after its results announcement.\nIf one delves deeper into Zoom's 4Q FY 2021 financial results, it is easy to understand why Zoom's share price dropped on March 2, 2021, and subsequently declined by an additional -10% over the next one and a half months post-results to close at $329.20 as of April 14, 2021.\nZoom Video Communications, Inc's revenue jumped by +369% YoY to $882 million in 4Q FY 2021, which was also +9% higher than market consensus' quarterly revenue forecast of around $811 million. But it is noteworthy that ZM's QoQ revenue growth narrowed from +17% in 3Q FY 2021 to +14% 4Q FY 2021. This also pales in comparison to Zoom's QoQ revenue growth rates of +102% and +74% for 2Q FY 2021 and 1Q FY 2021, respectively. The slowdown in QoQ top line expansion in the most recent quarter validates market concerns about WFH tailwinds easing for Zoom (when COVID wanes) to a large extent, which explains Zoom's poor share price performance post-results.\nValuation\nZoom Video Communications, Inc trades at 24.3 times consensus forward FY 2022 Enterprise Value-to-Revenue and 20.0 times consensus forward FY 2023 Enterprise Value-to-Revenue $329.20 as of April 14, 2021. The market also values the company at consensus forward FY 2022 and FY 2023 EV/EBITDA multiples of 77.5 times and 63.2 times, respectively. The company is expected to achieve revenue growth rates of +44% and +22% in the current fiscal year, and the next fiscal year, respectively according to S&P Capital IQ data.\nZM looks relatively more attractive on a forward EV/EBITDA basis, but its forward Enterprise Value-to-Revenue multiples and revenue growth rates are more or less in line with its peers. However, the valuations for Zoom and its peers are rather rich on an absolute basis, and there is no certainty that the de-rating for technology stocks and WFH beneficiaries has already run its full course.\nPeer Valuation Comparison For Zoom\n\n\n\nStock\nConsensus Current Year Enterprise Value-to-Revenue Multiple\nConsensus Forward One-Year Enterprise Value-to-Revenue Multiple\nConsensus Current Year EV/EBITDA\nConsensus Forward One-Year EV/EBITDA\nConsensus Current Year Revenue Growth Rate\nConsensus Forward One-Year Revenue Growth Rate\n\n\nSlack Technologies, Inc (WORK)\n15\n13\n283\n106\n+30%\n+28%\n\n\nTwilio Inc (TWLO)\n25\n19\n380\n218\n+38%\n+31%\n\n\nAtlassian Corporation Plc (TEAM)\n28\n24\n108\n94\n+24%\n+15%\n\n\n\nSource: Author\nZoom Forecast In 2021\nZoom Video Communications guided for revenue of $3,760-$3,780 million and non-GAAP core earnings per share of $3.59-$3.65 for calendar year 2021 or fiscal year 2022 (YE January 31). This translates to top line and bottom line growth of +42% and +8%, respectively this year, based on the mid-point of ZM's guidance.\nSell-side analysts are more optimistic, as they expect Zoom to achieve revenue and normalized earnings growth of +44% and +12%, respectively in the current fiscal year. Nevertheless, it is not surprising that Zoom is not expected to grow as fast this year as it did last year with WFH tailwinds easing. As a reference, ZM's revenue increased by +326% in the most recent fiscal year, while its core earnings per share jumped by +854% last year.\nThe key factor that will impact Zoom's financial performance this year is the churn rate for its customer cohort with less than 10 staff. The company's proportion of revenue derived from clients with under 10 staff doubled from 18% in FY 2020 to 36% in FY 2021, which it attributed to \"business owners and individual users\" using \"Zoom for many personal, professional, and social events\" in its 10-K. In other words, ZM's customer cohort with less than 10 staff was a significant driver of revenue growth for the company last year, as compared to its customer cohort with more than 10 employees.\nLooking forward into the current fiscal year, I expect Zoom's churn rate for its customer cohort with less than 10 staff to be significantly higher than its customer cohort with more than 10 employees for two key reasons.\nFirstly, fewer individuals will use Zoom for social purposes as COVID wanes, and there is a higher risk of business failure for smaller companies vis-a-vis their larger counterparts. Secondly, Zoom adopts a \"self-service\" model for its customer cohort with less than 10 staff, while there are sales teams to support its customer cohort with more than 10 employees, which makes this group of clients relatively more sticky.\nIn a nutshell, while ZM has set \"relatively modest\" growth target this year, there could still be room for disappointment (e.g. revenue miss), if COVID-19 is brought under control sooner than expected, and the churn rate for its customer cohort with less than 10 staff ends up higher than expected.\nIs Zoom Stock A Good Buy\nZoom stock is a HOLD for me now, but it could be a good buy in the medium to long term if there is a further correction in ZM's share price implying more attractive valuations, and the company delivers on its growth strategies.\nZoom Video Communications, Inc's key growth strategies are international expansion and increasing revenue from new products like Zoom Phone.\nThe company only generated 31% of its FY 2021 revenue from international markets outside the Americas, but these foreign markets are growing fast. Revenue for the Asia Pacific and EMEA markets grew by +551% and +587%, respectively last year, while the top line for ZM's Americas region increased by a lower +266% over the same period. Zoom highlighted at the company's FY 2021 earnings call on March 1, 2021 that \"we intend to make additional investments in international resources to further capitalize on the global opportunity.\"\nAnother key growth driver for Zoom in the medium term is Zoom Phone. In January 2021, ZM disclosed that \"it has sold one million Zoom Phone seats\" in less than two years of the product's launch. Based on my personal correspondence with the company, I was told that there are about hundreds of millions of commercial phones in the US running on legacy software that could potentially be migrating to cloud-based PBX (Private Branch Exchange) systems (like that of Zoom Phone) in time to come.\nZoom also noted at the Morgan Stanley (MS) Technology, Media and Telecom Conference on March 3, 2021 that \"on a percentage basis, Zoom Phone has been our fastest-growing product line in Q3 and Q4\", and the company sees Zoom Phone as \"a percentage of growth basis to outpace (Zoom) Meetings (company's core product)\" in the current fiscal year.\nOn the other hand, I am concerned that Zoom's revenue growth this year could disappoint the market, considering the possibility of a higher-than-expected churn rate for its customer cohort with less than 10 staff. As such, I see a Neutral rating for the stock as fair.\nZoom Video Communications, Inc's key risk factors are a shorter-than-expected time taken for the coronavirus pandemic to be effectively contained, and poor execution on key growth initiatives like international expansion and the Zoom Phone.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":370937110,"gmtCreate":1618542178330,"gmtModify":1704712474005,"author":{"id":"3574639401134105","authorId":"3574639401134105","authorIdStr":"3574639401134105","name":"Mochizuki","avatar":"https://static.tigerbbs.com/8eff2450a3e5a8207c8f6dc5db664010","vip":1,"crmLevel":5,"crmLevelSwitch":0,"idStr":"3574639401134105"},"htmlText":"Zoom probably can’t sustain past the pandemic","listText":"Zoom probably can’t sustain past the pandemic","text":"Zoom probably can’t sustain past the pandemic","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":2,"repostSize":0,"link":"https://ttm.financial/post/370937110","repostId":1117277782,"repostType":4,"repost":{"id":"1117277782","pubTimestamp":1618539309,"share":"https://ttm.financial/m/news/1117277782?lang=&edition=fundamental","pubTime":"2021-04-16 10:15","market":"us","language":"en","title":"Zoom Stock: What's The Outlook Once COVID Wanes","url":"https://stock-news.laohu8.com/highlight/detail?id=1117277782","media":"seekingalpha","summary":"Summary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% y","content":"Summary\n<ul>\n <li>Zoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.</li>\n <li>Zoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively.</li>\n <li>ZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of&nbsp;its customer cohort with under 10 staff being a key downside risk.</li>\n <li>I am positive on Zoom's medium to long-term growth drivers like international expansion and Zoom Phone.</li>\n <li>But I think Zoom is a HOLD rather than a BUY, as valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/cf695f0ee4625d58a734edbfe6cb7430\" tg-width=\"768\" tg-height=\"512\">Photo by Luis Alvarez/DigitalVision via Getty Images\nElevator Pitch\nI assign a Neutral rating to Zoom Video Communications, Inc (ZM).\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021. The slowdown in ZM's QoQ revenue growth in the most recent quarter could explain why the company's share price performance has been lackluster this year.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively. ZM's current valuations are not demanding on a relative basis as compared to peers, but the valuation de-rating of the technology sector might have just begun as investors switch to reopening plays in view of the ongoing vaccine roll-out program.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk factor. Also valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations. On the flip side, I am positive on Zoom's medium to long term growth drivers like international expansion and Zoom Phone.\nTaking into account all the factors highlighted above, I think that Zoom deserves a Neutral rating.\nCompany Description\nIn its FY 2021 10-K, Zoom Video Communications, Inc&nbsp;refers to itself&nbsp;as a provider of \"a video-first unified communications platform\" which helps to \"connect people through frictionless and secure video, phone, chat, and content sharing.\" The company's key products include Zoom Meetings, Zoom Rooms and Zoom Phone, which are detailed below.\n<img src=\"https://static.tigerbbs.com/b2ce8a0468e9ba4263d742190a82d70e\" tg-width=\"640\" tg-height=\"140\"><img src=\"https://static.tigerbbs.com/ca6f50d9ee74057e4a22fda98241529c\" tg-width=\"640\" tg-height=\"125\"><img src=\"https://static.tigerbbs.com/cfb55bbf89d56bb0584a5599b0453bb9\" tg-width=\"640\" tg-height=\"298\">\n<img src=\"https://static.tigerbbs.com/f4acfd03336743c0393a66d394665c36\" tg-width=\"640\" tg-height=\"309\">Source: Zoom's FY 2021 10-K And October 2020 Analyst Day Presentation Slides\nThe Americas, EMEA (Europe, the Middle East and Africa), and Asia-Pacific regions contributed&nbsp;69%, 18% and 13%&nbsp;of Zoom's FY 2021 top line.\nZoom Stock Price\n2020 was a great year for Zoom with regards to share price performance, but the stock is still delivering negative share price returns in 2021 year-to-date.\nZM's share price almost quintupled from $68.04 as of the last day of 2019 to&nbsp;$337.32&nbsp;as of end-2020. Notably, Zoom Video Communications, Inc's stock price reached an all-time high of $568.34 on October 19, 2020. Earlier, Zoom held its\"annual user conference\"known as Zoomtopia on October 14, 2020 where it disclosed updates to the Zoom platform, which led to a number of sell-side analysts&nbsp;increasing their respective target pricesfor the stock.\nHowever, Zoom's share price subsequently dropped by -41% to close at $337.32 as of December 31, 2020, aspositive news flow on vaccine development&nbsp;since November 2020 continued to put pressure on the share prices of Work-From-Home or WFH beneficiaries like ZM. The downward trend in Zoom's stock price continued into 2021, as ZM's stock price declined marginally by -2% from $337.32 as of December 31, 2020 to $329.20 as of April 14, 2021.\nAlthough Zoom's stock price rose by +10% from $373.61 as of February 26, 2021 to $409.66 as of March 1, 2021 prior to the company's&nbsp;release of 4Q FY 2021 results&nbsp;on the same day after trading hours. But ZM's share price fell by -9% to $372.79 as of March 2, 2021 a day after its results announcement.\nIf one delves deeper into Zoom's 4Q FY 2021 financial results, it is easy to understand why Zoom's share price dropped on March 2, 2021, and subsequently declined by an additional -10% over the next one and a half months post-results to close at $329.20 as of April 14, 2021.\nZoom Video Communications, Inc's revenue jumped by +369% YoY to $882 million in 4Q FY 2021, which was also +9% higher than market consensus' quarterly revenue forecast of around&nbsp;$811 million. But it is noteworthy that ZM's QoQ revenue growth narrowed from +17% in 3Q FY 2021 to +14% 4Q FY 2021. This also pales in comparison to Zoom's QoQ revenue growth rates of +102% and +74% for 2Q FY 2021 and 1Q FY 2021, respectively. The slowdown in QoQ top line expansion in the most recent quarter validates market concerns about WFH tailwinds easing for Zoom (when COVID wanes) to a large extent, which explains Zoom's poor share price performance post-results.\nValuation\nZoom Video Communications, Inc trades at 24.3 times consensus forward FY 2022 Enterprise Value-to-Revenue and 20.0 times consensus forward FY 2023 Enterprise Value-to-Revenue $329.20 as of April 14, 2021. The market also values the company at consensus forward FY 2022 and FY 2023 EV/EBITDA multiples of 77.5 times and 63.2 times, respectively. The company is expected to achieve revenue growth rates of +44% and +22% in the current fiscal year, and the next fiscal year, respectively according to S&amp;P Capital IQ data.\nZM looks relatively more attractive on a forward EV/EBITDA basis, but its forward Enterprise Value-to-Revenue multiples and revenue growth rates are more or less in line with its peers. However, the valuations for Zoom and its peers are rather rich on an absolute basis, and there is no certainty that the de-rating for technology stocks and WFH beneficiaries has already run its full course.\nPeer Valuation Comparison For Zoom\n<table>\n <tbody>\n <tr>\n <td>Stock</td>\n <td>Consensus Current Year Enterprise Value-to-Revenue Multiple</td>\n <td>Consensus Forward One-Year Enterprise Value-to-Revenue Multiple</td>\n <td>Consensus Current Year EV/EBITDA</td>\n <td>Consensus Forward One-Year EV/EBITDA</td>\n <td>Consensus Current Year Revenue Growth Rate</td>\n <td>Consensus Forward One-Year Revenue Growth Rate</td>\n </tr>\n <tr>\n <td>Slack Technologies, Inc (WORK)</td>\n <td>15</td>\n <td>13</td>\n <td>283</td>\n <td>106</td>\n <td>+30%</td>\n <td>+28%</td>\n </tr>\n <tr>\n <td>Twilio Inc (TWLO)</td>\n <td>25</td>\n <td>19</td>\n <td>380</td>\n <td>218</td>\n <td>+38%</td>\n <td>+31%</td>\n </tr>\n <tr>\n <td>Atlassian Corporation Plc (TEAM)</td>\n <td>28</td>\n <td>24</td>\n <td>108</td>\n <td>94</td>\n <td>+24%</td>\n <td>+15%</td>\n </tr>\n </tbody>\n</table>\nSource: Author\nZoom Forecast In 2021\nZoom Video Communications guided for revenue of&nbsp;$3,760-$3,780 million&nbsp;and non-GAAP core earnings per share of $3.59-$3.65 for calendar year 2021 or fiscal year 2022 (YE January 31). This translates to top line and bottom line growth of +42% and +8%, respectively this year, based on the mid-point of ZM's guidance.\nSell-side analysts are more optimistic, as they expect Zoom to achieve revenue and normalized earnings growth of +44% and +12%, respectively in the current fiscal year. Nevertheless, it is not surprising that Zoom is not expected to grow as fast this year as it did last year with WFH tailwinds easing. As a reference, ZM's revenue increased by +326% in the most recent fiscal year, while its core earnings per share jumped by +854% last year.\nThe key factor that will impact Zoom's financial performance this year is the churn rate for its customer cohort with less than 10 staff. The company's proportion of revenue derived from clients with under 10 staff doubled from 18% in FY 2020 to&nbsp;36%&nbsp;in FY 2021, which it attributed to \"business owners and individual users\" using \"Zoom for many personal, professional, and social events\" in its 10-K. In other words, ZM's customer cohort with less than 10 staff was a significant driver of revenue growth for the company last year, as compared to its customer cohort with more than 10 employees.\nLooking forward into the current fiscal year, I expect Zoom's churn rate for its customer cohort with less than 10 staff to be significantly higher than its customer cohort with more than 10 employees for two key reasons.\nFirstly, fewer individuals will use Zoom for social purposes as COVID wanes, and there is a higher risk of business failure for smaller companies vis-a-vis their larger counterparts. Secondly, Zoom adopts a \"self-service\" model for its customer cohort with less than 10 staff, while there are sales teams to support its customer cohort with more than 10 employees, which makes this group of clients relatively more sticky.\nIn a nutshell, while ZM has set \"relatively modest\" growth target this year, there could still be room for disappointment (e.g. revenue miss), if COVID-19 is brought under control sooner than expected, and the churn rate for its customer cohort with less than 10 staff ends up higher than expected.\nIs Zoom Stock A Good Buy\nZoom stock is a HOLD for me now, but it could be a good buy in the medium to long term if there is a further correction in ZM's share price implying more attractive valuations, and the company delivers on its growth strategies.\nZoom Video Communications, Inc's key growth strategies are international expansion and increasing revenue from new products like Zoom Phone.\nThe company only generated 31% of its FY 2021 revenue from international markets outside the Americas, but these foreign markets are growing fast. Revenue for the Asia Pacific and EMEA markets grew by&nbsp;+551% and +587%, respectively last year, while the top line for ZM's Americas region increased by a lower +266% over the same period. Zoom&nbsp;highlighted&nbsp;at the company's FY 2021 earnings call on March 1, 2021 that \"we intend to make additional investments in international resources to further capitalize on the global opportunity.\"\nAnother key growth driver for Zoom in the medium term is Zoom Phone. In January 2021, ZM&nbsp;disclosed&nbsp;that \"it has sold one million Zoom Phone seats\" in less than two years of the product's launch. Based on my personal correspondence with the company, I was told that there are about hundreds of millions of commercial phones in the US running on legacy software that could potentially be migrating to cloud-based PBX (Private Branch Exchange) systems (like that of Zoom Phone) in time to come.