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Cloud Stocks: Zoom is Not Bothered by Cisco or Microsoft

Posted on Wednesday, Jul 10th 2019

According to a Grand View Market Research report, the global video conferencing market is estimated to grow 9% annually through to 2025 from $3.4 billion in 2017. Zoom Video Communications (Nasdaq: ZM) is a strong performer in the industry as was evident from their recent quarterly results.

Zoom Video Communications’ Financials

Last month, Zoom announced its first quarterly results since it became a public company, and the results outpaced all market expectations. Revenues for the quarter grew 103% over the year to $122 million, surpassing the analyst forecast of $111.7 million. EPS of $0.03 was also ahead of the Street’s estimated $0.01 for the quarter.

Revenue from US-based customers grew 98% to $98.2 million, and revenue from international customers grew 127% to $49.6 million.

Among key customer metrics, Zoom ended the quarter with 58,500 customers with more than 10 employees, up 86%. 405 of its customers contributed more than $100,000 in trailing 12 months revenue.

For the current quarter, Zoom expects revenues of $129-$130 million with an EPS of $0.01-$0.02. Zoom expects to end the year with revenues of $535-$540 million with an EPS of $0.02-$0.03. The market was looking for revenues of $122.1 million for the quarter and $525 million for the year.

Zoom’s Phone Launch

Earlier this year, Zoom expanded its offerings with the launch of Zoom Phone, a cloud-based phone system for companies. While it is still early days, and the market remains skeptical, Zoom’s management is unfazed. It believes that Zoom Phone will be more of a contributor in the future. Zoom believes that organizations are looking to migrate from the complex, old-fashioned PBX phone systems and would view Zoom Phone as a viable upgrade option.

Previously known as Zoom Voice, Zoom Phone is available as an add-on to Zoom’s Meetings service for US and Canadian customers. It supports inbound and outbound calling through the public switched telephone network (PSTN) and offers seamlessly integrated telephony features to help customers replace the PBX solution and consolidate their communication requirements into Zoom’s video-first platform.

Earlier this quarter, Zoom added some more features to the phone service such as enabling users to seamlessly transition a Zoom Phone call to a Zoom Meeting; adding native integrations with charter members Five9 and Twilio to enable efficient and easy-to-manage call routing options; a Salesforce integration that lets users make Zoom Phone calls by clicking on any phone number within Salesforce and a Zero-Touch provisioning service integration to Polycom and Yealink that reduces the time required by IT administrators to set up and deploy Zoom Phone connected devices.

Zoom’s Collaborative Approach

Zoom continues to enter into several strategic partnerships to drive growth. Recently, it expanded its tie-up with Slack to simplify the ability to set up video conferencing calls and share content. Users of Slack messaging tools can now easily launch a Zoom video conferencing meeting to help drive productivity. Recently, Zoom also entered into a tie-up with Verizon that will allow all of Verizon’s business customers to access Zoom as a cloud service. Verizon customers will have access to call-in numbers and the ability to join in a Zoom meeting from a Verizon phone at no additional cost. The agreement will cover 50 countries.

Zoom’s expanding product offerings and partnerships are helping it compete with its biggest rivals – Cisco and Microsoft. Cisco and Microsoft have their own video and audio conferencing systems in the form of Webex and Microsoft Teams. But Zoom is able to compete with them because of its easy-to-use model and the growing integrations. It is well integrated with other collaboration tools offered by Atlassian and Dropbox. Cisco and Microsoft may very well upgrade their user experience to match Zoom’s, but Zoom is not too worried. It believes that the market is big enough to allow it to prosper and by focusing on customer happiness, it will continue to win a bigger share in the market.

Its stock is trading at $90.76 with a market capitalization of $24.7 billion. In April this year, the stock had listed at $36 apiece, raising $751 million at a valuation of $9.2 billion. It had soared to a record high of $107.34 earlier last month soon after result announcement. Analysts are pleased with Zoom given that it is one of those rare emerging technologies companies that delivers high growth in revenues while remaining profitable.

Prior to listing this year, Zoom had raised $160.5 million in funding from investors including AME Cloud Ventures, Emergence Capital Partners, Horizons Ventures, IT-FARM, Qualcomm Ventures, Maven Ventures, Sequoia Capital, Bart Swanson, Bill Tai, Carmen Elizabeth Sanchez C., Dan Scheinman, Matt Ocko, Mike Everett, Patrick Soon-Shiong, and Subrah Iyar (founder of Webex). Its last funding round was held in January 2017, when it raised $115 million in a round led by Sequoia Capital that valued it at $1 billion.

