![]() While the deal terms were not disclosed, it's likely the value of the transaction was only a small part of Zoom's liquidity, suggesting there is room for more corporate actions down the line. ( VMEO), Under Armour ( UAA), and HelloFresh SE ( OTCPK:HELFY). Major companies already using Solvvy include Vimeo, Inc. The thinking here is that there are synergies between Zoom's core unified communications product and customer experience solutions. ![]() On this point, into Q2 in May, Zoom announced the acquisition of "Solvvy", a leading artificial intelligence-based customer support platform. A question among investors that often gets brought up is how the company intends to utilize that proverbial war chest. The balance sheet position has always been a strong point of the company's investment profile and now represents nearly 16% of the company's $33 billion market value. The total RPO at $2.99 billion, up 44% y/y, provides confidence for a continued growth runway through the rest of the year.įinally, we note that Zoom ended the quarter with $5.3 billion in cash and cash equivalent along with a large portfolio of marketable securities, against zero long-term financial debt. Our interpretation is that this metric adds a layer of quality to Zoom financials as the company becomes less dependent on smaller individual users that are less predictable in terms of month-to-month renewals.Īnother key financial metric for the company is the remaining performance obligations (RPO) which is defined as the combination of unbilled and deferred revenue yet to be recognized. Anecdotally, the corporate and enterprise-level customers as a group generating this much sales are likely those that have chosen Zoom as their preferred video communications service provider and utilize the platform as a necessary day-to-day tool. The number of customers contributing more than $100,000 in revenue over the past year at 2,916 is up 46% compared to Q1 2022. Through the subscription model, the strength here is the recurring business with a move towards longer-term plans and a larger total of billions per customer. Nevertheless, the reported level of free cash flow at $501 million is up 10% in Q1 2022.Įven as the top-line growth this quarter was modest compared to trends last year and in 2020, it's worth pointing out that revenue is up 226% on a 2-year stacked basis compared to $328 million in Q1 fiscal 2021 at the start of the pandemic. The result is an impact on profitability as the non-GAAP operating margin at 37.2% is down from 41.9% last year. Similarly, sales and marketing efforts have also seen a big jump as part of the strategy to expand internationally. For example, research and development expenses climbed 120% y/y, or up 358 basis points higher as a percentage of revenue to 7.9% on an adjusted basis from 4.3% in the period last year. The lower bottom line this quarter considers what has been a new effort at investments and spending to support the next stage of growth. On the other hand, the geopolitical conflict in Europe pressured the EMEA region which was flat compared to fiscal 2022. By region, revenues from the Americas climbed 15% while APAC led growth with 20% higher y/y sales. Revenue at $1.1 billion climbed 12% year-over-year which favorably contributed to a higher adjusted gross margin at 78.6% compared to 73.9% in Q1 fiscal 2022. The company reported its fiscal 2023 Q1 earnings on May 23rd with non-GAAP EPS of $1.03, $0.16 ahead of the consensus estimate, but down 22% from $1.32 in Q1 last year. ![]() The stock likely has some upside in the near term but will continue to face long-term uncertainties so caution is warranted. At the same time, we highlight some ongoing growth concerns against what has evolved into a more competitive operating environment, particularly as Zoom looks to branch out into new business segments beyond just video. The company just reported its latest quarterly result which beat expectations with positive operating metrics. The good news is that the deep correction has brought Zoom's valuation back down to Earth supported by overall solid fundamentals. The stock is currently down about 40% year to date and a humbling 80% from its all-time high. Indeed, ZM rallied by as much as 800% at its peak during 2020 fueled by the trends in remote working and virtual learning, only to reverse nearly all gains with the ongoing "return to normal" forcing a reset of expectations. ( NASDAQ: ZM) is a poster child for the group of stocks that benefited from the early pandemic boom but ultimately faced a reckoning over the past year with the shifting market cycle.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |