Zoom’s Anticipated Earnings Report: What Investors Should Expect
Zoom’s Stance in 2023
Zoom Video Communications (ZM) has seen a slight dip of 1% in its stock as of August 14, 2023. However, when compared to the iShares Expanded Tech-Software (IGV) exchange-traded fund’s growth of 33% this year, it seems there’s a growing disparity. With the second-quarter earnings due on August 21, all eyes are on Zoom’s next move. Analysts are setting the bar with a predicted profit of $1.07 per share and a revenue spike of 1% at $1.114 billion.
The Return to Offices
Post the Covid-19 emergency, Zoom faced a double-edged sword. On the one hand, their video conferencing software saw a massive surge in demand as remote working became the norm. On the other hand, as businesses transitioned back to traditional office spaces, Zoom began to integrate more artificial intelligence tools into its platform. But there were hiccups; a change in terms of service sparked controversy, and the company had to retract its decision on data collection for AI training.
Zoom’s AI Race
Competing in a world where sales growth has decelerated for nine consecutive quarters, Zoom is keen on AI innovation. This is evident with the introduction of Zoom IQ, an AI-infused workplace collaboration platform. Their recent investments in AI startup, Anthropic, and the launch of Zoom Workforce Management further emphasize their commitment to AI integration.
Zoom’s Financial Health
Despite challenges, Zoom boasts a robust balance sheet with a whopping $5.4 billion in cash reserves. But challenges persist. With the Covid-19 threat diminishing, Zoom’s main focus will be on retaining both small businesses and larger corporate accounts. Moreover, increased competition means Zoom has to constantly stay ahead to prevent pricing pressures.
Customer Retention and New Offerings
Zoom’s freemium business model has played a significant role in its success. As the company ventures into new products, such as Zoom Phone, it remains to be seen how these innovations will contribute to its growth.
Zoom’s Leadership and Collaborations
Founded by Eric Yuan in 2011, Zoom has seen substantial growth and collaborations with giants like Salesforce.com, Atlassian, and Box. More recently, a partnership with software maker ServiceNow has put them on the map in the enterprise market.
Zoom’s Recent Performance
The past has been a rollercoaster for Zoom. While 2020 saw an impressive 400% stock increase, 2021 countered with a 45% drop. 2022 wasn’t kind either, resulting in a 63% tumble. However, with a current IBD Relative Strength Rating of 9 and an IBD Composite Rating of 66, there’s potential.
Earnings Expectations for This Week
Given Zoom’s past performance, expectations are high for the upcoming earnings report. The company has consistently surpassed EPS estimates 100% of the time over the past eight quarters and hit revenue targets in six of them. With the consensus estimate at $1.06 for EPS and $1.11 billion for revenue, investors are eager to see if Zoom maintains its streak.
Read More about this week’s upcoming Earning reports!
