Zoom Q3 Earnings Recap

Zoom Video Communications

Zoom provides a cloud based conference platform and was founded in 2011 in San Jose, California. Its popularity increased during the pandemic as the lockdown measures and the rise of work from home increased the global need for video conferencing solutions, for both personal and professional communication.

According to the company, half a million businesses globally choose Zoom for their critical communications, including 70% of the Fortune100. Zoom's services users span from financial institutions to health delivery organizations and education institution. [1]

Q3 FY2022 Results

Zoom announced its financial results for the third quarter of Fiscal Year 2022 on Monday November 22, after US markets had closed. [2]

It beat estimates with Revenue of $1.05 billion - which marked a 35% year over year (y/y) increase - and Earnings of $1.11/share.

At the end of Q3 FY2022, It had approximately 512,100 customers with more than 10 employees, up around 18% y/y.

The firm also upgraded its outlook for the Full Fiscal Year 2022, now expecting Total Revenue to be between $4.079 billion and $4.081 billion. This is higher than the previous projections, but it is a rather timid forecast.

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M&A Activity and Zoomtopia 2021

The Merger & Acquisition front was a source of disappointment during the reported period, as the firm announced on September 30 [3], that it had abandoned the proposed acquisition of Five9, after shareholders of the latter voted against the deal.

Five9 is a leading provider of cloud contact center software and the deal – had it gone through - would have costed approximately $14.7 billion. [4]

Despite that, the contact center market remains a strategic priority for Zoom, as per its CEO and Founder Eric S. Yuan, having announced at September's Zoomtopia 2021 [5] the Zoom Video Engagement Center - a cloud-based contact center solution, which will launch in early 2022. [2]

Zoomtopia is an annual online conference, where the firm showcases new services, products and its vision for the future. The event itself, was hosted on the new Zoom Events Conference, which will allow hosts to organize multi-track and multi-day events in a sophisticated format. Among other Zoomtopia highlights were the Zoom Whiteboard and the collaboration with Oculus for a push towards virtual reality.

Stock Movement

The company's stock had seen a meteoric rise over the past year, as the outbreak of the COVID-19 pandemic led to the Work from Home rise and to increased demand for its services. The current year however, is a losing one, with the third quarter drop amounting to approximately 30%. November started on the front, but has since turned negative and yesterday (Monday), ZM.us set new 2021 lows.

Monday was bad for the technology sector in general, with NAS100 extending its losses today. Zoom's results - although solid – were uninspiring and along with broader poor market sentiment, ZM.us is likely to open lower today.

After the release of the previous quarterly results – at the end of August – it had wiped out around $55 in the day (highlighted area), so there is potential for big moves and a negative reaction could expose ZM.us to sub-$200.00 moves.


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Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 23 Nov 2021 https://blog.zoom.us/how-the-world-connects/

2

Retrieved 23 Nov 2021 https://investors.zoom.us/news-releases/news-release-details/zoom-reports-financial-results-third-quarter-fiscal-year-2022

3

Retrieved 23 Nov 2021 https://investors.zoom.us/news-releases/news-release-details/zoom-announces-termination-merger-agreement-five9

4

Retrieved 23 Nov 2021 https://investors.zoom.us/news-releases/news-release-details/zoom-acquire-five9

5

Retrieved 01 Dec 2021 https://investors.zoom.us/news-releases/news-release-details/zoom-announces-planned-innovations-ignite-next-era

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