Video communications platform Zoom Video (NYSE: ZM)
stock has been the face of work and engagement from home during the pandemic but continues to sell off on post-pandemic
normalization fears. Fears of a slow down in growth were noticeably illustrated in the share sell-off after Q2 fiscal 2022 earnings and most importantly, the guidance. The disruptive
pandemic winner is seeing a reversion as workers
are returning to offices in the post-pandemic era thanks to the acceleration
of COVID vaccinations
. With the reopening, shares in Zoom are providing a bottom-feeding opportunity for risk-tolerant investors seeking exposure in a critical cornerstone in the new normal
Q2 Fiscal Year 2022 Earnings Release
On Aug. 16, 2021, Zoom Video released its second-quarter fiscal 2022 results for the quarter ending June 2021. The Company reported earnings-per-share (EPS) profit of $1.36 beating consensus analysts estimates for a profit of $1.16 by $0.20. Revenues rose 54% year-over-year (YoY) to $1.02 billion, beating consensus analyst estimates for $990 million. Customers spending over $100,000 annual grew by 131% to 2,278 customers. Companies with 10 or more employees rise 36% YoY. Zoom Video CEO Eric Yuan commented, “In Q2, we achieved our first billion-dollar revenue quarter while delivering strong profitability and cash flow. Q2 also marked several milestones on our expansion beyond the UC platform. We launched Zoom Apps, bringing over 50 apps directly into the Zoom experience, and Zoom Events, an all-in-one digital events service. Today we are a global brand counting over half a million customers with more than 10 employees, which we believe positions us extremely well to support organizations and individuals as they look to reimagine work, communications, and collaboration.”
Mixed and Raised Guidance
Zoom issued both Q3 2021 and full-year 2022 guidance. For Q3 2021, the Company expects $1.07 to $1.08 EPS falling short of the $1.09 consensus analyst expectations. Revenues for Q3 are expected between $1.015 billion to $1.020 billion beating analyst estimates for $1.01 billion. For full-year 2022, Zoom raised its EPS to $4.56 to $4.71 range versus $4.66 analyst estimates. The Company sees revenues for fiscal 2022 to come in between $4.005 billion to $4.015 billion compared to $4 billion.
Conference Call Takeaways
CEO Yuan set the tone, “I have been humbled by the stories of how finance professionals have leveraged Zoom to reimagine the way they work. Specifically, I’d like to thank Charlie Munger of Berkshire Hathaway for his remarks about how Zoom has added so much convenience to his life. We are so delighted to count Charlie as a happy user. And I nominate myself to be Charlie’s personal Zoom tech support if he ever needs it. In Q2, we also achieved several milestones, setting the foundation for us to thrive as a platform. In July, we launched Zoom Apps, which brings over 50 apps right into the Zoom meeting experience. And this is just the beginning. The beauty of our platform is it allows our ecosystem of developers to add even more functionality, by building apps where workflows are integrated with meeting interactions.” He went on to name-drop some recent large customers, “In addition to these great customer wins, we also closed another strategic channel partnership with Telkomsel, the largest cellular operator in Indonesia, which is the world’s fourth-largest country by population. Telkomsel understands and wants to support its 170 million subscribers’ need for seamless and reliable virtual meetings to thrive in the digital workplace era. They will be leveraging the power of Zoom’s Developer Platform and ISV Partner Program to deliver a fully integrated solution via their CloudX offering for the Enterprise segment and Zoom native apps for the Consumer segment. The collaboration between Telkomsel and Zoom will bring communication to the next level by combining Zoom’s strong capabilities and feature-rich platform with Telkomsel’s best quality network and localized interface, together creating a powerful tool to improve customer productivity and collaboration. Thank you, NEC, Seagate, ExxonMobil, and Telkomsel. I love you all.” CEO Yuan concluded, “Today we are fortunate to be a leading global brand with over half a million customers having more than 10 employees. Our internal innovation engine is strong and bolstered by our growing Zoom Apps developer ecosystem and acquisitions such as Kites, that will strengthen our position in AI transcription and translation. As organizations and people reimagine work, communications, and collaboration, we are faced with a once-in-a-lifetime opportunity to drive this evolution on multiple fronts.
ZM Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames provides a near-term precision view of the price action playing field for ZM shares. The weekly rifle chart has a downtrend triggered on the market structure high (MSH) breakdown under $354.34 with a falling 5-period moving average (MA) nearing the $323.52 Fibonacci (fib) level. The weekly 15-period MA is turning down at $355.90. The weekly stochastic has a mini inverse pup heading towards the 20-band. The weekly lower Bollinger Bands (BBs) sit at $265.82. The daily rifle chart illustrates the large gap down on earnings but attempts a market structure low (MSL) buy trigger above $296.61. The daily 5-period MA is attempting to rise at $297.84 with the 15-period MA still falling at the $316.74 fib. The daily stochastic has been smothered under the 20-band for weeks but has crossed up at the 10-band as it attempts to rally back to and through the 20-band for a channel tightening. Prudent investors can watch for opportunistic pullbacks at the $296.61 fib, $293.75 fib, $290.68 fib, $285.54 fib, $280.29 fib, $273.30 fib, $267.06 fib, and the $262.80 fib. The upside trajectories range from the $323.52 fib up towards the $376.87 fib level.
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