\nZoom also&nbsp;noted&nbsp;at the Morgan Stanley (MS) Technology, Media and Telecom Conference on March 3, 2021 that \"on a percentage basis, Zoom Phone has been our fastest-growing product line in Q3 and Q4\", and the company sees Zoom Phone as \"a percentage of growth basis to outpace (Zoom) Meetings (company's core product)\" in the current fiscal year.\nOn the other hand, I am concerned that Zoom's revenue growth this year could disappoint the market, considering the possibility of a higher-than-expected churn rate for its customer cohort with less than 10 staff. As such, I see a Neutral rating for the stock as fair.\nZoom Video Communications, Inc's key risk factors are a shorter-than-expected time taken for the coronavirus pandemic to be effectively contained, and poor execution on key growth initiatives like international expansion and the Zoom Phone.","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Zoom Stock: What's The Outlook Once COVID Wanes</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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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 Stock: What's The Outlook Once COVID Wanes\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-04-16 10:15 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise ...\n\n<a href=\"https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"ZM":"Zoom"},"source_url":"https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1117277782","content_text":"Summary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk.\nI am positive on Zoom's medium to long-term growth drivers like international expansion and Zoom Phone.\nBut I think Zoom is a HOLD rather than a BUY, as valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations.\n\nPhoto by Luis Alvarez/DigitalVision via Getty Images\nElevator Pitch\nI assign a Neutral rating to Zoom Video Communications, Inc (ZM).\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021. The slowdown in ZM's QoQ revenue growth in the most recent quarter could explain why the company's share price performance has been lackluster this year.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively. ZM's current valuations are not demanding on a relative basis as compared to peers, but the valuation de-rating of the technology sector might have just begun as investors switch to reopening plays in view of the ongoing vaccine roll-out program.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk factor. Also valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations. On the flip side, I am positive on Zoom's medium to long term growth drivers like international expansion and Zoom Phone.\nTaking into account all the factors highlighted above, I think that Zoom deserves a Neutral rating.\nCompany Description\nIn its FY 2021 10-K, Zoom Video Communications, Inc refers to itself as a provider of \"a video-first unified communications platform\" which helps to \"connect people through frictionless and secure video, phone, chat, and content sharing.\" The company's key products include Zoom Meetings, Zoom Rooms and Zoom Phone, which are detailed below.\n\nSource: Zoom's FY 2021 10-K And October 2020 Analyst Day Presentation Slides\nThe Americas, EMEA (Europe, the Middle East and Africa), and Asia-Pacific regions contributed 69%, 18% and 13% of Zoom's FY 2021 top line.\nZoom Stock Price\n2020 was a great year for Zoom with regards to share price performance, but the stock is still delivering negative share price returns in 2021 year-to-date.\nZM's share price almost quintupled from $68.04 as of the last day of 2019 to $337.32 as of end-2020. Notably, Zoom Video Communications, Inc's stock price reached an all-time high of $568.34 on October 19, 2020. Earlier, Zoom held its\"annual user conference\"known as Zoomtopia on October 14, 2020 where it disclosed updates to the Zoom platform, which led to a number of sell-side analysts increasing their respective target pricesfor the stock.\nHowever, Zoom's share price subsequently dropped by -41% to close at $337.32 as of December 31, 2020, aspositive news flow on vaccine development since November 2020 continued to put pressure on the share prices of Work-From-Home or WFH beneficiaries like ZM. The downward trend in Zoom's stock price continued into 2021, as ZM's stock price declined marginally by -2% from $337.32 as of December 31, 2020 to $329.20 as of April 14, 2021.\nAlthough Zoom's stock price rose by +10% from $373.61 as of February 26, 2021 to $409.66 as of March 1, 2021 prior to the company's release of 4Q FY 2021 results on the same day after trading hours. But ZM's share price fell by -9% to $372.79 as of March 2, 2021 a day after its results announcement.\nIf one delves deeper into Zoom's 4Q FY 2021 financial results, it is easy to understand why Zoom's share price dropped on March 2, 2021, and subsequently declined by an additional -10% over the next one and a half months post-results to close at $329.20 as of April 14, 2021.\nZoom Video Communications, Inc's revenue jumped by +369% YoY to $882 million in 4Q FY 2021, which was also +9% higher than market consensus' quarterly revenue forecast of around $811 million. But it is noteworthy that ZM's QoQ revenue growth narrowed from +17% in 3Q FY 2021 to +14% 4Q FY 2021. This also pales in comparison to Zoom's QoQ revenue growth rates of +102% and +74% for 2Q FY 2021 and 1Q FY 2021, respectively. The slowdown in QoQ top line expansion in the most recent quarter validates market concerns about WFH tailwinds easing for Zoom (when COVID wanes) to a large extent, which explains Zoom's poor share price performance post-results.\nValuation\nZoom Video Communications, Inc trades at 24.3 times consensus forward FY 2022 Enterprise Value-to-Revenue and 20.0 times consensus forward FY 2023 Enterprise Value-to-Revenue $329.20 as of April 14, 2021. The market also values the company at consensus forward FY 2022 and FY 2023 EV/EBITDA multiples of 77.5 times and 63.2 times, respectively. The company is expected to achieve revenue growth rates of +44% and +22% in the current fiscal year, and the next fiscal year, respectively according to S&P Capital IQ data.\nZM looks relatively more attractive on a forward EV/EBITDA basis, but its forward Enterprise Value-to-Revenue multiples and revenue growth rates are more or less in line with its peers. However, the valuations for Zoom and its peers are rather rich on an absolute basis, and there is no certainty that the de-rating for technology stocks and WFH beneficiaries has already run its full course.\nPeer Valuation Comparison For Zoom\n\n\n\nStock\nConsensus Current Year Enterprise Value-to-Revenue Multiple\nConsensus Forward One-Year Enterprise Value-to-Revenue Multiple\nConsensus Current Year EV/EBITDA\nConsensus Forward One-Year EV/EBITDA\nConsensus Current Year Revenue Growth Rate\nConsensus Forward One-Year Revenue Growth Rate\n\n\nSlack Technologies, Inc (WORK)\n15\n13\n283\n106\n+30%\n+28%\n\n\nTwilio Inc (TWLO)\n25\n19\n380\n218\n+38%\n+31%\n\n\nAtlassian Corporation Plc (TEAM)\n28\n24\n108\n94\n+24%\n+15%\n\n\n\nSource: Author\nZoom Forecast In 2021\nZoom Video Communications guided for revenue of $3,760-$3,780 million and non-GAAP core earnings per share of $3.59-$3.65 for calendar year 2021 or fiscal year 2022 (YE January 31). This translates to top line and bottom line growth of +42% and +8%, respectively this year, based on the mid-point of ZM's guidance.\nSell-side analysts are more optimistic, as they expect Zoom to achieve revenue and normalized earnings growth of +44% and +12%, respectively in the current fiscal year. Nevertheless, it is not surprising that Zoom is not expected to grow as fast this year as it did last year with WFH tailwinds easing. As a reference, ZM's revenue increased by +326% in the most recent fiscal year, while its core earnings per share jumped by +854% last year.\nThe key factor that will impact Zoom's financial performance this year is the churn rate for its customer cohort with less than 10 staff. The company's proportion of revenue derived from clients with under 10 staff doubled from 18% in FY 2020 to 36% in FY 2021, which it attributed to \"business owners and individual users\" using \"Zoom for many personal, professional, and social events\" in its 10-K. In other words, ZM's customer cohort with less than 10 staff was a significant driver of revenue growth for the company last year, as compared to its customer cohort with more than 10 employees.\nLooking forward into the current fiscal year, I expect Zoom's churn rate for its customer cohort with less than 10 staff to be significantly higher than its customer cohort with more than 10 employees for two key reasons.\nFirstly, fewer individuals will use Zoom for social purposes as COVID wanes, and there is a higher risk of business failure for smaller companies vis-a-vis their larger counterparts. Secondly, Zoom adopts a \"self-service\" model for its customer cohort with less than 10 staff, while there are sales teams to support its customer cohort with more than 10 employees, which makes this group of clients relatively more sticky.\nIn a nutshell, while ZM has set \"relatively modest\" growth target this year, there could still be room for disappointment (e.g. revenue miss), if COVID-19 is brought under control sooner than expected, and the churn rate for its customer cohort with less than 10 staff ends up higher than expected.\nIs Zoom Stock A Good Buy\nZoom stock is a HOLD for me now, but it could be a good buy in the medium to long term if there is a further correction in ZM's share price implying more attractive valuations, and the company delivers on its growth strategies.\nZoom Video Communications, Inc's key growth strategies are international expansion and increasing revenue from new products like Zoom Phone.\nThe company only generated 31% of its FY 2021 revenue from international markets outside the Americas, but these foreign markets are growing fast. Revenue for the Asia Pacific and EMEA markets grew by +551% and +587%, respectively last year, while the top line for ZM's Americas region increased by a lower +266% over the same period. Zoom highlighted at the company's FY 2021 earnings call on March 1, 2021 that \"we intend to make additional investments in international resources to further capitalize on the global opportunity.\"\nAnother key growth driver for Zoom in the medium term is Zoom Phone. In January 2021, ZM disclosed that \"it has sold one million Zoom Phone seats\" in less than two years of the product's launch. Based on my personal correspondence with the company, I was told that there are about hundreds of millions of commercial phones in the US running on legacy software that could potentially be migrating to cloud-based PBX (Private Branch Exchange) systems (like that of Zoom Phone) in time to come.\nZoom also noted at the Morgan Stanley (MS) Technology, Media and Telecom Conference on March 3, 2021 that \"on a percentage basis, Zoom Phone has been our fastest-growing product line in Q3 and Q4\", and the company sees Zoom Phone as \"a percentage of growth basis to outpace (Zoom) Meetings (company's core product)\" in the current fiscal year.\nOn the other hand, I am concerned that Zoom's revenue growth this year could disappoint the market, considering the possibility of a higher-than-expected churn rate for its customer cohort with less than 10 staff. As such, I see a Neutral rating for the stock as fair.\nZoom Video Communications, Inc's key risk factors are a shorter-than-expected time taken for the coronavirus pandemic to be effectively contained, and poor execution on key growth initiatives like international expansion and the Zoom Phone.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":4069367,"gmtCreate":1618793096947,"gmtModify":1680784585777,"authorId":3555020641484564,"author":{"id":3555020641484564,"authorId":3555020641484564,"name":"AmosTeo","avatar":"https://static.tigerbbs.com/a08231bce14a334357c9e989e087ac0f","vip":1,"currentWearingBadge":{"badgeId":"1026c425416b44e0aac28c11a0848493-3","templateUuid":"1026c425416b44e0aac28c11a0848493","name":" Tiger Idol","description":"Join the tiger community for 1500 days","bigImgUrl":"https://static.tigerbbs.com/8b40ae7da5bf081a1c84df14bf9e6367","smallImgUrl":"https://static.tigerbbs.com/f160eceddd7c284a8e1136557615cfad","grayImgUrl":"https://static.tigerbbs.com/11792805c468334a9b31c39f95a41c6a","redirectLinkEnabled":0,"hasAllocated":1,"isWearing":1,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2024.07.22","individualDisplayEnabled":0,"individualDisplaySort":0,"categoryType":1001},"crmLevel":6,"crmLevelSwitch":1,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":370937110,"type":1,"supId":0,"prevId":0,"content":"Hhahaaa","text":"Hhahaaa","html":"Hhahaaa"},{"id":4065300,"gmtCreate":1618729749856,"gmtModify":1680784520651,"authorId":3576895914333904,"author":{"id":3576895914333904,"authorId":3576895914333904,"name":"Auteur","avatar":"https://static.tigerbbs.com/d16a5bbbdb8b078faa38feb3dfadc275","vip":1,"crmLevel":4,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":370937110,"type":1,"supId":0,"prevId":0,"content":"?","text":"?","html":"?"}],"langContent":"EN"},{"id":370990646,"gmtCreate":1618540484085,"gmtModify":1704712448750,"author":{"id":"3571694506074118","authorId":"3571694506074118","authorIdStr":"3571694506074118","name":"Josca","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3571694506074118"},"htmlText":"Nice","listText":"Nice","text":"Nice","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":2,"repostSize":0,"link":"https://ttm.financial/post/370990646","repostId":1117277782,"repostType":4,"repost":{"id":"1117277782","pubTimestamp":1618539309,"share":"https://ttm.financial/m/news/1117277782?lang=&edition=fundamental","pubTime":"2021-04-16 10:15","market":"us","language":"en","title":"Zoom Stock: What's The Outlook Once COVID Wanes","url":"https://stock-news.laohu8.com/highlight/detail?id=1117277782","media":"seekingalpha","summary":"Summary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% y","content":"Summary\n<ul>\n <li>Zoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.</li>\n <li>Zoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively.</li>\n <li>ZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of&nbsp;its customer cohort with under 10 staff being a key downside risk.</li>\n <li>I am positive on Zoom's medium to long-term growth drivers like international expansion and Zoom Phone.</li>\n <li>But I think Zoom is a HOLD rather than a BUY, as valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/cf695f0ee4625d58a734edbfe6cb7430\" tg-width=\"768\" tg-height=\"512\">Photo by Luis Alvarez/DigitalVision via Getty Images\nElevator Pitch\nI assign a Neutral rating to Zoom Video Communications, Inc (ZM).\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021. The slowdown in ZM's QoQ revenue growth in the most recent quarter could explain why the company's share price performance has been lackluster this year.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively. ZM's current valuations are not demanding on a relative basis as compared to peers, but the valuation de-rating of the technology sector might have just begun as investors switch to reopening plays in view of the ongoing vaccine roll-out program.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk factor. Also valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations. On the flip side, I am positive on Zoom's medium to long term growth drivers like international expansion and Zoom Phone.\nTaking into account all the factors highlighted above, I think that Zoom deserves a Neutral rating.\nCompany Description\nIn its FY 2021 10-K, Zoom Video Communications, Inc&nbsp;refers to itself&nbsp;as a provider of \"a video-first unified communications platform\" which helps to \"connect people through frictionless and secure video, phone, chat, and content sharing.\" The company's key products include Zoom Meetings, Zoom Rooms and Zoom Phone, which are detailed below.\n<img src=\"https://static.tigerbbs.com/b2ce8a0468e9ba4263d742190a82d70e\" tg-width=\"640\" tg-height=\"140\"><img src=\"https://static.tigerbbs.com/ca6f50d9ee74057e4a22fda98241529c\" tg-width=\"640\" tg-height=\"125\"><img src=\"https://static.tigerbbs.com/cfb55bbf89d56bb0584a5599b0453bb9\" tg-width=\"640\" tg-height=\"298\">\n<img src=\"https://static.tigerbbs.com/f4acfd03336743c0393a66d394665c36\" tg-width=\"640\" tg-height=\"309\">Source: Zoom's FY 2021 10-K And October 2020 Analyst Day Presentation Slides\nThe Americas, EMEA (Europe, the Middle East and Africa), and Asia-Pacific regions contributed&nbsp;69%, 18% and 13%&nbsp;of Zoom's FY 2021 top line.\nZoom Stock Price\n2020 was a great year for Zoom with regards to share price performance, but the stock is still delivering negative share price returns in 2021 year-to-date.\nZM's share price almost quintupled from $68.04 as of the last day of 2019 to&nbsp;$337.32&nbsp;as of end-2020. Notably, Zoom Video Communications, Inc's stock price reached an all-time high of $568.34 on October 19, 2020. Earlier, Zoom held its\"annual user conference\"known as Zoomtopia on October 14, 2020 where it disclosed updates to the Zoom platform, which led to a number of sell-side analysts&nbsp;increasing their respective target pricesfor the stock.\nHowever, Zoom's share price subsequently dropped by -41% to close at $337.32 as of December 31, 2020, aspositive news flow on vaccine development&nbsp;since November 2020 continued to put pressure on the share prices of Work-From-Home or WFH beneficiaries like ZM. The downward trend in Zoom's stock price continued into 2021, as ZM's stock price declined marginally by -2% from $337.32 as of December 31, 2020 to $329.20 as of April 14, 2021.\nAlthough Zoom's stock price rose by +10% from $373.61 as of February 26, 2021 to $409.66 as of March 1, 2021 prior to the company's&nbsp;release of 4Q FY 2021 results&nbsp;on the same day after trading hours. But ZM's share price fell by -9% to $372.79 as of March 2, 2021 a day after its results announcement.\nIf one delves deeper into Zoom's 4Q FY 2021 financial results, it is easy to understand why Zoom's share price dropped on March 2, 2021, and subsequently declined by an additional -10% over the next one and a half months post-results to close at $329.20 as of April 14, 2021.\nZoom Video Communications, Inc's revenue jumped by +369% YoY to $882 million in 4Q FY 2021, which was also +9% higher than market consensus' quarterly revenue forecast of around&nbsp;$811 million. But it is noteworthy that ZM's QoQ revenue growth narrowed from +17% in 3Q FY 2021 to +14% 4Q FY 2021. This also pales in comparison to Zoom's QoQ revenue growth rates of +102% and +74% for 2Q FY 2021 and 1Q FY 2021, respectively. The slowdown in QoQ top line expansion in the most recent quarter validates market concerns about WFH tailwinds easing for Zoom (when COVID wanes) to a large extent, which explains Zoom's poor share price performance post-results.\nValuation\nZoom Video Communications, Inc trades at 24.3 times consensus forward FY 2022 Enterprise Value-to-Revenue and 20.0 times consensus forward FY 2023 Enterprise Value-to-Revenue $329.20 as of April 14, 2021. The market also values the company at consensus forward FY 2022 and FY 2023 EV/EBITDA multiples of 77.5 times and 63.2 times, respectively. The company is expected to achieve revenue growth rates of +44% and +22% in the current fiscal year, and the next fiscal year, respectively according to S&amp;P Capital IQ data.\nZM looks relatively more attractive on a forward EV/EBITDA basis, but its forward Enterprise Value-to-Revenue multiples and revenue growth rates are more or less in line with its peers. However, the valuations for Zoom and its peers are rather rich on an absolute basis, and there is no certainty that the de-rating for technology stocks and WFH beneficiaries has already run its full course.\nPeer Valuation Comparison For Zoom\n<table>\n <tbody>\n <tr>\n <td>Stock</td>\n <td>Consensus Current Year Enterprise Value-to-Revenue Multiple</td>\n <td>Consensus Forward One-Year Enterprise Value-to-Revenue Multiple</td>\n <td>Consensus Current Year EV/EBITDA</td>\n <td>Consensus Forward One-Year EV/EBITDA</td>\n <td>Consensus Current Year Revenue Growth Rate</td>\n <td>Consensus Forward One-Year Revenue Growth Rate</td>\n </tr>\n <tr>\n <td>Slack Technologies, Inc (WORK)</td>\n <td>15</td>\n <td>13</td>\n <td>283</td>\n <td>106</td>\n <td>+30%</td>\n <td>+28%</td>\n </tr>\n <tr>\n <td>Twilio Inc (TWLO)</td>\n <td>25</td>\n <td>19</td>\n <td>380</td>\n <td>218</td>\n <td>+38%</td>\n <td>+31%</td>\n </tr>\n <tr>\n <td>Atlassian Corporation Plc (TEAM)</td>\n <td>28</td>\n <td>24</td>\n <td>108</td>\n <td>94</td>\n <td>+24%</td>\n <td>+15%</td>\n </tr>\n </tbody>\n</table>\nSource: Author\nZoom Forecast In 2021\nZoom Video Communications guided for revenue of&nbsp;$3,760-$3,780 million&nbsp;and non-GAAP core earnings per share of $3.59-$3.65 for calendar year 2021 or fiscal year 2022 (YE January 31). This translates to top line and bottom line growth of +42% and +8%, respectively this year, based on the mid-point of ZM's guidance.\nSell-side analysts are more optimistic, as they expect Zoom to achieve revenue and normalized earnings growth of +44% and +12%, respectively in the current fiscal year. Nevertheless, it is not surprising that Zoom is not expected to grow as fast this year as it did last year with WFH tailwinds easing. As a reference, ZM's revenue increased by +326% in the most recent fiscal year, while its core earnings per share jumped by +854% last year.\nThe key factor that will impact Zoom's financial performance this year is the churn rate for its customer cohort with less than 10 staff. The company's proportion of revenue derived from clients with under 10 staff doubled from 18% in FY 2020 to&nbsp;36%&nbsp;in FY 2021, which it attributed to \"business owners and individual users\" using \"Zoom for many personal, professional, and social events\" in its 10-K. In other words, ZM's customer cohort with less than 10 staff was a significant driver of revenue growth for the company last year, as compared to its customer cohort with more than 10 employees.\nLooking forward into the current fiscal year, I expect Zoom's churn rate for its customer cohort with less than 10 staff to be significantly higher than its customer cohort with more than 10 employees for two key reasons.\nFirstly, fewer individuals will use Zoom for social purposes as COVID wanes, and there is a higher risk of business failure for smaller companies vis-a-vis their larger counterparts. Secondly, Zoom adopts a \"self-service\" model for its customer cohort with less than 10 staff, while there are sales teams to support its customer cohort with more than 10 employees, which makes this group of clients relatively more sticky.\nIn a nutshell, while ZM has set \"relatively modest\" growth target this year, there could still be room for disappointment (e.g. revenue miss), if COVID-19 is brought under control sooner than expected, and the churn rate for its customer cohort with less than 10 staff ends up higher than expected.\nIs Zoom Stock A Good Buy\nZoom stock is a HOLD for me now, but it could be a good buy in the medium to long term if there is a further correction in ZM's share price implying more attractive valuations, and the company delivers on its growth strategies.\nZoom Video Communications, Inc's key growth strategies are international expansion and increasing revenue from new products like Zoom Phone.\nThe company only generated 31% of its FY 2021 revenue from international markets outside the Americas, but these foreign markets are growing fast. Revenue for the Asia Pacific and EMEA markets grew by&nbsp;+551% and +587%, respectively last year, while the top line for ZM's Americas region increased by a lower +266% over the same period. Zoom&nbsp;highlighted&nbsp;at the company's FY 2021 earnings call on March 1, 2021 that \"we intend to make additional investments in international resources to further capitalize on the global opportunity.\"\nAnother key growth driver for Zoom in the medium term is Zoom Phone. In January 2021, ZM&nbsp;disclosed&nbsp;that \"it has sold one million Zoom Phone seats\" in less than two years of the product's launch. Based on my personal correspondence with the company, I was told that there are about hundreds of millions of commercial phones in the US running on legacy software that could potentially be migrating to cloud-based PBX (Private Branch Exchange) systems (like that of Zoom Phone) in time to come.\nZoom also&nbsp;noted&nbsp;at the Morgan Stanley (MS) Technology, Media and Telecom Conference on March 3, 2021 that \"on a percentage basis, Zoom Phone has been our fastest-growing product line in Q3 and Q4\", and the company sees Zoom Phone as \"a percentage of growth basis to outpace (Zoom) Meetings (company's core product)\" in the current fiscal year.\nOn the other hand, I am concerned that Zoom's revenue growth this year could disappoint the market, considering the possibility of a higher-than-expected churn rate for its customer cohort with less than 10 staff. As such, I see a Neutral rating for the stock as fair.\nZoom Video Communications, Inc's key risk factors are a shorter-than-expected time taken for the coronavirus pandemic to be effectively contained, and poor execution on key growth initiatives like international expansion and the Zoom Phone.","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Zoom Stock: What's The Outlook Once COVID Wanes</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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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 Stock: What's The Outlook Once COVID Wanes\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-04-16 10:15 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise ...\n\n<a href=\"https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"ZM":"Zoom"},"source_url":"https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1117277782","content_text":"Summary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk.\nI am positive on Zoom's medium to long-term growth drivers like international expansion and Zoom Phone.\nBut I think Zoom is a HOLD rather than a BUY, as valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations.\n\nPhoto by Luis Alvarez/DigitalVision via Getty Images\nElevator Pitch\nI assign a Neutral rating to Zoom Video Communications, Inc (ZM).\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021. The slowdown in ZM's QoQ revenue growth in the most recent quarter could explain why the company's share price performance has been lackluster this year.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively. ZM's current valuations are not demanding on a relative basis as compared to peers, but the valuation de-rating of the technology sector might have just begun as investors switch to reopening plays in view of the ongoing vaccine roll-out program.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk factor. Also valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations. On the flip side, I am positive on Zoom's medium to long term growth drivers like international expansion and Zoom Phone.\nTaking into account all the factors highlighted above, I think that Zoom deserves a Neutral rating.\nCompany Description\nIn its FY 2021 10-K, Zoom Video Communications, Inc refers to itself as a provider of \"a video-first unified communications platform\" which helps to \"connect people through frictionless and secure video, phone, chat, and content sharing.\" The company's key products include Zoom Meetings, Zoom Rooms and Zoom Phone, which are detailed below.\n\nSource: Zoom's FY 2021 10-K And October 2020 Analyst Day Presentation Slides\nThe Americas, EMEA (Europe, the Middle East and Africa), and Asia-Pacific regions contributed 69%, 18% and 13% of Zoom's FY 2021 top line.\nZoom Stock Price\n2020 was a great year for Zoom with regards to share price performance, but the stock is still delivering negative share price returns in 2021 year-to-date.\nZM's share price almost quintupled from $68.04 as of the last day of 2019 to $337.32 as of end-2020. Notably, Zoom Video Communications, Inc's stock price reached an all-time high of $568.34 on October 19, 2020. Earlier, Zoom held its\"annual user conference\"known as Zoomtopia on October 14, 2020 where it disclosed updates to the Zoom platform, which led to a number of sell-side analysts increasing their respective target pricesfor the stock.\nHowever, Zoom's share price subsequently dropped by -41% to close at $337.32 as of December 31, 2020, aspositive news flow on vaccine development since November 2020 continued to put pressure on the share prices of Work-From-Home or WFH beneficiaries like ZM. The downward trend in Zoom's stock price continued into 2021, as ZM's stock price declined marginally by -2% from $337.32 as of December 31, 2020 to $329.20 as of April 14, 2021.\nAlthough Zoom's stock price rose by +10% from $373.61 as of February 26, 2021 to $409.66 as of March 1, 2021 prior to the company's release of 4Q FY 2021 results on the same day after trading hours. But ZM's share price fell by -9% to $372.79 as of March 2, 2021 a day after its results announcement.\nIf one delves deeper into Zoom's 4Q FY 2021 financial results, it is easy to understand why Zoom's share price dropped on March 2, 2021, and subsequently declined by an additional -10% over the next one and a half months post-results to close at $329.20 as of April 14, 2021.\nZoom Video Communications, Inc's revenue jumped by +369% YoY to $882 million in 4Q FY 2021, which was also +9% higher than market consensus' quarterly revenue forecast of around $811 million. But it is noteworthy that ZM's QoQ revenue growth narrowed from +17% in 3Q FY 2021 to +14% 4Q FY 2021. This also pales in comparison to Zoom's QoQ revenue growth rates of +102% and +74% for 2Q FY 2021 and 1Q FY 2021, respectively. The slowdown in QoQ top line expansion in the most recent quarter validates market concerns about WFH tailwinds easing for Zoom (when COVID wanes) to a large extent, which explains Zoom's poor share price performance post-results.\nValuation\nZoom Video Communications, Inc trades at 24.3 times consensus forward FY 2022 Enterprise Value-to-Revenue and 20.0 times consensus forward FY 2023 Enterprise Value-to-Revenue $329.20 as of April 14, 2021. The market also values the company at consensus forward FY 2022 and FY 2023 EV/EBITDA multiples of 77.5 times and 63.2 times, respectively. The company is expected to achieve revenue growth rates of +44% and +22% in the current fiscal year, and the next fiscal year, respectively according to S&P Capital IQ data.\nZM looks relatively more attractive on a forward EV/EBITDA basis, but its forward Enterprise Value-to-Revenue multiples and revenue growth rates are more or less in line with its peers. However, the valuations for Zoom and its peers are rather rich on an absolute basis, and there is no certainty that the de-rating for technology stocks and WFH beneficiaries has already run its full course.\nPeer Valuation Comparison For Zoom\n\n\n\nStock\nConsensus Current Year Enterprise Value-to-Revenue Multiple\nConsensus Forward One-Year Enterprise Value-to-Revenue Multiple\nConsensus Current Year EV/EBITDA\nConsensus Forward One-Year EV/EBITDA\nConsensus Current Year Revenue Growth Rate\nConsensus Forward One-Year Revenue Growth Rate\n\n\nSlack Technologies, Inc (WORK)\n15\n13\n283\n106\n+30%\n+28%\n\n\nTwilio Inc (TWLO)\n25\n19\n380\n218\n+38%\n+31%\n\n\nAtlassian Corporation Plc (TEAM)\n28\n24\n108\n94\n+24%\n+15%\n\n\n\nSource: Author\nZoom Forecast In 2021\nZoom Video Communications guided for revenue of $3,760-$3,780 million and non-GAAP core earnings per share of $3.59-$3.65 for calendar year 2021 or fiscal year 2022 (YE January 31). This translates to top line and bottom line growth of +42% and +8%, respectively this year, based on the mid-point of ZM's guidance.\nSell-side analysts are more optimistic, as they expect Zoom to achieve revenue and normalized earnings growth of +44% and +12%, respectively in the current fiscal year. Nevertheless, it is not surprising that Zoom is not expected to grow as fast this year as it did last year with WFH tailwinds easing. As a reference, ZM's revenue increased by +326% in the most recent fiscal year, while its core earnings per share jumped by +854% last year.\nThe key factor that will impact Zoom's financial performance this year is the churn rate for its customer cohort with less than 10 staff. The company's proportion of revenue derived from clients with under 10 staff doubled from 18% in FY 2020 to 36% in FY 2021, which it attributed to \"business owners and individual users\" using \"Zoom for many personal, professional, and social events\" in its 10-K. In other words, ZM's customer cohort with less than 10 staff was a significant driver of revenue growth for the company last year, as compared to its customer cohort with more than 10 employees.\nLooking forward into the current fiscal year, I expect Zoom's churn rate for its customer cohort with less than 10 staff to be significantly higher than its customer cohort with more than 10 employees for two key reasons.\nFirstly, fewer individuals will use Zoom for social purposes as COVID wanes, and there is a higher risk of business failure for smaller companies vis-a-vis their larger counterparts. Secondly, Zoom adopts a \"self-service\" model for its customer cohort with less than 10 staff, while there are sales teams to support its customer cohort with more than 10 employees, which makes this group of clients relatively more sticky.\nIn a nutshell, while ZM has set \"relatively modest\" growth target this year, there could still be room for disappointment (e.g. revenue miss), if COVID-19 is brought under control sooner than expected, and the churn rate for its customer cohort with less than 10 staff ends up higher than expected.\nIs Zoom Stock A Good Buy\nZoom stock is a HOLD for me now, but it could be a good buy in the medium to long term if there is a further correction in ZM's share price implying more attractive valuations, and the company delivers on its growth strategies.\nZoom Video Communications, Inc's key growth strategies are international expansion and increasing revenue from new products like Zoom Phone.\nThe company only generated 31% of its FY 2021 revenue from international markets outside the Americas, but these foreign markets are growing fast. Revenue for the Asia Pacific and EMEA markets grew by +551% and +587%, respectively last year, while the top line for ZM's Americas region increased by a lower +266% over the same period. Zoom highlighted at the company's FY 2021 earnings call on March 1, 2021 that \"we intend to make additional investments in international resources to further capitalize on the global opportunity.\"\nAnother key growth driver for Zoom in the medium term is Zoom Phone. In January 2021, ZM disclosed that \"it has sold one million Zoom Phone seats\" in less than two years of the product's launch. Based on my personal correspondence with the company, I was told that there are about hundreds of millions of commercial phones in the US running on legacy software that could potentially be migrating to cloud-based PBX (Private Branch Exchange) systems (like that of Zoom Phone) in time to come.\nZoom also noted at the Morgan Stanley (MS) Technology, Media and Telecom Conference on March 3, 2021 that \"on a percentage basis, Zoom Phone has been our fastest-growing product line in Q3 and Q4\", and the company sees Zoom Phone as \"a percentage of growth basis to outpace (Zoom) Meetings (company's core product)\" in the current fiscal year.\nOn the other hand, I am concerned that Zoom's revenue growth this year could disappoint the market, considering the possibility of a higher-than-expected churn rate for its customer cohort with less than 10 staff. As such, I see a Neutral rating for the stock as fair.\nZoom Video Communications, Inc's key risk factors are a shorter-than-expected time taken for the coronavirus pandemic to be effectively contained, and poor execution on key growth initiatives like international expansion and the Zoom Phone.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":4049991,"gmtCreate":1618544201101,"gmtModify":1680784286631,"authorId":3574409680880402,"author":{"id":3574409680880402,"authorId":3574409680880402,"name":"Egging","avatar":"https://static.tigerbbs.com/5d5b3caed5b1dc46f9f3a4e05eef58cb","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":"2021.12.21","exceedPercentage":"93.55%","individualDisplayEnabled":0,"individualDisplaySort":0,"categoryType":1100},"crmLevel":3,"crmLevelSwitch":1,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":370990646,"type":1,"supId":4049708,"prevId":0,"content":"wow","text":"wow","html":"wow"},{"id":4049708,"gmtCreate":1618541343150,"gmtModify":1680784279279,"authorId":3569478069644531,"author":{"id":3569478069644531,"authorId":3569478069644531,"name":"GM33","avatar":"https://static.tigerbbs.com/93e233e9c84746e3cbd703306142c4eb","vip":1,"crmLevel":4,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":370990646,"type":1,"supId":0,"prevId":0,"content":"Rigt","text":"Rigt","html":"Rigt"}],"langContent":"EN"},{"id":370904358,"gmtCreate":1618540325274,"gmtModify":1704712443897,"author":{"id":"3570641297556287","authorId":"3570641297556287","authorIdStr":"3570641297556287","name":"ThangCT","avatar":"https://static.tigerbbs.com/3c4fdd822c498b0a8fa7d517c7c1f5be","vip":1,"hat":"https://static.tigerbbs.com/f84d87792f02cf78e80ee34979fd31e5","crmLevel":1,"crmLevelSwitch":1,"idStr":"3570641297556287"},"htmlText":"Cool","listText":"Cool","text":"Cool","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/370904358","repostId":1117277782,"repostType":4,"repost":{"id":"1117277782","pubTimestamp":1618539309,"share":"https://ttm.financial/m/news/1117277782?lang=&edition=fundamental","pubTime":"2021-04-16 10:15","market":"us","language":"en","title":"Zoom Stock: What's The Outlook Once COVID Wanes","url":"https://stock-news.laohu8.com/highlight/detail?id=1117277782","media":"seekingalpha","summary":"Summary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% y","content":"Summary\n<ul>\n <li>Zoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.</li>\n <li>Zoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively.</li>\n <li>ZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of&nbsp;its customer cohort with under 10 staff being a key downside risk.</li>\n <li>I am positive on Zoom's medium to long-term growth drivers like international expansion and Zoom Phone.</li>\n <li>But I think Zoom is a HOLD rather than a BUY, as valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/cf695f0ee4625d58a734edbfe6cb7430\" tg-width=\"768\" tg-height=\"512\">Photo by Luis Alvarez/DigitalVision via Getty Images\nElevator Pitch\nI assign a Neutral rating to Zoom Video Communications, Inc (ZM).\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021. The slowdown in ZM's QoQ revenue growth in the most recent quarter could explain why the company's share price performance has been lackluster this year.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively. ZM's current valuations are not demanding on a relative basis as compared to peers, but the valuation de-rating of the technology sector might have just begun as investors switch to reopening plays in view of the ongoing vaccine roll-out program.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk factor. Also valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations. On the flip side, I am positive on Zoom's medium to long term growth drivers like international expansion and Zoom Phone.\nTaking into account all the factors highlighted above, I think that Zoom deserves a Neutral rating.\nCompany Description\nIn its FY 2021 10-K, Zoom Video Communications, Inc&nbsp;refers to itself&nbsp;as a provider of \"a video-first unified communications platform\" which helps to \"connect people through frictionless and secure video, phone, chat, and content sharing.\" The company's key products include Zoom Meetings, Zoom Rooms and Zoom Phone, which are detailed below.\n<img src=\"https://static.tigerbbs.com/b2ce8a0468e9ba4263d742190a82d70e\" tg-width=\"640\" tg-height=\"140\"><img src=\"https://static.tigerbbs.com/ca6f50d9ee74057e4a22fda98241529c\" tg-width=\"640\" tg-height=\"125\"><img src=\"https://static.tigerbbs.com/cfb55bbf89d56bb0584a5599b0453bb9\" tg-width=\"640\" tg-height=\"298\">\n<img src=\"https://static.tigerbbs.com/f4acfd03336743c0393a66d394665c36\" tg-width=\"640\" tg-height=\"309\">Source: Zoom's FY 2021 10-K And October 2020 Analyst Day Presentation Slides\nThe Americas, EMEA (Europe, the Middle East and Africa), and Asia-Pacific regions contributed&nbsp;69%, 18% and 13%&nbsp;of Zoom's FY 2021 top line.\nZoom Stock Price\n2020 was a great year for Zoom with regards to share price performance, but the stock is still delivering negative share price returns in 2021 year-to-date.\nZM's share price almost quintupled from $68.04 as of the last day of 2019 to&nbsp;$337.32&nbsp;as of end-2020. Notably, Zoom Video Communications, Inc's stock price reached an all-time high of $568.34 on October 19, 2020. Earlier, Zoom held its\"annual user conference\"known as Zoomtopia on October 14, 2020 where it disclosed updates to the Zoom platform, which led to a number of sell-side analysts&nbsp;increasing their respective target pricesfor the stock.\nHowever, Zoom's share price subsequently dropped by -41% to close at $337.32 as of December 31, 2020, aspositive news flow on vaccine development&nbsp;since November 2020 continued to put pressure on the share prices of Work-From-Home or WFH beneficiaries like ZM. The downward trend in Zoom's stock price continued into 2021, as ZM's stock price declined marginally by -2% from $337.32 as of December 31, 2020 to $329.20 as of April 14, 2021.\nAlthough Zoom's stock price rose by +10% from $373.61 as of February 26, 2021 to $409.66 as of March 1, 2021 prior to the company's&nbsp;release of 4Q FY 2021 results&nbsp;on the same day after trading hours. But ZM's share price fell by -9% to $372.79 as of March 2, 2021 a day after its results announcement.\nIf one delves deeper into Zoom's 4Q FY 2021 financial results, it is easy to understand why Zoom's share price dropped on March 2, 2021, and subsequently declined by an additional -10% over the next one and a half months post-results to close at $329.20 as of April 14, 2021.\nZoom Video Communications, Inc's revenue jumped by +369% YoY to $882 million in 4Q FY 2021, which was also +9% higher than market consensus' quarterly revenue forecast of around&nbsp;$811 million. But it is noteworthy that ZM's QoQ revenue growth narrowed from +17% in 3Q FY 2021 to +14% 4Q FY 2021. This also pales in comparison to Zoom's QoQ revenue growth rates of +102% and +74% for 2Q FY 2021 and 1Q FY 2021, respectively. The slowdown in QoQ top line expansion in the most recent quarter validates market concerns about WFH tailwinds easing for Zoom (when COVID wanes) to a large extent, which explains Zoom's poor share price performance post-results.\nValuation\nZoom Video Communications, Inc trades at 24.3 times consensus forward FY 2022 Enterprise Value-to-Revenue and 20.0 times consensus forward FY 2023 Enterprise Value-to-Revenue $329.20 as of April 14, 2021. The market also values the company at consensus forward FY 2022 and FY 2023 EV/EBITDA multiples of 77.5 times and 63.2 times, respectively. The company is expected to achieve revenue growth rates of +44% and +22% in the current fiscal year, and the next fiscal year, respectively according to S&amp;P Capital IQ data.\nZM looks relatively more attractive on a forward EV/EBITDA basis, but its forward Enterprise Value-to-Revenue multiples and revenue growth rates are more or less in line with its peers. However, the valuations for Zoom and its peers are rather rich on an absolute basis, and there is no certainty that the de-rating for technology stocks and WFH beneficiaries has already run its full course.\nPeer Valuation Comparison For Zoom\n<table>\n <tbody>\n <tr>\n <td>Stock</td>\n <td>Consensus Current Year Enterprise Value-to-Revenue Multiple</td>\n <td>Consensus Forward One-Year Enterprise Value-to-Revenue Multiple</td>\n <td>Consensus Current Year EV/EBITDA</td>\n <td>Consensus Forward One-Year EV/EBITDA</td>\n <td>Consensus Current Year Revenue Growth Rate</td>\n <td>Consensus Forward One-Year Revenue Growth Rate</td>\n </tr>\n <tr>\n <td>Slack Technologies, Inc (WORK)</td>\n <td>15</td>\n <td>13</td>\n <td>283</td>\n <td>106</td>\n <td>+30%</td>\n <td>+28%</td>\n </tr>\n <tr>\n <td>Twilio Inc (TWLO)</td>\n <td>25</td>\n <td>19</td>\n <td>380</td>\n <td>218</td>\n <td>+38%</td>\n <td>+31%</td>\n </tr>\n <tr>\n <td>Atlassian Corporation Plc (TEAM)</td>\n <td>28</td>\n <td>24</td>\n <td>108</td>\n <td>94</td>\n <td>+24%</td>\n <td>+15%</td>\n </tr>\n </tbody>\n</table>\nSource: Author\nZoom Forecast In 2021\nZoom Video Communications guided for revenue of&nbsp;$3,760-$3,780 million&nbsp;and non-GAAP core earnings per share of $3.59-$3.65 for calendar year 2021 or fiscal year 2022 (YE January 31). This translates to top line and bottom line growth of +42% and +8%, respectively this year, based on the mid-point of ZM's guidance.\nSell-side analysts are more optimistic, as they expect Zoom to achieve revenue and normalized earnings growth of +44% and +12%, respectively in the current fiscal year. Nevertheless, it is not surprising that Zoom is not expected to grow as fast this year as it did last year with WFH tailwinds easing. As a reference, ZM's revenue increased by +326% in the most recent fiscal year, while its core earnings per share jumped by +854% last year.\nThe key factor that will impact Zoom's financial performance this year is the churn rate for its customer cohort with less than 10 staff. The company's proportion of revenue derived from clients with under 10 staff doubled from 18% in FY 2020 to&nbsp;36%&nbsp;in FY 2021, which it attributed to \"business owners and individual users\" using \"Zoom for many personal, professional, and social events\" in its 10-K. In other words, ZM's customer cohort with less than 10 staff was a significant driver of revenue growth for the company last year, as compared to its customer cohort with more than 10 employees.\nLooking forward into the current fiscal year, I expect Zoom's churn rate for its customer cohort with less than 10 staff to be significantly higher than its customer cohort with more than 10 employees for two key reasons.\nFirstly, fewer individuals will use Zoom for social purposes as COVID wanes, and there is a higher risk of business failure for smaller companies vis-a-vis their larger counterparts. Secondly, Zoom adopts a \"self-service\" model for its customer cohort with less than 10 staff, while there are sales teams to support its customer cohort with more than 10 employees, which makes this group of clients relatively more sticky.\nIn a nutshell, while ZM has set \"relatively modest\" growth target this year, there could still be room for disappointment (e.g. revenue miss), if COVID-19 is brought under control sooner than expected, and the churn rate for its customer cohort with less than 10 staff ends up higher than expected.\nIs Zoom Stock A Good Buy\nZoom stock is a HOLD for me now, but it could be a good buy in the medium to long term if there is a further correction in ZM's share price implying more attractive valuations, and the company delivers on its growth strategies.\nZoom Video Communications, Inc's key growth strategies are international expansion and increasing revenue from new products like Zoom Phone.\nThe company only generated 31% of its FY 2021 revenue from international markets outside the Americas, but these foreign markets are growing fast. Revenue for the Asia Pacific and EMEA markets grew by&nbsp;+551% and +587%, respectively last year, while the top line for ZM's Americas region increased by a lower +266% over the same period. Zoom&nbsp;highlighted&nbsp;at the company's FY 2021 earnings call on March 1, 2021 that \"we intend to make additional investments in international resources to further capitalize on the global opportunity.\"\nAnother key growth driver for Zoom in the medium term is Zoom Phone. In January 2021, ZM&nbsp;disclosed&nbsp;that \"it has sold one million Zoom Phone seats\" in less than two years of the product's launch. Based on my personal correspondence with the company, I was told that there are about hundreds of millions of commercial phones in the US running on legacy software that could potentially be migrating to cloud-based PBX (Private Branch Exchange) systems (like that of Zoom Phone) in time to come.\nZoom also&nbsp;noted&nbsp;at the Morgan Stanley (MS) Technology, Media and Telecom Conference on March 3, 2021 that \"on a percentage basis, Zoom Phone has been our fastest-growing product line in Q3 and Q4\", and the company sees Zoom Phone as \"a percentage of growth basis to outpace (Zoom) Meetings (company's core product)\" in the current fiscal year.\nOn the other hand, I am concerned that Zoom's revenue growth this year could disappoint the market, considering the possibility of a higher-than-expected churn rate for its customer cohort with less than 10 staff. As such, I see a Neutral rating for the stock as fair.\nZoom Video Communications, Inc's key risk factors are a shorter-than-expected time taken for the coronavirus pandemic to be effectively contained, and poor execution on key growth initiatives like international expansion and the Zoom Phone.","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Zoom Stock: What's The Outlook Once COVID Wanes</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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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 Stock: What's The Outlook Once COVID Wanes\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-04-16 10:15 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise ...\n\n<a href=\"https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"ZM":"Zoom"},"source_url":"https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1117277782","content_text":"Summary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk.\nI am positive on Zoom's medium to long-term growth drivers like international expansion and Zoom Phone.\nBut I think Zoom is a HOLD rather than a BUY, as valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations.\n\nPhoto by Luis Alvarez/DigitalVision via Getty Images\nElevator Pitch\nI assign a Neutral rating to Zoom Video Communications, Inc (ZM).\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021. The slowdown in ZM's QoQ revenue growth in the most recent quarter could explain why the company's share price performance has been lackluster this year.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively. ZM's current valuations are not demanding on a relative basis as compared to peers, but the valuation de-rating of the technology sector might have just begun as investors switch to reopening plays in view of the ongoing vaccine roll-out program.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk factor. Also valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations. On the flip side, I am positive on Zoom's medium to long term growth drivers like international expansion and Zoom Phone.\nTaking into account all the factors highlighted above, I think that Zoom deserves a Neutral rating.\nCompany Description\nIn its FY 2021 10-K, Zoom Video Communications, Inc refers to itself as a provider of \"a video-first unified communications platform\" which helps to \"connect people through frictionless and secure video, phone, chat, and content sharing.\" The company's key products include Zoom Meetings, Zoom Rooms and Zoom Phone, which are detailed below.\n\nSource: Zoom's FY 2021 10-K And October 2020 Analyst Day Presentation Slides\nThe Americas, EMEA (Europe, the Middle East and Africa), and Asia-Pacific regions contributed 69%, 18% and 13% of Zoom's FY 2021 top line.\nZoom Stock Price\n2020 was a great year for Zoom with regards to share price performance, but the stock is still delivering negative share price returns in 2021 year-to-date.\nZM's share price almost quintupled from $68.04 as of the last day of 2019 to $337.32 as of end-2020. Notably, Zoom Video Communications, Inc's stock price reached an all-time high of $568.34 on October 19, 2020. Earlier, Zoom held its\"annual user conference\"known as Zoomtopia on October 14, 2020 where it disclosed updates to the Zoom platform, which led to a number of sell-side analysts increasing their respective target pricesfor the stock.\nHowever, Zoom's share price subsequently dropped by -41% to close at $337.32 as of December 31, 2020, aspositive news flow on vaccine development since November 2020 continued to put pressure on the share prices of Work-From-Home or WFH beneficiaries like ZM. The downward trend in Zoom's stock price continued into 2021, as ZM's stock price declined marginally by -2% from $337.32 as of December 31, 2020 to $329.20 as of April 14, 2021.\nAlthough Zoom's stock price rose by +10% from $373.61 as of February 26, 2021 to $409.66 as of March 1, 2021 prior to the company's release of 4Q FY 2021 results on the same day after trading hours. But ZM's share price fell by -9% to $372.79 as of March 2, 2021 a day after its results announcement.\nIf one delves deeper into Zoom's 4Q FY 2021 financial results, it is easy to understand why Zoom's share price dropped on March 2, 2021, and subsequently declined by an additional -10% over the next one and a half months post-results to close at $329.20 as of April 14, 2021.\nZoom Video Communications, Inc's revenue jumped by +369% YoY to $882 million in 4Q FY 2021, which was also +9% higher than market consensus' quarterly revenue forecast of around $811 million. But it is noteworthy that ZM's QoQ revenue growth narrowed from +17% in 3Q FY 2021 to +14% 4Q FY 2021. This also pales in comparison to Zoom's QoQ revenue growth rates of +102% and +74% for 2Q FY 2021 and 1Q FY 2021, respectively. The slowdown in QoQ top line expansion in the most recent quarter validates market concerns about WFH tailwinds easing for Zoom (when COVID wanes) to a large extent, which explains Zoom's poor share price performance post-results.\nValuation\nZoom Video Communications, Inc trades at 24.3 times consensus forward FY 2022 Enterprise Value-to-Revenue and 20.0 times consensus forward FY 2023 Enterprise Value-to-Revenue $329.20 as of April 14, 2021. The market also values the company at consensus forward FY 2022 and FY 2023 EV/EBITDA multiples of 77.5 times and 63.2 times, respectively. The company is expected to achieve revenue growth rates of +44% and +22% in the current fiscal year, and the next fiscal year, respectively according to S&P Capital IQ data.\nZM looks relatively more attractive on a forward EV/EBITDA basis, but its forward Enterprise Value-to-Revenue multiples and revenue growth rates are more or less in line with its peers. However, the valuations for Zoom and its peers are rather rich on an absolute basis, and there is no certainty that the de-rating for technology stocks and WFH beneficiaries has already run its full course.\nPeer Valuation Comparison For Zoom\n\n\n\nStock\nConsensus Current Year Enterprise Value-to-Revenue Multiple\nConsensus Forward One-Year Enterprise Value-to-Revenue Multiple\nConsensus Current Year EV/EBITDA\nConsensus Forward One-Year EV/EBITDA\nConsensus Current Year Revenue Growth Rate\nConsensus Forward One-Year Revenue Growth Rate\n\n\nSlack Technologies, Inc (WORK)\n15\n13\n283\n106\n+30%\n+28%\n\n\nTwilio Inc (TWLO)\n25\n19\n380\n218\n+38%\n+31%\n\n\nAtlassian Corporation Plc (TEAM)\n28\n24\n108\n94\n+24%\n+15%\n\n\n\nSource: Author\nZoom Forecast In 2021\nZoom Video Communications guided for revenue of $3,760-$3,780 million and non-GAAP core earnings per share of $3.59-$3.65 for calendar year 2021 or fiscal year 2022 (YE January 31). This translates to top line and bottom line growth of +42% and +8%, respectively this year, based on the mid-point of ZM's guidance.\nSell-side analysts are more optimistic, as they expect Zoom to achieve revenue and normalized earnings growth of +44% and +12%, respectively in the current fiscal year. Nevertheless, it is not surprising that Zoom is not expected to grow as fast this year as it did last year with WFH tailwinds easing. As a reference, ZM's revenue increased by +326% in the most recent fiscal year, while its core earnings per share jumped by +854% last year.\nThe key factor that will impact Zoom's financial performance this year is the churn rate for its customer cohort with less than 10 staff. The company's proportion of revenue derived from clients with under 10 staff doubled from 18% in FY 2020 to 36% in FY 2021, which it attributed to \"business owners and individual users\" using \"Zoom for many personal, professional, and social events\" in its 10-K. In other words, ZM's customer cohort with less than 10 staff was a significant driver of revenue growth for the company last year, as compared to its customer cohort with more than 10 employees.\nLooking forward into the current fiscal year, I expect Zoom's churn rate for its customer cohort with less than 10 staff to be significantly higher than its customer cohort with more than 10 employees for two key reasons.\nFirstly, fewer individuals will use Zoom for social purposes as COVID wanes, and there is a higher risk of business failure for smaller companies vis-a-vis their larger counterparts. Secondly, Zoom adopts a \"self-service\" model for its customer cohort with less than 10 staff, while there are sales teams to support its customer cohort with more than 10 employees, which makes this group of clients relatively more sticky.\nIn a nutshell, while ZM has set \"relatively modest\" growth target this year, there could still be room for disappointment (e.g. revenue miss), if COVID-19 is brought under control sooner than expected, and the churn rate for its customer cohort with less than 10 staff ends up higher than expected.\nIs Zoom Stock A Good Buy\nZoom stock is a HOLD for me now, but it could be a good buy in the medium to long term if there is a further correction in ZM's share price implying more attractive valuations, and the company delivers on its growth strategies.\nZoom Video Communications, Inc's key growth strategies are international expansion and increasing revenue from new products like Zoom Phone.\nThe company only generated 31% of its FY 2021 revenue from international markets outside the Americas, but these foreign markets are growing fast. Revenue for the Asia Pacific and EMEA markets grew by +551% and +587%, respectively last year, while the top line for ZM's Americas region increased by a lower +266% over the same period. Zoom highlighted at the company's FY 2021 earnings call on March 1, 2021 that \"we intend to make additional investments in international resources to further capitalize on the global opportunity.\"\nAnother key growth driver for Zoom in the medium term is Zoom Phone. In January 2021, ZM disclosed that \"it has sold one million Zoom Phone seats\" in less than two years of the product's launch. Based on my personal correspondence with the company, I was told that there are about hundreds of millions of commercial phones in the US running on legacy software that could potentially be migrating to cloud-based PBX (Private Branch Exchange) systems (like that of Zoom Phone) in time to come.\nZoom also noted at the Morgan Stanley (MS) Technology, Media and Telecom Conference on March 3, 2021 that \"on a percentage basis, Zoom Phone has been our fastest-growing product line in Q3 and Q4\", and the company sees Zoom Phone as \"a percentage of growth basis to outpace (Zoom) Meetings (company's core product)\" in the current fiscal year.\nOn the other hand, I am concerned that Zoom's revenue growth this year could disappoint the market, considering the possibility of a higher-than-expected churn rate for its customer cohort with less than 10 staff. As such, I see a Neutral rating for the stock as fair.\nZoom Video Communications, Inc's key risk factors are a shorter-than-expected time taken for the coronavirus pandemic to be effectively contained, and poor execution on key growth initiatives like international expansion and the Zoom Phone.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":4049592,"gmtCreate":1618540492935,"gmtModify":1680784280642,"authorId":3571694506074118,"author":{"id":3571694506074118,"authorId":3571694506074118,"name":"Josca","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":370904358,"type":1,"supId":0,"prevId":0,"content":"Nice","text":"Nice","html":"Nice"}],"langContent":"EN"},{"id":370908920,"gmtCreate":1618540073160,"gmtModify":1704712438208,"author":{"id":"3576888762442253","authorId":"3576888762442253","authorIdStr":"3576888762442253","name":"Barbarazhao","avatar":"https://static.tigerbbs.com/40f6fdeabe0e8cac300f1fd2a17eb3ac","vip":1,"crmLevel":7,"crmLevelSwitch":1,"idStr":"3576888762442253"},"htmlText":"I believe Zoom will continue to do well after the pandemic&nbsp;","listText":"I believe Zoom will continue to do well after the pandemic&nbsp;","text":"I believe Zoom will continue to do well after the pandemic","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":8,"commentSize":6,"repostSize":0,"link":"https://ttm.financial/post/370908920","repostId":1117277782,"repostType":4,"repost":{"id":"1117277782","pubTimestamp":1618539309,"share":"https://ttm.financial/m/news/1117277782?lang=&edition=fundamental","pubTime":"2021-04-16 10:15","market":"us","language":"en","title":"Zoom Stock: What's The Outlook Once COVID Wanes","url":"https://stock-news.laohu8.com/highlight/detail?id=1117277782","media":"seekingalpha","summary":"Summary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% y","content":"Summary\n<ul>\n <li>Zoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.</li>\n <li>Zoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively.</li>\n <li>ZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of&nbsp;its customer cohort with under 10 staff being a key downside risk.</li>\n <li>I am positive on Zoom's medium to long-term growth drivers like international expansion and Zoom Phone.</li>\n <li>But I think Zoom is a HOLD rather than a BUY, as valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/cf695f0ee4625d58a734edbfe6cb7430\" tg-width=\"768\" tg-height=\"512\">Photo by Luis Alvarez/DigitalVision via Getty Images\nElevator Pitch\nI assign a Neutral rating to Zoom Video Communications, Inc (ZM).\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021. The slowdown in ZM's QoQ revenue growth in the most recent quarter could explain why the company's share price performance has been lackluster this year.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively. ZM's current valuations are not demanding on a relative basis as compared to peers, but the valuation de-rating of the technology sector might have just begun as investors switch to reopening plays in view of the ongoing vaccine roll-out program.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk factor. Also valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations. On the flip side, I am positive on Zoom's medium to long term growth drivers like international expansion and Zoom Phone.\nTaking into account all the factors highlighted above, I think that Zoom deserves a Neutral rating.\nCompany Description\nIn its FY 2021 10-K, Zoom Video Communications, Inc&nbsp;refers to itself&nbsp;as a provider of \"a video-first unified communications platform\" which helps to \"connect people through frictionless and secure video, phone, chat, and content sharing.\" The company's key products include Zoom Meetings, Zoom Rooms and Zoom Phone, which are detailed below.\n<img src=\"https://static.tigerbbs.com/b2ce8a0468e9ba4263d742190a82d70e\" tg-width=\"640\" tg-height=\"140\"><img src=\"https://static.tigerbbs.com/ca6f50d9ee74057e4a22fda98241529c\" tg-width=\"640\" tg-height=\"125\"><img src=\"https://static.tigerbbs.com/cfb55bbf89d56bb0584a5599b0453bb9\" tg-width=\"640\" tg-height=\"298\">\n<img src=\"https://static.tigerbbs.com/f4acfd03336743c0393a66d394665c36\" tg-width=\"640\" tg-height=\"309\">Source: Zoom's FY 2021 10-K And October 2020 Analyst Day Presentation Slides\nThe Americas, EMEA (Europe, the Middle East and Africa), and Asia-Pacific regions contributed&nbsp;69%, 18% and 13%&nbsp;of Zoom's FY 2021 top line.\nZoom Stock Price\n2020 was a great year for Zoom with regards to share price performance, but the stock is still delivering negative share price returns in 2021 year-to-date.\nZM's share price almost quintupled from $68.04 as of the last day of 2019 to&nbsp;$337.32&nbsp;as of end-2020. Notably, Zoom Video Communications, Inc's stock price reached an all-time high of $568.34 on October 19, 2020. Earlier, Zoom held its\"annual user conference\"known as Zoomtopia on October 14, 2020 where it disclosed updates to the Zoom platform, which led to a number of sell-side analysts&nbsp;increasing their respective target pricesfor the stock.\nHowever, Zoom's share price subsequently dropped by -41% to close at $337.32 as of December 31, 2020, aspositive news flow on vaccine development&nbsp;since November 2020 continued to put pressure on the share prices of Work-From-Home or WFH beneficiaries like ZM. The downward trend in Zoom's stock price continued into 2021, as ZM's stock price declined marginally by -2% from $337.32 as of December 31, 2020 to $329.20 as of April 14, 2021.\nAlthough Zoom's stock price rose by +10% from $373.61 as of February 26, 2021 to $409.66 as of March 1, 2021 prior to the company's&nbsp;release of 4Q FY 2021 results&nbsp;on the same day after trading hours. But ZM's share price fell by -9% to $372.79 as of March 2, 2021 a day after its results announcement.\nIf one delves deeper into Zoom's 4Q FY 2021 financial results, it is easy to understand why Zoom's share price dropped on March 2, 2021, and subsequently declined by an additional -10% over the next one and a half months post-results to close at $329.20 as of April 14, 2021.\nZoom Video Communications, Inc's revenue jumped by +369% YoY to $882 million in 4Q FY 2021, which was also +9% higher than market consensus' quarterly revenue forecast of around&nbsp;$811 million. But it is noteworthy that ZM's QoQ revenue growth narrowed from +17% in 3Q FY 2021 to +14% 4Q FY 2021. This also pales in comparison to Zoom's QoQ revenue growth rates of +102% and +74% for 2Q FY 2021 and 1Q FY 2021, respectively. The slowdown in QoQ top line expansion in the most recent quarter validates market concerns about WFH tailwinds easing for Zoom (when COVID wanes) to a large extent, which explains Zoom's poor share price performance post-results.\nValuation\nZoom Video Communications, Inc trades at 24.3 times consensus forward FY 2022 Enterprise Value-to-Revenue and 20.0 times consensus forward FY 2023 Enterprise Value-to-Revenue $329.20 as of April 14, 2021. The market also values the company at consensus forward FY 2022 and FY 2023 EV/EBITDA multiples of 77.5 times and 63.2 times, respectively. The company is expected to achieve revenue growth rates of +44% and +22% in the current fiscal year, and the next fiscal year, respectively according to S&amp;P Capital IQ data.\nZM looks relatively more attractive on a forward EV/EBITDA basis, but its forward Enterprise Value-to-Revenue multiples and revenue growth rates are more or less in line with its peers. However, the valuations for Zoom and its peers are rather rich on an absolute basis, and there is no certainty that the de-rating for technology stocks and WFH beneficiaries has already run its full course.\nPeer Valuation Comparison For Zoom\n<table>\n <tbody>\n <tr>\n <td>Stock</td>\n <td>Consensus Current Year Enterprise Value-to-Revenue Multiple</td>\n <td>Consensus Forward One-Year Enterprise Value-to-Revenue Multiple</td>\n <td>Consensus Current Year EV/EBITDA</td>\n <td>Consensus Forward One-Year EV/EBITDA</td>\n <td>Consensus Current Year Revenue Growth Rate</td>\n <td>Consensus Forward One-Year Revenue Growth Rate</td>\n </tr>\n <tr>\n <td>Slack Technologies, Inc (WORK)</td>\n <td>15</td>\n <td>13</td>\n <td>283</td>\n <td>106</td>\n <td>+30%</td>\n <td>+28%</td>\n </tr>\n <tr>\n <td>Twilio Inc (TWLO)</td>\n <td>25</td>\n <td>19</td>\n <td>380</td>\n <td>218</td>\n <td>+38%</td>\n <td>+31%</td>\n </tr>\n <tr>\n <td>Atlassian Corporation Plc (TEAM)</td>\n <td>28</td>\n <td>24</td>\n <td>108</td>\n <td>94</td>\n <td>+24%</td>\n <td>+15%</td>\n </tr>\n </tbody>\n</table>\nSource: Author\nZoom Forecast In 2021\nZoom Video Communications guided for revenue of&nbsp;$3,760-$3,780 million&nbsp;and non-GAAP core earnings per share of $3.59-$3.65 for calendar year 2021 or fiscal year 2022 (YE January 31). This translates to top line and bottom line growth of +42% and +8%, respectively this year, based on the mid-point of ZM's guidance.\nSell-side analysts are more optimistic, as they expect Zoom to achieve revenue and normalized earnings growth of +44% and +12%, respectively in the current fiscal year. Nevertheless, it is not surprising that Zoom is not expected to grow as fast this year as it did last year with WFH tailwinds easing. As a reference, ZM's revenue increased by +326% in the most recent fiscal year, while its core earnings per share jumped by +854% last year.\nThe key factor that will impact Zoom's financial performance this year is the churn rate for its customer cohort with less than 10 staff. The company's proportion of revenue derived from clients with under 10 staff doubled from 18% in FY 2020 to&nbsp;36%&nbsp;in FY 2021, which it attributed to \"business owners and individual users\" using \"Zoom for many personal, professional, and social events\" in its 10-K. In other words, ZM's customer cohort with less than 10 staff was a significant driver of revenue growth for the company last year, as compared to its customer cohort with more than 10 employees.\nLooking forward into the current fiscal year, I expect Zoom's churn rate for its customer cohort with less than 10 staff to be significantly higher than its customer cohort with more than 10 employees for two key reasons.\nFirstly, fewer individuals will use Zoom for social purposes as COVID wanes, and there is a higher risk of business failure for smaller companies vis-a-vis their larger counterparts. Secondly, Zoom adopts a \"self-service\" model for its customer cohort with less than 10 staff, while there are sales teams to support its customer cohort with more than 10 employees, which makes this group of clients relatively more sticky.\nIn a nutshell, while ZM has set \"relatively modest\" growth target this year, there could still be room for disappointment (e.g. revenue miss), if COVID-19 is brought under control sooner than expected, and the churn rate for its customer cohort with less than 10 staff ends up higher than expected.\nIs Zoom Stock A Good Buy\nZoom stock is a HOLD for me now, but it could be a good buy in the medium to long term if there is a further correction in ZM's share price implying more attractive valuations, and the company delivers on its growth strategies.\nZoom Video Communications, Inc's key growth strategies are international expansion and increasing revenue from new products like Zoom Phone.\nThe company only generated 31% of its FY 2021 revenue from international markets outside the Americas, but these foreign markets are growing fast. Revenue for the Asia Pacific and EMEA markets grew by&nbsp;+551% and +587%, respectively last year, while the top line for ZM's Americas region increased by a lower +266% over the same period. Zoom&nbsp;highlighted&nbsp;at the company's FY 2021 earnings call on March 1, 2021 that \"we intend to make additional investments in international resources to further capitalize on the global opportunity.\"\nAnother key growth driver for Zoom in the medium term is Zoom Phone. In January 2021, ZM&nbsp;disclosed&nbsp;that \"it has sold one million Zoom Phone seats\" in less than two years of the product's launch. Based on my personal correspondence with the company, I was told that there are about hundreds of millions of commercial phones in the US running on legacy software that could potentially be migrating to cloud-based PBX (Private Branch Exchange) systems (like that of Zoom Phone) in time to come.\nZoom also&nbsp;noted&nbsp;at the Morgan Stanley (MS) Technology, Media and Telecom Conference on March 3, 2021 that \"on a percentage basis, Zoom Phone has been our fastest-growing product line in Q3 and Q4\", and the company sees Zoom Phone as \"a percentage of growth basis to outpace (Zoom) Meetings (company's core product)\" in the current fiscal year.\nOn the other hand, I am concerned that Zoom's revenue growth this year could disappoint the market, considering the possibility of a higher-than-expected churn rate for its customer cohort with less than 10 staff. As such, I see a Neutral rating for the stock as fair.\nZoom Video Communications, Inc's key risk factors are a shorter-than-expected time taken for the coronavirus pandemic to be effectively contained, and poor execution on key growth initiatives like international expansion and the Zoom Phone.","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Zoom Stock: What's The Outlook Once COVID Wanes</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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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 Stock: What's The Outlook Once COVID Wanes\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-04-16 10:15 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise ...\n\n<a href=\"https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"ZM":"Zoom"},"source_url":"https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1117277782","content_text":"Summary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk.\nI am positive on Zoom's medium to long-term growth drivers like international expansion and Zoom Phone.\nBut I think Zoom is a HOLD rather than a BUY, as valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations.\n\nPhoto by Luis Alvarez/DigitalVision via Getty Images\nElevator Pitch\nI assign a Neutral rating to Zoom Video Communications, Inc (ZM).\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021. The slowdown in ZM's QoQ revenue growth in the most recent quarter could explain why the company's share price performance has been lackluster this year.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively. ZM's current valuations are not demanding on a relative basis as compared to peers, but the valuation de-rating of the technology sector might have just begun as investors switch to reopening plays in view of the ongoing vaccine roll-out program.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk factor. Also valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations. On the flip side, I am positive on Zoom's medium to long term growth drivers like international expansion and Zoom Phone.\nTaking into account all the factors highlighted above, I think that Zoom deserves a Neutral rating.