This segment is a part in the series : Cloud Stocks

. Smartsheet Acquiring Bootstrapped Startups to Drive Growth
. Bootstrapped Unicorn Atlassian is Acquiring Capital Efficient Startups
. Netflix Price Hike Ruffles Competition
. How Will Carbon Black Differentiate?
. ServiceNow Grows Through Addition of Capital-Efficient Startups
. Zendesk and Freshworks Follow Different Acquisition Strategies
. Tableau Grows Through Small Acquisitions
. Open Platform Strategy Stands Intuit in Good Stead
. Will GoDaddy Follow the PaaS Route?
. Adobe Delivers Via PaaS
. A Look at Oracle’s 2018 M&A Activity
. What Apps Will Drive More Traction for Cloudera?
. Slack's App Focus Will Be Key to Post-IPO Success
. IBM Counts on its Cloud and Platform for the Turnaround
. Atlassian Acquires From its PaaS Marketplace
. What Should SAP Acquire to Triple its Value by 2023?
. Expect ServiceNow to Acquire From App Marketplace
. Should Follow a PaaS Strategy?
. How Upwork Can Leverage the Virtual Company Trend
. Qualys Scouting For Acquisitions
. Should SAP Acquire Zendesk or Freshworks?
. HubSpot Counts on its API Strategy
. SurveyMonkey Eyes Acquisitions for Growth
. Workday Wants to Disrupt Cloud Computing Using Machine Learning
. Einstein and Open-Source Platform Lead the Charge for Salesforce
. DocuSign Prepares to Beat Rival Adobe
. Veeva Soars, But Dassault Acquires Medidata for $5.8 Billion
. Tableau Acquisition Signals Massive Analytics Push for Salesforce
. Oracle Joins Hands with Microsoft to Take on Amazon
. GoDaddy is Making Strategic Acquisitions for the Next Level of Growth
. Alteryx Sees Strong Momentum
. Adobe Leveraging Magento and Marketo to Deliver Blockbuster Performance
. Is Slack Overvalued?
. How Will Cloudera Address the Competition?
. Zoom is Not Bothered by Cisco or Microsoft
. Domo Counts on Enterprise Revenue for Growth
. Netflix Plays with Pricing and Games to Attract Subscribers
. CrowdStrike Has a Successful IPO
. Atlassian Crosses the Billion Dollar Revenue Milestone
. ServiceNow Believes Strength Lies in Tie-ups
. Partnerships are the Mantra for BlackLine
. SurveyMonkey Counts on Enterprise Segment for Growth
. HubSpot Soars to a New High
. Intuit Pushes AI to Simplify Tax Filing
. Splunk Sees Strong Cloud Momentum
. Forescout Partners with Big Names
. Smartsheet Tapping into the Government Sector
. Salesforce Continues its Shopping Spree
. Palo Alto Networks Targets the IoT Security Market
. DocuSign Focuses on the Mortgage Sector
. Oracle Brags About Autonomous Database
. Blackbaud Acquires YourCause to Grow Addressable Market
. The Market Expects a Lot More from Adobe
. Anaplan Makes its First Acquisition Post IPO
. Activist Investor Drives Market Interest in Box
. MongoDB's Formula for Success
. Coupa Aims for $1B Revenue
. Dropbox on a Rocky Road
. Medallia Banks on Acquisitions
. IBM Banks on AI
. Time For Skepticism with Netflix
. SAP Riding High on the Cloud
. Amazon's Faster Shipping Hurting its Earnings
. ServiceNow CEO Change Signals Focus on Acquisitions
. Will Google Acquire Fitbit?
. HubSpot Focuses on Its Platform
. BlackLine Partners with Google Cloud
. Rapid7’s Focus on Cloud SIEM Pays Off
. Splunk Bets Big on Data Streaming
. Intuit's QBO Scores Big
. VMware Builds Up With Acquisitions
. Palo Alto Targets $5B Revenue by 2022
. Workday Targeting Procure-to-Pay Cycle
. Will Salesforce Acquire DocuSign?
. Okta Targets Enterprise Customers
. MongoDB Eyeing China With Alibaba Partnership
. Twilio Counts on API Upgrades for Growth
. Adobe Revs up its Experience Platform
. Top 20 for 2020
. Anaplan Sees Expanding Use Cases
. Dropbox Gears Up to Regain Lost Valuation
. Forescout Fails to Deliver
. Enterprise Bet Pays Off for SurveyMonkey
. SAP Bets Big on Experience Management
. Twilio Steps up Investment in 2020 to Preserve Growth Momentum
. Zendesk, Freshworks Focus on Marketplaces and Integrations
. Proofpoint Targets Insider Threats Through Acquisition
. RingCentral's Powerful Partner Strategy Would Augment with PaaS
. Qualys Counts on Google and Microsoft for Growth
. Shopify Soars on Improved Merchant Offerings
. HubSpot Believes in the Importance of PaaS
. BlackLine Remains Focused on SAP Integration
. Recently Public Cloudflare has New Edge
