Zoom Video Communications, Inc Financial Statements NASDAQ:ZM

Across all Ark Invest funds, Zoom makes up around 4.5% of the company’s holdings. As Wood and others have stated, Zoom is much more than an online meeting platform. It is a comprehensive communications ecosystem that includes team chat platforms, online whiteboards, VoIP phone service, workspaces, email, and other services.

Should You Buy Zoom Stock Today?

With growth expected to hit the breaks in the years ahead, the company will likely become less attractive to investors who bought into Zoom’s growth story. Given the state of the company, investors should consider Zoom stock. Admittedly, investors like Ark Invest may have to adjust their expectations. With 2026 just two years away, Ark Invest’s base case estimates are looking increasingly unlikely to come to 6 reasons to create your own cryptocurrency pass, and it may even fall short of the $700-per-share bear case estimate.

1. Leo Sun owns shares of Cisco Systems and Zoom Video Communications.
2. Zoom expects its revenue to rise 31% year over year in the third quarter, which surpasses analysts’ estimates, but for its adjusted EPS to grow just 8%-9%, which misses expectations for 10% growth.
3. Zoom has almost no debt, boasting a debt-to-equity ratio of 2% and a strong cash position of $1.3 billion.
4. Zoom makes up almost 7% of its flagship fund, the Ark Innovation ETF, making the Cathie Wood investment its fourth-largest holding.
5. In 2020, the United States charged a China-based Zoom executive with conspiring to disrupt videoconference commemorations of the 1989 Tiananmen Square democracy protests.

Revenue and earnings growth remain strong — analysts are forecasting revenue and earnings per share to grow by 54% and 46% year over year up to $4.1 billion and $4.87 per share in fiscal year 2022, respectively. Zoom has almost no debt, boasting a debt-to-equity ratio of 2% and a strong cash position of $1.3 billion. The company also grew free cash flow by over 1,100% in fiscal year 2021 up to $1.4 billion.

How Zoom’s business could stabilize after the pandemic

Zoom video conferencing is celebrated for its ease of use, high quality video and audio, and collaboration facilities – and the basic version is also completely free of charge. However, Zoom has rapidly turned into a value stock that returns a respectable level of free-cash-flow growth. If Zoom can start monetizing some of the AI potential Ark Invest sees, it could inspire another bull market in its stock. Ark Invest has backed estimates up by taking a significant position in the media stock. Zoom makes up almost 7% of its flagship fund, the Ark Innovation ETF, making the Cathie Wood investment its fourth-largest holding.

Still, operating income fell during that period, and much of the gain came from $114 million in « other income, » which consists of income from interest, foreign currency, and marketable securities. Unfortunately for Zoom bulls, that « increase » is likely a one-time event. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services.

Prior to founding Zoom, Yuan was corporate vice president of engineering at Cisco, and was a founding engineer and vice president of engineering for web and videoconferencing platform Webex. As mentioned above, on Sept. 30, 2021, Five9 announced that the two parties had mutually agreed to abandon the deal. The company said that the agreement had not received the required number of votes from Five9 shareholders to approve the merger. Department of Justice-led panel, named Team Telecom, was investigating the proposed merger’s potential national security risks. Zoom’s latest fiscal year (FY) was FY 2021, which ended Jan. 31, 2021.

If you’re after a new webcam for Zoom video conferencing, or indeed any other kind of video conferencing, these are our top recommendations right now. Quoted prices do not cover additional add-ons – such as webinar ideas and forecasts on euro facilities, large meetings (up to 1000 participants) and additional cloud recording storage – which will bump up the price. It also supports unlimited one-on-one meetings, screen sharing, chat, virtual backgrounds, whiteboard and more.

Zoom Video Communications, Inc.