\nCompany Description\nIn its FY 2021 10-K, Zoom Video Communications, Inc refers to itself as a provider of \"a video-first unified communications platform\" which helps to \"connect people through frictionless and secure video, phone, chat, and content sharing.\" The company's key products include Zoom Meetings, Zoom Rooms and Zoom Phone, which are detailed below.\n\nSource: Zoom's FY 2021 10-K And October 2020 Analyst Day Presentation Slides\nThe Americas, EMEA (Europe, the Middle East and Africa), and Asia-Pacific regions contributed 69%, 18% and 13% of Zoom's FY 2021 top line.\nZoom Stock Price\n2020 was a great year for Zoom with regards to share price performance, but the stock is still delivering negative share price returns in 2021 year-to-date.\nZM's share price almost quintupled from $68.04 as of the last day of 2019 to $337.32 as of end-2020. Notably, Zoom Video Communications, Inc's stock price reached an all-time high of $568.34 on October 19, 2020. Earlier, Zoom held its\"annual user conference\"known as Zoomtopia on October 14, 2020 where it disclosed updates to the Zoom platform, which led to a number of sell-side analysts increasing their respective target pricesfor the stock.\nHowever, Zoom's share price subsequently dropped by -41% to close at $337.32 as of December 31, 2020, aspositive news flow on vaccine development since November 2020 continued to put pressure on the share prices of Work-From-Home or WFH beneficiaries like ZM. The downward trend in Zoom's stock price continued into 2021, as ZM's stock price declined marginally by -2% from $337.32 as of December 31, 2020 to $329.20 as of April 14, 2021.\nAlthough Zoom's stock price rose by +10% from $373.61 as of February 26, 2021 to $409.66 as of March 1, 2021 prior to the company's release of 4Q FY 2021 results on the same day after trading hours. But ZM's share price fell by -9% to $372.79 as of March 2, 2021 a day after its results announcement.\nIf one delves deeper into Zoom's 4Q FY 2021 financial results, it is easy to understand why Zoom's share price dropped on March 2, 2021, and subsequently declined by an additional -10% over the next one and a half months post-results to close at $329.20 as of April 14, 2021.\nZoom Video Communications, Inc's revenue jumped by +369% YoY to $882 million in 4Q FY 2021, which was also +9% higher than market consensus' quarterly revenue forecast of around $811 million. But it is noteworthy that ZM's QoQ revenue growth narrowed from +17% in 3Q FY 2021 to +14% 4Q FY 2021. This also pales in comparison to Zoom's QoQ revenue growth rates of +102% and +74% for 2Q FY 2021 and 1Q FY 2021, respectively. The slowdown in QoQ top line expansion in the most recent quarter validates market concerns about WFH tailwinds easing for Zoom (when COVID wanes) to a large extent, which explains Zoom's poor share price performance post-results.\nValuation\nZoom Video Communications, Inc trades at 24.3 times consensus forward FY 2022 Enterprise Value-to-Revenue and 20.0 times consensus forward FY 2023 Enterprise Value-to-Revenue $329.20 as of April 14, 2021. The market also values the company at consensus forward FY 2022 and FY 2023 EV/EBITDA multiples of 77.5 times and 63.2 times, respectively. The company is expected to achieve revenue growth rates of +44% and +22% in the current fiscal year, and the next fiscal year, respectively according to S&P Capital IQ data.\nZM looks relatively more attractive on a forward EV/EBITDA basis, but its forward Enterprise Value-to-Revenue multiples and revenue growth rates are more or less in line with its peers. However, the valuations for Zoom and its peers are rather rich on an absolute basis, and there is no certainty that the de-rating for technology stocks and WFH beneficiaries has already run its full course.\nPeer Valuation Comparison For Zoom\n\n\n\nStock\nConsensus Current Year Enterprise Value-to-Revenue Multiple\nConsensus Forward One-Year Enterprise Value-to-Revenue Multiple\nConsensus Current Year EV/EBITDA\nConsensus Forward One-Year EV/EBITDA\nConsensus Current Year Revenue Growth Rate\nConsensus Forward One-Year Revenue Growth Rate\n\n\nSlack Technologies, Inc (WORK)\n15\n13\n283\n106\n+30%\n+28%\n\n\nTwilio Inc (TWLO)\n25\n19\n380\n218\n+38%\n+31%\n\n\nAtlassian Corporation Plc (TEAM)\n28\n24\n108\n94\n+24%\n+15%\n\n\n\nSource: Author\nZoom Forecast In 2021\nZoom Video Communications guided for revenue of $3,760-$3,780 million and non-GAAP core earnings per share of $3.59-$3.65 for calendar year 2021 or fiscal year 2022 (YE January 31). This translates to top line and bottom line growth of +42% and +8%, respectively this year, based on the mid-point of ZM's guidance.\nSell-side analysts are more optimistic, as they expect Zoom to achieve revenue and normalized earnings growth of +44% and +12%, respectively in the current fiscal year. Nevertheless, it is not surprising that Zoom is not expected to grow as fast this year as it did last year with WFH tailwinds easing. As a reference, ZM's revenue increased by +326% in the most recent fiscal year, while its core earnings per share jumped by +854% last year.\nThe key factor that will impact Zoom's financial performance this year is the churn rate for its customer cohort with less than 10 staff. The company's proportion of revenue derived from clients with under 10 staff doubled from 18% in FY 2020 to 36% in FY 2021, which it attributed to \"business owners and individual users\" using \"Zoom for many personal, professional, and social events\" in its 10-K. In other words, ZM's customer cohort with less than 10 staff was a significant driver of revenue growth for the company last year, as compared to its customer cohort with more than 10 employees.\nLooking forward into the current fiscal year, I expect Zoom's churn rate for its customer cohort with less than 10 staff to be significantly higher than its customer cohort with more than 10 employees for two key reasons.\nFirstly, fewer individuals will use Zoom for social purposes as COVID wanes, and there is a higher risk of business failure for smaller companies vis-a-vis their larger counterparts. Secondly, Zoom adopts a \"self-service\" model for its customer cohort with less than 10 staff, while there are sales teams to support its customer cohort with more than 10 employees, which makes this group of clients relatively more sticky.\nIn a nutshell, while ZM has set \"relatively modest\" growth target this year, there could still be room for disappointment (e.g. revenue miss), if COVID-19 is brought under control sooner than expected, and the churn rate for its customer cohort with less than 10 staff ends up higher than expected.\nIs Zoom Stock A Good Buy\nZoom stock is a HOLD for me now, but it could be a good buy in the medium to long term if there is a further correction in ZM's share price implying more attractive valuations, and the company delivers on its growth strategies.\nZoom Video Communications, Inc's key growth strategies are international expansion and increasing revenue from new products like Zoom Phone.\nThe company only generated 31% of its FY 2021 revenue from international markets outside the Americas, but these foreign markets are growing fast. Revenue for the Asia Pacific and EMEA markets grew by +551% and +587%, respectively last year, while the top line for ZM's Americas region increased by a lower +266% over the same period. Zoom highlighted at the company's FY 2021 earnings call on March 1, 2021 that \"we intend to make additional investments in international resources to further capitalize on the global opportunity.\"\nAnother key growth driver for Zoom in the medium term is Zoom Phone. In January 2021, ZM disclosed that \"it has sold one million Zoom Phone seats\" in less than two years of the product's launch. Based on my personal correspondence with the company, I was told that there are about hundreds of millions of commercial phones in the US running on legacy software that could potentially be migrating to cloud-based PBX (Private Branch Exchange) systems (like that of Zoom Phone) in time to come.\nZoom also noted at the Morgan Stanley (MS) Technology, Media and Telecom Conference on March 3, 2021 that \"on a percentage basis, Zoom Phone has been our fastest-growing product line in Q3 and Q4\", and the company sees Zoom Phone as \"a percentage of growth basis to outpace (Zoom) Meetings (company's core product)\" in the current fiscal year.\nOn the other hand, I am concerned that Zoom's revenue growth this year could disappoint the market, considering the possibility of a higher-than-expected churn rate for its customer cohort with less than 10 staff. As such, I see a Neutral rating for the stock as fair.\nZoom Video Communications, Inc's key risk factors are a shorter-than-expected time taken for the coronavirus pandemic to be effectively contained, and poor execution on key growth initiatives like international expansion and the Zoom Phone.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":4054461,"gmtCreate":1618585368227,"gmtModify":1680784355315,"authorId":3494281781797251,"author":{"id":3494281781797251,"authorId":3494281781797251,"name":"Clumsypig","avatar":"https://static.tigerbbs.com/0b15f83d2e489f283f51b78126066b4e","vip":1,"crmLevel":1,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":370908920,"type":1,"supId":0,"prevId":0,"content":"嗯，好东西使用的人会越来越多，不是疫情过了就不用了","text":"嗯，好东西使用的人会越来越多，不是疫情过了就不用了","html":"嗯，好东西使用的人会越来越多，不是疫情过了就不用了"},{"id":4049751,"gmtCreate":1618541820098,"gmtModify":1680784289538,"authorId":3581558110897670,"author":{"id":3581558110897670,"authorId":3581558110897670,"name":"poonhoekit","avatar":"https://static.tigerbbs.com/96340bc4d0663a95d025226aa3821c93","vip":1,"crmLevel":5,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":370908920,"type":1,"supId":0,"prevId":0,"content":"up 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10:15","market":"us","language":"en","title":"Zoom Stock: What's The Outlook Once COVID Wanes","url":"https://stock-news.laohu8.com/highlight/detail?id=1117277782","media":"seekingalpha","summary":"Summary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% y","content":"Summary\n<ul>\n <li>Zoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.</li>\n <li>Zoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively.</li>\n <li>ZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of&nbsp;its customer cohort with under 10 staff being a key downside risk.</li>\n <li>I am positive on Zoom's medium to long-term growth drivers like international expansion and Zoom Phone.</li>\n <li>But I think Zoom is a HOLD rather than a BUY, as valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/cf695f0ee4625d58a734edbfe6cb7430\" tg-width=\"768\" tg-height=\"512\">Photo by Luis Alvarez/DigitalVision via Getty Images\nElevator Pitch\nI assign a Neutral rating to Zoom Video Communications, Inc (ZM).\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021. The slowdown in ZM's QoQ revenue growth in the most recent quarter could explain why the company's share price performance has been lackluster this year.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively. ZM's current valuations are not demanding on a relative basis as compared to peers, but the valuation de-rating of the technology sector might have just begun as investors switch to reopening plays in view of the ongoing vaccine roll-out program.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk factor. Also valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations. On the flip side, I am positive on Zoom's medium to long term growth drivers like international expansion and Zoom Phone.\nTaking into account all the factors highlighted above, I think that Zoom deserves a Neutral rating.\nCompany Description\nIn its FY 2021 10-K, Zoom Video Communications, Inc&nbsp;refers to itself&nbsp;as a provider of \"a video-first unified communications platform\" which helps to \"connect people through frictionless and secure video, phone, chat, and content sharing.\" The company's key products include Zoom Meetings, Zoom Rooms and Zoom Phone, which are detailed below.\n<img src=\"https://static.tigerbbs.com/b2ce8a0468e9ba4263d742190a82d70e\" tg-width=\"640\" tg-height=\"140\"><img src=\"https://static.tigerbbs.com/ca6f50d9ee74057e4a22fda98241529c\" tg-width=\"640\" tg-height=\"125\"><img src=\"https://static.tigerbbs.com/cfb55bbf89d56bb0584a5599b0453bb9\" tg-width=\"640\" tg-height=\"298\">\n<img src=\"https://static.tigerbbs.com/f4acfd03336743c0393a66d394665c36\" tg-width=\"640\" tg-height=\"309\">Source: Zoom's FY 2021 10-K And October 2020 Analyst Day Presentation Slides\nThe Americas, EMEA (Europe, the Middle East and Africa), and Asia-Pacific regions contributed&nbsp;69%, 18% and 13%&nbsp;of Zoom's FY 2021 top line.\nZoom Stock Price\n2020 was a great year for Zoom with regards to share price performance, but the stock is still delivering negative share price returns in 2021 year-to-date.\nZM's share price almost quintupled from $68.04 as of the last day of 2019 to&nbsp;$337.32&nbsp;as of end-2020. Notably, Zoom Video Communications, Inc's stock price reached an all-time high of $568.34 on October 19, 2020. Earlier, Zoom held its\"annual user conference\"known as Zoomtopia on October 14, 2020 where it disclosed updates to the Zoom platform, which led to a number of sell-side analysts&nbsp;increasing their respective target pricesfor the stock.\nHowever, Zoom's share price subsequently dropped by -41% to close at $337.32 as of December 31, 2020, aspositive news flow on vaccine development&nbsp;since November 2020 continued to put pressure on the share prices of Work-From-Home or WFH beneficiaries like ZM. The downward trend in Zoom's stock price continued into 2021, as ZM's stock price declined marginally by -2% from $337.32 as of December 31, 2020 to $329.20 as of April 14, 2021.\nAlthough Zoom's stock price rose by +10% from $373.61 as of February 26, 2021 to $409.66 as of March 1, 2021 prior to the company's&nbsp;release of 4Q FY 2021 results&nbsp;on the same day after trading hours. But ZM's share price fell by -9% to $372.79 as of March 2, 2021 a day after its results announcement.\nIf one delves deeper into Zoom's 4Q FY 2021 financial results, it is easy to understand why Zoom's share price dropped on March 2, 2021, and subsequently declined by an additional -10% over the next one and a half months post-results to close at $329.20 as of April 14, 2021.\nZoom Video Communications, Inc's revenue jumped by +369% YoY to $882 million in 4Q FY 2021, which was also +9% higher than market consensus' quarterly revenue forecast of around&nbsp;$811 million. But it is noteworthy that ZM's QoQ revenue growth narrowed from +17% in 3Q FY 2021 to +14% 4Q FY 2021. This also pales in comparison to Zoom's QoQ revenue growth rates of +102% and +74% for 2Q FY 2021 and 1Q FY 2021, respectively. The slowdown in QoQ top line expansion in the most recent quarter validates market concerns about WFH tailwinds easing for Zoom (when COVID wanes) to a large extent, which explains Zoom's poor share price performance post-results.\nValuation\nZoom Video Communications, Inc trades at 24.3 times consensus forward FY 2022 Enterprise Value-to-Revenue and 20.0 times consensus forward FY 2023 Enterprise Value-to-Revenue $329.20 as of April 14, 2021. The market also values the company at consensus forward FY 2022 and FY 2023 EV/EBITDA multiples of 77.5 times and 63.2 times, respectively. The company is expected to achieve revenue growth rates of +44% and +22% in the current fiscal year, and the next fiscal year, respectively according to S&amp;P Capital IQ data.\nZM looks relatively more attractive on a forward EV/EBITDA basis, but its forward Enterprise Value-to-Revenue multiples and revenue growth rates are more or less in line with its peers. However, the valuations for Zoom and its peers are rather rich on an absolute basis, and there is no certainty that the de-rating for technology stocks and WFH beneficiaries has already run its full course.\nPeer Valuation Comparison For Zoom\n<table>\n <tbody>\n <tr>\n <td>Stock</td>\n <td>Consensus Current Year Enterprise Value-to-Revenue Multiple</td>\n <td>Consensus Forward One-Year Enterprise Value-to-Revenue Multiple</td>\n <td>Consensus Current Year EV/EBITDA</td>\n <td>Consensus Forward One-Year EV/EBITDA</td>\n <td>Consensus Current Year Revenue Growth Rate</td>\n <td>Consensus Forward One-Year Revenue Growth Rate</td>\n </tr>\n <tr>\n <td>Slack Technologies, Inc (WORK)</td>\n <td>15</td>\n <td>13</td>\n <td>283</td>\n <td>106</td>\n <td>+30%</td>\n <td>+28%</td>\n </tr>\n <tr>\n <td>Twilio Inc (TWLO)</td>\n <td>25</td>\n <td>19</td>\n <td>380</td>\n <td>218</td>\n <td>+38%</td>\n <td>+31%</td>\n </tr>\n <tr>\n <td>Atlassian Corporation Plc (TEAM)</td>\n <td>28</td>\n <td>24</td>\n <td>108</td>\n <td>94</td>\n <td>+24%</td>\n <td>+15%</td>\n </tr>\n </tbody>\n</table>\nSource: Author\nZoom Forecast In 2021\nZoom Video Communications guided for revenue of&nbsp;$3,760-$3,780 million&nbsp;and non-GAAP core earnings per share of $3.59-$3.65 for calendar year 2021 or fiscal year 2022 (YE January 31). This translates to top line and bottom line growth of +42% and +8%, respectively this year, based on the mid-point of ZM's guidance.\nSell-side analysts are more optimistic, as they expect Zoom to achieve revenue and normalized earnings growth of +44% and +12%, respectively in the current fiscal year. Nevertheless, it is not surprising that Zoom is not expected to grow as fast this year as it did last year with WFH tailwinds easing. As a reference, ZM's revenue increased by +326% in the most recent fiscal year, while its core earnings per share jumped by +854% last year.\nThe key factor that will impact Zoom's financial performance this year is the churn rate for its customer cohort with less than 10 staff. The company's proportion of revenue derived from clients with under 10 staff doubled from 18% in FY 2020 to&nbsp;36%&nbsp;in FY 2021, which it attributed to \"business owners and individual users\" using \"Zoom for many personal, professional, and social events\" in its 10-K. In other words, ZM's customer cohort with less than 10 staff was a significant driver of revenue growth for the company last year, as compared to its customer cohort with more than 10 employees.\nLooking forward into the current fiscal year, I expect Zoom's churn rate for its customer cohort with less than 10 staff to be significantly higher than its customer cohort with more than 10 employees for two key reasons.\nFirstly, fewer individuals will use Zoom for social purposes as COVID wanes, and there is a higher risk of business failure for smaller companies vis-a-vis their larger counterparts. Secondly, Zoom adopts a \"self-service\" model for its customer cohort with less than 10 staff, while there are sales teams to support its customer cohort with more than 10 employees, which makes this group of clients relatively more sticky.\nIn a nutshell, while ZM has set \"relatively modest\" growth target this year, there could still be room for disappointment (e.g. revenue miss), if COVID-19 is brought under control sooner than expected, and the churn rate for its customer cohort with less than 10 staff ends up higher than expected.\nIs Zoom Stock A Good Buy\nZoom stock is a HOLD for me now, but it could be a good buy in the medium to long term if there is a further correction in ZM's share price implying more attractive valuations, and the company delivers on its growth strategies.\nZoom Video Communications, Inc's key growth strategies are international expansion and increasing revenue from new products like Zoom Phone.\nThe company only generated 31% of its FY 2021 revenue from international markets outside the Americas, but these foreign markets are growing fast. Revenue for the Asia Pacific and EMEA markets grew by&nbsp;+551% and +587%, respectively last year, while the top line for ZM's Americas region increased by a lower +266% over the same period. Zoom&nbsp;highlighted&nbsp;at the company's FY 2021 earnings call on March 1, 2021 that \"we intend to make additional investments in international resources to further capitalize on the global opportunity.\"\nAnother key growth driver for Zoom in the medium term is Zoom Phone. In January 2021, ZM&nbsp;disclosed&nbsp;that \"it has sold one million Zoom Phone seats\" in less than two years of the product's launch. Based on my personal correspondence with the company, I was told that there are about hundreds of millions of commercial phones in the US running on legacy software that could potentially be migrating to cloud-based PBX (Private Branch Exchange) systems (like that of Zoom Phone) in time to come.\nZoom also&nbsp;noted&nbsp;at the Morgan Stanley (MS) Technology, Media and Telecom Conference on March 3, 2021 that \"on a percentage basis, Zoom Phone has been our fastest-growing product line in Q3 and Q4\", and the company sees Zoom Phone as \"a percentage of growth basis to outpace (Zoom) Meetings (company's core product)\" in the current fiscal year.\nOn the other hand, I am concerned that Zoom's revenue growth this year could disappoint the market, considering the possibility of a higher-than-expected churn rate for its customer cohort with less than 10 staff. As such, I see a Neutral rating for the stock as fair.\nZoom Video Communications, Inc's key risk factors are a shorter-than-expected time taken for the coronavirus pandemic to be effectively contained, and poor execution on key growth initiatives like international expansion and the Zoom Phone.","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Zoom Stock: What's The Outlook Once COVID Wanes</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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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 Stock: What's The Outlook Once COVID Wanes\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-04-16 10:15 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise ...\n\n<a href=\"https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"ZM":"Zoom"},"source_url":"https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1117277782","content_text":"Summary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk.\nI am positive on Zoom's medium to long-term growth drivers like international expansion and Zoom Phone.\nBut I think Zoom is a HOLD rather than a BUY, as valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations.\n\nPhoto by Luis Alvarez/DigitalVision via Getty Images\nElevator Pitch\nI assign a Neutral rating to Zoom Video Communications, Inc (ZM).\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021. The slowdown in ZM's QoQ revenue growth in the most recent quarter could explain why the company's share price performance has been lackluster this year.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively. ZM's current valuations are not demanding on a relative basis as compared to peers, but the valuation de-rating of the technology sector might have just begun as investors switch to reopening plays in view of the ongoing vaccine roll-out program.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk factor. Also valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations. On the flip side, I am positive on Zoom's medium to long term growth drivers like international expansion and Zoom Phone.\nTaking into account all the factors highlighted above, I think that Zoom deserves a Neutral rating.\nCompany Description\nIn its FY 2021 10-K, Zoom Video Communications, Inc refers to itself as a provider of \"a video-first unified communications platform\" which helps to \"connect people through frictionless and secure video, phone, chat, and content sharing.\" The company's key products include Zoom Meetings, Zoom Rooms and Zoom Phone, which are detailed below.\n\nSource: Zoom's FY 2021 10-K And October 2020 Analyst Day Presentation Slides\nThe Americas, EMEA (Europe, the Middle East and Africa), and Asia-Pacific regions contributed 69%, 18% and 13% of Zoom's FY 2021 top line.\nZoom Stock Price\n2020 was a great year for Zoom with regards to share price performance, but the stock is still delivering negative share price returns in 2021 year-to-date.\nZM's share price almost quintupled from $68.04 as of the last day of 2019 to $337.32 as of end-2020. Notably, Zoom Video Communications, Inc's stock price reached an all-time high of $568.34 on October 19, 2020. Earlier, Zoom held its\"annual user conference\"known as Zoomtopia on October 14, 2020 where it disclosed updates to the Zoom platform, which led to a number of sell-side analysts increasing their respective target pricesfor the stock.\nHowever, Zoom's share price subsequently dropped by -41% to close at $337.32 as of December 31, 2020, aspositive news flow on vaccine development since November 2020 continued to put pressure on the share prices of Work-From-Home or WFH beneficiaries like ZM. The downward trend in Zoom's stock price continued into 2021, as ZM's stock price declined marginally by -2% from $337.32 as of December 31, 2020 to $329.20 as of April 14, 2021.\nAlthough Zoom's stock price rose by +10% from $373.61 as of February 26, 2021 to $409.66 as of March 1, 2021 prior to the company's release of 4Q FY 2021 results on the same day after trading hours. But ZM's share price fell by -9% to $372.79 as of March 2, 2021 a day after its results announcement.\nIf one delves deeper into Zoom's 4Q FY 2021 financial results, it is easy to understand why Zoom's share price dropped on March 2, 2021, and subsequently declined by an additional -10% over the next one and a half months post-results to close at $329.20 as of April 14, 2021.\nZoom Video Communications, Inc's revenue jumped by +369% YoY to $882 million in 4Q FY 2021, which was also +9% higher than market consensus' quarterly revenue forecast of around $811 million. But it is noteworthy that ZM's QoQ revenue growth narrowed from +17% in 3Q FY 2021 to +14% 4Q FY 2021. This also pales in comparison to Zoom's QoQ revenue growth rates of +102% and +74% for 2Q FY 2021 and 1Q FY 2021, respectively. The slowdown in QoQ top line expansion in the most recent quarter validates market concerns about WFH tailwinds easing for Zoom (when COVID wanes) to a large extent, which explains Zoom's poor share price performance post-results.\nValuation\nZoom Video Communications, Inc trades at 24.3 times consensus forward FY 2022 Enterprise Value-to-Revenue and 20.0 times consensus forward FY 2023 Enterprise Value-to-Revenue $329.20 as of April 14, 2021. The market also values the company at consensus forward FY 2022 and FY 2023 EV/EBITDA multiples of 77.5 times and 63.2 times, respectively. The company is expected to achieve revenue growth rates of +44% and +22% in the current fiscal year, and the next fiscal year, respectively according to S&P Capital IQ data.\nZM looks relatively more attractive on a forward EV/EBITDA basis, but its forward Enterprise Value-to-Revenue multiples and revenue growth rates are more or less in line with its peers. However, the valuations for Zoom and its peers are rather rich on an absolute basis, and there is no certainty that the de-rating for technology stocks and WFH beneficiaries has already run its full course.\nPeer Valuation Comparison For Zoom\n\n\n\nStock\nConsensus Current Year Enterprise Value-to-Revenue Multiple\nConsensus Forward One-Year Enterprise Value-to-Revenue Multiple\nConsensus Current Year EV/EBITDA\nConsensus Forward One-Year EV/EBITDA\nConsensus Current Year Revenue Growth Rate\nConsensus Forward One-Year Revenue Growth Rate\n\n\nSlack Technologies, Inc (WORK)\n15\n13\n283\n106\n+30%\n+28%\n\n\nTwilio Inc (TWLO)\n25\n19\n380\n218\n+38%\n+31%\n\n\nAtlassian Corporation Plc (TEAM)\n28\n24\n108\n94\n+24%\n+15%\n\n\n\nSource: Author\nZoom Forecast In 2021\nZoom Video Communications guided for revenue of $3,760-$3,780 million and non-GAAP core earnings per share of $3.59-$3.65 for calendar year 2021 or fiscal year 2022 (YE January 31). This translates to top line and bottom line growth of +42% and +8%, respectively this year, based on the mid-point of ZM's guidance.\nSell-side analysts are more optimistic, as they expect Zoom to achieve revenue and normalized earnings growth of +44% and +12%, respectively in the current fiscal year. Nevertheless, it is not surprising that Zoom is not expected to grow as fast this year as it did last year with WFH tailwinds easing. As a reference, ZM's revenue increased by +326% in the most recent fiscal year, while its core earnings per share jumped by +854% last year.\nThe key factor that will impact Zoom's financial performance this year is the churn rate for its customer cohort with less than 10 staff. The company's proportion of revenue derived from clients with under 10 staff doubled from 18% in FY 2020 to 36% in FY 2021, which it attributed to \"business owners and individual users\" using \"Zoom for many personal, professional, and social events\" in its 10-K. In other words, ZM's customer cohort with less than 10 staff was a significant driver of revenue growth for the company last year, as compared to its customer cohort with more than 10 employees.\nLooking forward into the current fiscal year, I expect Zoom's churn rate for its customer cohort with less than 10 staff to be significantly higher than its customer cohort with more than 10 employees for two key reasons.\nFirstly, fewer individuals will use Zoom for social purposes as COVID wanes, and there is a higher risk of business failure for smaller companies vis-a-vis their larger counterparts. Secondly, Zoom adopts a \"self-service\" model for its customer cohort with less than 10 staff, while there are sales teams to support its customer cohort with more than 10 employees, which makes this group of clients relatively more sticky.\nIn a nutshell, while ZM has set \"relatively modest\" growth target this year, there could still be room for disappointment (e.g. revenue miss), if COVID-19 is brought under control sooner than expected, and the churn rate for its customer cohort with less than 10 staff ends up higher than expected.\nIs Zoom Stock A Good Buy\nZoom stock is a HOLD for me now, but it could be a good buy in the medium to long term if there is a further correction in ZM's share price implying more attractive valuations, and the company delivers on its growth strategies.\nZoom Video Communications, Inc's key growth strategies are international expansion and increasing revenue from new products like Zoom Phone.\nThe company only generated 31% of its FY 2021 revenue from international markets outside the Americas, but these foreign markets are growing fast. Revenue for the Asia Pacific and EMEA markets grew by +551% and +587%, respectively last year, while the top line for ZM's Americas region increased by a lower +266% over the same period. Zoom highlighted at the company's FY 2021 earnings call on March 1, 2021 that \"we intend to make additional investments in international resources to further capitalize on the global opportunity.\"\nAnother key growth driver for Zoom in the medium term is Zoom Phone. In January 2021, ZM disclosed that \"it has sold one million Zoom Phone seats\" in less than two years of the product's launch. Based on my personal correspondence with the company, I was told that there are about hundreds of millions of commercial phones in the US running on legacy software that could potentially be migrating to cloud-based PBX (Private Branch Exchange) systems (like that of Zoom Phone) in time to come.\nZoom also noted at the Morgan Stanley (MS) Technology, Media and Telecom Conference on March 3, 2021 that \"on a percentage basis, Zoom Phone has been our fastest-growing product line in Q3 and Q4\", and the company sees Zoom Phone as \"a percentage of growth basis to outpace (Zoom) Meetings (company's core product)\" in the current fiscal year.\nOn the other hand, I am concerned that Zoom's revenue growth this year could disappoint the market, considering the possibility of a higher-than-expected churn rate for its customer cohort with less than 10 staff. As such, I see a Neutral rating for the stock as fair.\nZoom Video Communications, Inc's key risk factors are a shorter-than-expected time taken for the coronavirus pandemic to be effectively contained, and poor execution on key growth initiatives like international expansion and the Zoom Phone.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":4049713,"gmtCreate":1618541457620,"gmtModify":1680784282111,"authorId":3566353609041424,"author":{"id":3566353609041424,"authorId":3566353609041424,"name":"carceng","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":370077128,"type":1,"supId":0,"prevId":0,"content":"Yes i agree","text":"Yes i agree","html":"Yes i agree"}],"langContent":"EN"},{"id":370075267,"gmtCreate":1618539494859,"gmtModify":1704712428334,"author":{"id":"3574639331964090","authorId":"3574639331964090","authorIdStr":"3574639331964090","name":"yung","avatar":"https://static.tigerbbs.com/9824f99b3f3aafd5e3bbacc77ffee02d","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3574639331964090"},"htmlText":"High use during covid","listText":"High use during covid","text":"High use during covid","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/370075267","repostId":1117277782,"repostType":4,"repost":{"id":"1117277782","pubTimestamp":1618539309,"share":"https://ttm.financial/m/news/1117277782?lang=&edition=fundamental","pubTime":"2021-04-16 10:15","market":"us","language":"en","title":"Zoom Stock: What's The Outlook Once COVID Wanes","url":"https://stock-news.laohu8.com/highlight/detail?id=1117277782","media":"seekingalpha","summary":"Summary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% y","content":"Summary\n<ul>\n <li>Zoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.</li>\n <li>Zoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively.</li>\n <li>ZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of&nbsp;its customer cohort with under 10 staff being a key downside risk.</li>\n <li>I am positive on Zoom's medium to long-term growth drivers like international expansion and Zoom Phone.</li>\n <li>But I think Zoom is a HOLD rather than a BUY, as valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/cf695f0ee4625d58a734edbfe6cb7430\" tg-width=\"768\" tg-height=\"512\">Photo by Luis Alvarez/DigitalVision via Getty Images\nElevator Pitch\nI assign a Neutral rating to Zoom Video Communications, Inc (ZM).\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021. The slowdown in ZM's QoQ revenue growth in the most recent quarter could explain why the company's share price performance has been lackluster this year.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively. ZM's current valuations are not demanding on a relative basis as compared to peers, but the valuation de-rating of the technology sector might have just begun as investors switch to reopening plays in view of the ongoing vaccine roll-out program.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk factor. Also valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations. On the flip side, I am positive on Zoom's medium to long term growth drivers like international expansion and Zoom Phone.\nTaking into account all the factors highlighted above, I think that Zoom deserves a Neutral rating.\nCompany Description\nIn its FY 2021 10-K, Zoom Video Communications, Inc&nbsp;refers to itself&nbsp;as a provider of \"a video-first unified communications platform\" which helps to \"connect people through frictionless and secure video, phone, chat, and content sharing.\" The company's key products include Zoom Meetings, Zoom Rooms and Zoom Phone, which are detailed below.\n<img src=\"https://static.tigerbbs.com/b2ce8a0468e9ba4263d742190a82d70e\" tg-width=\"640\" tg-height=\"140\"><img src=\"https://static.tigerbbs.com/ca6f50d9ee74057e4a22fda98241529c\" tg-width=\"640\" tg-height=\"125\"><img src=\"https://static.tigerbbs.com/cfb55bbf89d56bb0584a5599b0453bb9\" tg-width=\"640\" tg-height=\"298\">\n<img src=\"https://static.tigerbbs.com/f4acfd03336743c0393a66d394665c36\" tg-width=\"640\" tg-height=\"309\">Source: Zoom's FY 2021 10-K And October 2020 Analyst Day Presentation Slides\nThe Americas, EMEA (Europe, the Middle East and Africa), and Asia-Pacific regions contributed&nbsp;69%, 18% and 13%&nbsp;of Zoom's FY 2021 top line.\nZoom Stock Price\n2020 was a great year for Zoom with regards to share price performance, but the stock is still delivering negative share price returns in 2021 year-to-date.\nZM's share price almost quintupled from $68.04 as of the last day of 2019 to&nbsp;$337.32&nbsp;as of end-2020. Notably, Zoom Video Communications, Inc's stock price reached an all-time high of $568.34 on October 19, 2020. Earlier, Zoom held its\"annual user conference\"known as Zoomtopia on October 14, 2020 where it disclosed updates to the Zoom platform, which led to a number of sell-side analysts&nbsp;increasing their respective target pricesfor the stock.\nHowever, Zoom's share price subsequently dropped by -41% to close at $337.32 as of December 31, 2020, aspositive news flow on vaccine development&nbsp;since November 2020 continued to put pressure on the share prices of Work-From-Home or WFH beneficiaries like ZM. The downward trend in Zoom's stock price continued into 2021, as ZM's stock price declined marginally by -2% from $337.32 as of December 31, 2020 to $329.20 as of April 14, 2021.\nAlthough Zoom's stock price rose by +10% from $373.61 as of February 26, 2021 to $409.66 as of March 1, 2021 prior to the company's&nbsp;release of 4Q FY 2021 results&nbsp;on the same day after trading hours. But ZM's share price fell by -9% to $372.79 as of March 2, 2021 a day after its results announcement.