For that period, the company reported net income of $672.3 million on revenue of $2.7 billion. Zoom is a member of the information technology sector and operates within the software industry. They include legacy web-based meeting service providers such as Cisco Systems Inc.’s (CSCO) WebEx and LogMeIn Inc.’s GoToMeeting. Rivals also include bundled productivity solution providers with video functionality such as Alphabet Inc.’s (GOOGL) Google G Suite and Microsoft Inc.’s (MSFT) Microsoft Teams. Other competitors are unified communications as a service (UCaaS) and legacy private bank exchange (PBX) providers such as 8×8 Inc. (EGHT), Avaya Holdings Corp. (AVYA), and RingCentral Inc. (RNG).

Double-digit revenue growth for the next five years surely isn’t bad, but it doesn’t compare to the company’s 160% compound annual growth rate over the past three years. On the earnings front, Wall Street analysts are forecasting an average annualized growth of 28% over the next five years up to an earnings per share of $6.21 per share in fiscal year 2026. This is more favorable than Zoom’s expected top-line scenario, but many investors still might be hesitant to pay a lofty valuation for the company when taking into account the deceleration in growth. I believe Zoom still has room to grow since it clearly disrupted a fragmented market filled with mature and complacent players. Investors who expect the remote work trend to continue after the pandemic ends should accumulate some shares of Zoom after its post-earnings drop. However, the stock is still pricey and will remain volatile — so it isn’t an ideal investment for queasy investors.

Zoom is also the focus of several ongoing federal investigations related to its dealings with Beijing, according to the Journal. Meetings on the platform can host as many as 1,000 participants, while webinars can scale up to as many as 50,000. Don’t let Zoom’s past success dictate your decision to invest in the company today. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors.

Zoom is still generating healthy growth on top of its triple-digit percentage revenue growth last year, but the market’s reaction indicates investors are still worried about its post-pandemic growth. There is one caveat worth mentioning — Zoom’s growth in the coming years is expected to let up significantly from current levels. As the pandemic unwinds and Zoom becomes a more mature company, it’s inevitable that sales growth will come down from its all-time highs. Analysts are forecasting Zoom’s revenue to come in at $7.7 billion in fiscal year 2026, indicating an average annualized growth of 13% from 2022 estimates.

The platform connects people via video, phone, chat, and content sharing and can be integrated across a broad range of devices. The one area of modest strength is non-GAAP (adjusted) free cash flow, which increased almost 14% yearly to more than $1.1 billion in the first three quarters of 2023. That was not enough to persuade investors to buy Zoom stock, as it is up just 1% from year-ago levels. Admittedly, the company’s results have come nowhere close to matching that expected growth. In the first nine months of 2023, revenue of $3.4 billion increased by only 3% yearly.

Growth and Profitability

The video conferencing software company’s stock tumbled after its latest earnings report. Free Zoom offers video conferencing for up to 100 participants, provided the meeting runs for no longer than 40 minutes, at which point attendees are ejected from the conference. If you don’t mind the hassle of dialling back in, the host can simply start another call.

The Motley Fool has positions in and recommends Bitcoin, Tesla, and Zoom Video Communications. Zoom Video Communications (ZM -0.85%) is a bit of a mystery as a growth stock. The U.S. government has been increasing its scrutiny of Zoom on several fronts. In 2020, the United States best online stock trading courses in 2021 charged a China-based Zoom executive with conspiring to disrupt videoconference commemorations of the 1989 Tiananmen Square democracy protests.

Also, 3% revenue growth will probably not inspire growth-oriented investors. Instead of trying to figure out exactly how much Zoom’s revenue growth will decelerate as the pandemic passes, investors should track its expanding operating margins and rising free cash flow. Zoom ended the second quarter with 2,278 customers contributing more than $100,000 in revenue over the past 12 months, which represented 131% growth from a year ago. Its number of customers with more than 10 employees grew 36% year over year to approximately 504,900, while its 12-month net dollar expansion rate among those customers remained above 130% for the 13th straight quarter. Zoom’s operating margins are expanding as its scale improves and its data center capacity rises. Zoom Video Communications Inc. (ZM) offers a video-first communications platform used by millions of people worldwide for both business and personal use.