\nIf one delves deeper into Zoom's 4Q FY 2021 financial results, it is easy to understand why Zoom's share price dropped on March 2, 2021, and subsequently declined by an additional -10% over the next one and a half months post-results to close at $329.20 as of April 14, 2021.\nZoom Video Communications, Inc's revenue jumped by +369% YoY to $882 million in 4Q FY 2021, which was also +9% higher than market consensus' quarterly revenue forecast of around&nbsp;$811 million. But it is noteworthy that ZM's QoQ revenue growth narrowed from +17% in 3Q FY 2021 to +14% 4Q FY 2021. This also pales in comparison to Zoom's QoQ revenue growth rates of +102% and +74% for 2Q FY 2021 and 1Q FY 2021, respectively. The slowdown in QoQ top line expansion in the most recent quarter validates market concerns about WFH tailwinds easing for Zoom (when COVID wanes) to a large extent, which explains Zoom's poor share price performance post-results.\nValuation\nZoom Video Communications, Inc trades at 24.3 times consensus forward FY 2022 Enterprise Value-to-Revenue and 20.0 times consensus forward FY 2023 Enterprise Value-to-Revenue $329.20 as of April 14, 2021. The market also values the company at consensus forward FY 2022 and FY 2023 EV/EBITDA multiples of 77.5 times and 63.2 times, respectively. The company is expected to achieve revenue growth rates of +44% and +22% in the current fiscal year, and the next fiscal year, respectively according to S&amp;P Capital IQ data.\nZM looks relatively more attractive on a forward EV/EBITDA basis, but its forward Enterprise Value-to-Revenue multiples and revenue growth rates are more or less in line with its peers. However, the valuations for Zoom and its peers are rather rich on an absolute basis, and there is no certainty that the de-rating for technology stocks and WFH beneficiaries has already run its full course.\nPeer Valuation Comparison For Zoom\n<table>\n <tbody>\n <tr>\n <td>Stock</td>\n <td>Consensus Current Year Enterprise Value-to-Revenue Multiple</td>\n <td>Consensus Forward One-Year Enterprise Value-to-Revenue Multiple</td>\n <td>Consensus Current Year EV/EBITDA</td>\n <td>Consensus Forward One-Year EV/EBITDA</td>\n <td>Consensus Current Year Revenue Growth Rate</td>\n <td>Consensus Forward One-Year Revenue Growth Rate</td>\n </tr>\n <tr>\n <td>Slack Technologies, Inc (WORK)</td>\n <td>15</td>\n <td>13</td>\n <td>283</td>\n <td>106</td>\n <td>+30%</td>\n <td>+28%</td>\n </tr>\n <tr>\n <td>Twilio Inc (TWLO)</td>\n <td>25</td>\n <td>19</td>\n <td>380</td>\n <td>218</td>\n <td>+38%</td>\n <td>+31%</td>\n </tr>\n <tr>\n <td>Atlassian Corporation Plc (TEAM)</td>\n <td>28</td>\n <td>24</td>\n <td>108</td>\n <td>94</td>\n <td>+24%</td>\n <td>+15%</td>\n </tr>\n </tbody>\n</table>\nSource: Author\nZoom Forecast In 2021\nZoom Video Communications guided for revenue of&nbsp;$3,760-$3,780 million&nbsp;and non-GAAP core earnings per share of $3.59-$3.65 for calendar year 2021 or fiscal year 2022 (YE January 31). This translates to top line and bottom line growth of +42% and +8%, respectively this year, based on the mid-point of ZM's guidance.\nSell-side analysts are more optimistic, as they expect Zoom to achieve revenue and normalized earnings growth of +44% and +12%, respectively in the current fiscal year. Nevertheless, it is not surprising that Zoom is not expected to grow as fast this year as it did last year with WFH tailwinds easing. As a reference, ZM's revenue increased by +326% in the most recent fiscal year, while its core earnings per share jumped by +854% last year.\nThe key factor that will impact Zoom's financial performance this year is the churn rate for its customer cohort with less than 10 staff. The company's proportion of revenue derived from clients with under 10 staff doubled from 18% in FY 2020 to&nbsp;36%&nbsp;in FY 2021, which it attributed to \"business owners and individual users\" using \"Zoom for many personal, professional, and social events\" in its 10-K. In other words, ZM's customer cohort with less than 10 staff was a significant driver of revenue growth for the company last year, as compared to its customer cohort with more than 10 employees.\nLooking forward into the current fiscal year, I expect Zoom's churn rate for its customer cohort with less than 10 staff to be significantly higher than its customer cohort with more than 10 employees for two key reasons.\nFirstly, fewer individuals will use Zoom for social purposes as COVID wanes, and there is a higher risk of business failure for smaller companies vis-a-vis their larger counterparts. Secondly, Zoom adopts a \"self-service\" model for its customer cohort with less than 10 staff, while there are sales teams to support its customer cohort with more than 10 employees, which makes this group of clients relatively more sticky.\nIn a nutshell, while ZM has set \"relatively modest\" growth target this year, there could still be room for disappointment (e.g. revenue miss), if COVID-19 is brought under control sooner than expected, and the churn rate for its customer cohort with less than 10 staff ends up higher than expected.\nIs Zoom Stock A Good Buy\nZoom stock is a HOLD for me now, but it could be a good buy in the medium to long term if there is a further correction in ZM's share price implying more attractive valuations, and the company delivers on its growth strategies.\nZoom Video Communications, Inc's key growth strategies are international expansion and increasing revenue from new products like Zoom Phone.\nThe company only generated 31% of its FY 2021 revenue from international markets outside the Americas, but these foreign markets are growing fast. Revenue for the Asia Pacific and EMEA markets grew by&nbsp;+551% and +587%, respectively last year, while the top line for ZM's Americas region increased by a lower +266% over the same period. Zoom&nbsp;highlighted&nbsp;at the company's FY 2021 earnings call on March 1, 2021 that \"we intend to make additional investments in international resources to further capitalize on the global opportunity.\"\nAnother key growth driver for Zoom in the medium term is Zoom Phone. In January 2021, ZM&nbsp;disclosed&nbsp;that \"it has sold one million Zoom Phone seats\" in less than two years of the product's launch. Based on my personal correspondence with the company, I was told that there are about hundreds of millions of commercial phones in the US running on legacy software that could potentially be migrating to cloud-based PBX (Private Branch Exchange) systems (like that of Zoom Phone) in time to come.\nZoom also&nbsp;noted&nbsp;at the Morgan Stanley (MS) Technology, Media and Telecom Conference on March 3, 2021 that \"on a percentage basis, Zoom Phone has been our fastest-growing product line in Q3 and Q4\", and the company sees Zoom Phone as \"a percentage of growth basis to outpace (Zoom) Meetings (company's core product)\" in the current fiscal year.\nOn the other hand, I am concerned that Zoom's revenue growth this year could disappoint the market, considering the possibility of a higher-than-expected churn rate for its customer cohort with less than 10 staff. As such, I see a Neutral rating for the stock as fair.\nZoom Video Communications, Inc's key risk factors are a shorter-than-expected time taken for the coronavirus pandemic to be effectively contained, and poor execution on key growth initiatives like international expansion and the Zoom Phone.","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Zoom Stock: What's The Outlook Once COVID Wanes</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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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 Stock: What's The Outlook Once COVID Wanes\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-04-16 10:15 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise ...\n\n<a href=\"https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"ZM":"Zoom"},"source_url":"https://seekingalpha.com/article/4419250-zoom-stock-overvalued-covid-wanes","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1117277782","content_text":"Summary\n\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk.\nI am positive on Zoom's medium to long-term growth drivers like international expansion and Zoom Phone.\nBut I think Zoom is a HOLD rather than a BUY, as valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations.\n\nPhoto by Luis Alvarez/DigitalVision via Getty Images\nElevator Pitch\nI assign a Neutral rating to Zoom Video Communications, Inc (ZM).\nZoom's share price was up close to +400% in 2020, but its stock price has declined by -2% year-to-date in 2021. The slowdown in ZM's QoQ revenue growth in the most recent quarter could explain why the company's share price performance has been lackluster this year.\nZoom currently trades at consensus forward FY 2022 (YE January 31) Enterprise Value-to-Revenue and EV/EBITDA multiples of 24.3 times and 77.5 times, respectively. ZM's current valuations are not demanding on a relative basis as compared to peers, but the valuation de-rating of the technology sector might have just begun as investors switch to reopening plays in view of the ongoing vaccine roll-out program.\nZM's top line and bottom line growth is expected to slow considerably this year, with the churn rate of its customer cohort with under 10 staff being a key downside risk factor. Also valuations seem rich on an absolute basis, and the company's revenue growth this year could possibly be below expectations. On the flip side, I am positive on Zoom's medium to long term growth drivers like international expansion and Zoom Phone.\nTaking into account all the factors highlighted above, I think that Zoom deserves a Neutral rating.\nCompany Description\nIn its FY 2021 10-K, Zoom Video Communications, Inc refers to itself as a provider of \"a video-first unified communications platform\" which helps to \"connect people through frictionless and secure video, phone, chat, and content sharing.\" The company's key products include Zoom Meetings, Zoom Rooms and Zoom Phone, which are detailed below.\n\nSource: Zoom's FY 2021 10-K And October 2020 Analyst Day Presentation Slides\nThe Americas, EMEA (Europe, the Middle East and Africa), and Asia-Pacific regions contributed 69%, 18% and 13% of Zoom's FY 2021 top line.\nZoom Stock Price\n2020 was a great year for Zoom with regards to share price performance, but the stock is still delivering negative share price returns in 2021 year-to-date.\nZM's share price almost quintupled from $68.04 as of the last day of 2019 to $337.32 as of end-2020. Notably, Zoom Video Communications, Inc's stock price reached an all-time high of $568.34 on October 19, 2020. Earlier, Zoom held its\"annual user conference\"known as Zoomtopia on October 14, 2020 where it disclosed updates to the Zoom platform, which led to a number of sell-side analysts increasing their respective target pricesfor the stock.\nHowever, Zoom's share price subsequently dropped by -41% to close at $337.32 as of December 31, 2020, aspositive news flow on vaccine development since November 2020 continued to put pressure on the share prices of Work-From-Home or WFH beneficiaries like ZM. The downward trend in Zoom's stock price continued into 2021, as ZM's stock price declined marginally by -2% from $337.32 as of December 31, 2020 to $329.20 as of April 14, 2021.\nAlthough Zoom's stock price rose by +10% from $373.61 as of February 26, 2021 to $409.66 as of March 1, 2021 prior to the company's release of 4Q FY 2021 results on the same day after trading hours. But ZM's share price fell by -9% to $372.79 as of March 2, 2021 a day after its results announcement.\nIf one delves deeper into Zoom's 4Q FY 2021 financial results, it is easy to understand why Zoom's share price dropped on March 2, 2021, and subsequently declined by an additional -10% over the next one and a half months post-results to close at $329.20 as of April 14, 2021.\nZoom Video Communications, Inc's revenue jumped by +369% YoY to $882 million in 4Q FY 2021, which was also +9% higher than market consensus' quarterly revenue forecast of around $811 million. But it is noteworthy that ZM's QoQ revenue growth narrowed from +17% in 3Q FY 2021 to +14% 4Q FY 2021. This also pales in comparison to Zoom's QoQ revenue growth rates of +102% and +74% for 2Q FY 2021 and 1Q FY 2021, respectively. The slowdown in QoQ top line expansion in the most recent quarter validates market concerns about WFH tailwinds easing for Zoom (when COVID wanes) to a large extent, which explains Zoom's poor share price performance post-results.\nValuation\nZoom Video Communications, Inc trades at 24.3 times consensus forward FY 2022 Enterprise Value-to-Revenue and 20.0 times consensus forward FY 2023 Enterprise Value-to-Revenue $329.20 as of April 14, 2021. The market also values the company at consensus forward FY 2022 and FY 2023 EV/EBITDA multiples of 77.5 times and 63.2 times, respectively. The company is expected to achieve revenue growth rates of +44% and +22% in the current fiscal year, and the next fiscal year, respectively according to S&P Capital IQ data.\nZM looks relatively more attractive on a forward EV/EBITDA basis, but its forward Enterprise Value-to-Revenue multiples and revenue growth rates are more or less in line with its peers. However, the valuations for Zoom and its peers are rather rich on an absolute basis, and there is no certainty that the de-rating for technology stocks and WFH beneficiaries has already run its full course.\nPeer Valuation Comparison For Zoom\n\n\n\nStock\nConsensus Current Year Enterprise Value-to-Revenue Multiple\nConsensus Forward One-Year Enterprise Value-to-Revenue Multiple\nConsensus Current Year EV/EBITDA\nConsensus Forward One-Year EV/EBITDA\nConsensus Current Year Revenue Growth Rate\nConsensus Forward One-Year Revenue Growth Rate\n\n\nSlack Technologies, Inc (WORK)\n15\n13\n283\n106\n+30%\n+28%\n\n\nTwilio Inc (TWLO)\n25\n19\n380\n218\n+38%\n+31%\n\n\nAtlassian Corporation Plc (TEAM)\n28\n24\n108\n94\n+24%\n+15%\n\n\n\nSource: Author\nZoom Forecast In 2021\nZoom Video Communications guided for revenue of $3,760-$3,780 million and non-GAAP core earnings per share of $3.59-$3.65 for calendar year 2021 or fiscal year 2022 (YE January 31). This translates to top line and bottom line growth of +42% and +8%, respectively this year, based on the mid-point of ZM's guidance.\nSell-side analysts are more optimistic, as they expect Zoom to achieve revenue and normalized earnings growth of +44% and +12%, respectively in the current fiscal year. Nevertheless, it is not surprising that Zoom is not expected to grow as fast this year as it did last year with WFH tailwinds easing. As a reference, ZM's revenue increased by +326% in the most recent fiscal year, while its core earnings per share jumped by +854% last year.\nThe key factor that will impact Zoom's financial performance this year is the churn rate for its customer cohort with less than 10 staff. The company's proportion of revenue derived from clients with under 10 staff doubled from 18% in FY 2020 to 36% in FY 2021, which it attributed to \"business owners and individual users\" using \"Zoom for many personal, professional, and social events\" in its 10-K. In other words, ZM's customer cohort with less than 10 staff was a significant driver of revenue growth for the company last year, as compared to its customer cohort with more than 10 employees.\nLooking forward into the current fiscal year, I expect Zoom's churn rate for its customer cohort with less than 10 staff to be significantly higher than its customer cohort with more than 10 employees for two key reasons.\nFirstly, fewer individuals will use Zoom for social purposes as COVID wanes, and there is a higher risk of business failure for smaller companies vis-a-vis their larger counterparts. Secondly, Zoom adopts a \"self-service\" model for its customer cohort with less than 10 staff, while there are sales teams to support its customer cohort with more than 10 employees, which makes this group of clients relatively more sticky.\nIn a nutshell, while ZM has set \"relatively modest\" growth target this year, there could still be room for disappointment (e.g. revenue miss), if COVID-19 is brought under control sooner than expected, and the churn rate for its customer cohort with less than 10 staff ends up higher than expected.\nIs Zoom Stock A Good Buy\nZoom stock is a HOLD for me now, but it could be a good buy in the medium to long term if there is a further correction in ZM's share price implying more attractive valuations, and the company delivers on its growth strategies.\nZoom Video Communications, Inc's key growth strategies are international expansion and increasing revenue from new products like Zoom Phone.\nThe company only generated 31% of its FY 2021 revenue from international markets outside the Americas, but these foreign markets are growing fast. Revenue for the Asia Pacific and EMEA markets grew by +551% and +587%, respectively last year, while the top line for ZM's Americas region increased by a lower +266% over the same period. Zoom highlighted at the company's FY 2021 earnings call on March 1, 2021 that \"we intend to make additional investments in international resources to further capitalize on the global opportunity.\"\nAnother key growth driver for Zoom in the medium term is Zoom Phone. In January 2021, ZM disclosed that \"it has sold one million Zoom Phone seats\" in less than two years of the product's launch. Based on my personal correspondence with the company, I was told that there are about hundreds of millions of commercial phones in the US running on legacy software that could potentially be migrating to cloud-based PBX (Private Branch Exchange) systems (like that of Zoom Phone) in time to come.\nZoom also noted at the Morgan Stanley (MS) Technology, Media and Telecom Conference on March 3, 2021 that \"on a percentage basis, Zoom Phone has been our fastest-growing product line in Q3 and Q4\", and the company sees Zoom Phone as \"a percentage of growth basis to outpace (Zoom) Meetings (company's core product)\" in the current fiscal year.\nOn the other hand, I am concerned that Zoom's revenue growth this year could disappoint the market, considering the possibility of a higher-than-expected churn rate for its customer cohort with less than 10 staff. As such, I see a Neutral rating for the stock as fair.\nZoom Video Communications, Inc's key risk factors are a shorter-than-expected time taken for the coronavirus pandemic to be effectively contained, and poor execution on key growth initiatives like international expansion and the Zoom Phone.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":30,"commentSize":12,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}