. GoDaddy is on a Shopping Spree
. Intuit Targets Online User Base Through Acquisition
. Should Palo Alto Networks Acquire ZScaler?
. Why Salesforce Buying Vlocity Proves the Growing Importance of PaaS
. Datadog Performing Well Post Recent IPO
. Workday Should Open Up About its PaaS Success
. Anaplan Focuses on API Connectors for its Platform
. Veeva
. Five9 Strengthens its PaaS Focus
. RealPage Brings AI and SaaS to Real Estate
. Splunk Should Open up About its PaaS Metrics
. Okta Benefiting from App Diversity
. Oracle Sees Growth Momentum
. Xero Focuses on a PaaS Strategy
. DocuSign Resilient to COVID-19
. Smartsheet Looking up to Enterprise Customers for Growth
. Paylocity Delivers Solid Results
. Q2 Holdings Expands TAM with Acquisitions
. New Relic Focuses on PaaS
. AppFolio Leverages AI for Product Enhancement
. Will Adobe Open Up About its PaaS Statistics?
. Change Healthcare Pushes APIs
. Dropbox Needs to Share API Metrics
. Upwork Improves Monetization
. MongoDB has Miles to go
. Nutanix Needs to Define a PaaS Strategy
. Cloudera Focuses on Hybrid Cloud
. Atlassian Gears Up for Growth, Unfazed by Covid-19
. Shopify Helps Merchants Pivot to Online Stores
. ServiceNow Steady in Turbulent Seas
. RingCentral Sees Strong Traction
. Twilio Hits 52-Week High Amidst COVID Crisis
. HubSpot Lowers Outlook Amidst Virus Concerns
. Proofpoint Acquiring Even Amidst Crisis
. BlackLine Looks Solid At The Face of Covid-19
. GoDaddy Continues to Acquire
. Qualys Expands Cloud Offerings to Soar to New Highs
. Zendesk Struggling Amidst the Downturn
. Alteryx Bounces Back Despite Low Outlook
. Palo Alto Networks Continues to Acquire
. Workday Extends its PaaS Strategy
. Splunk Rides High on Cloud Initiatives
. Salesforce Partners with Workday to Address the New Normal
. Veeva Scales New Highs
. Is Smartsheet’s Pullback a Buying Opportunity?
. MongoDB Soars Even in the Crisis
. Okta Reiterates Outlook
. Is Anaplan a Prospect for Oracle, SAP?
. Oracle Relies on Autonomous Offerings
. Adobe Shifts its Focus
. Paycom Confident Under Current Conditions
. DocuSign Soars to Record Highs
. Paylocity Acquires Amid Crisis
. Datadog's Integrations and Upgrades Help it Soar
. AppFolio Improves Offerings for Current Conditions
. SurveyMonkey Should Get Into PaaS
. Model N Soars to a Record High
. Appian Focuses on RPA for Growth
. Slack Beefs up its Portfolio
. Coupa Expands into Treasury Services
. CrowdStrike Soars to Record Highs
. Guidewire Expands Cloud Offerings
. Dropbox Should Focus on PaaS
. Talend Expands Data Offering Through Partners
. IBM Expands Cloud Partners
. One Medical Supports COVID-19 Care Digitally
. Microsoft Rides High on Teams and Gaming
. Investors Say Yes to nCino’s IPO
. Nutanix Focuses on Government and Media Verticals
. SAP Rethinks Qualtrics Acquisition
. Tenable Expands Into Industrial Cyber-Security
. ServiceNow Expands Ties with Zoom
. Cloudera Powers its Data Platform with Partnerships
. Atlassian Continues to Acquire from PaaS Ecosystem
. Shopify Soars to an All-Time High
. The PaaS Landscape
. HubSpot Focuses on the Enterprise Segment
. GoDaddy Restructures During COVID
. Akamai's Security Solutions Thriving
. Blackline Needs a PaaS Strategy
. Twilio - A Successful PaaS Story
. Zendesk Invests in the Future
. Qualys Continues to Acquire Indian Startups
. ZoomInfo Lists Despite COVID-19
. Analysis of Alteryx PaaS Strategy
. Fastly Needs to Diversify from TikTok
. Way to Go, Salesforce
. Intuit Continues to Acquire
. VMware Continues Buying Spree
. Analysis of Five9's PaaS Strategy
. Okta Expands Alliances to Attract Enterprises
. Palo Alto Continues to Acquire
. Analysis of Splunk's PaaS Strategy
. BigCommerce Goes Big with IPO
. Analysis of Workday's PaaS Strategy
. Analysis of Anaplan's PaaS Strategy
. Sees Strong Demand
. Analysis of MongoDB's PaaS Strategy
. Analysis of Wix's Platform Strategy
. New Relic Product Upgrades Deliver Growth
. What Should Proofpoint Acquire?
. Smartsheet Should Follow Atlassian’s Example
. Adobe's Relentless Growth Continues
. SurveyMonkey's PaaS Prospects
. DocuSign Acquires Amid COVID
. Paylocity Counts on Video
. The Unstoppable Veeva
. Magic Software Acquires to Expand in Europe
. What Can Cloud Startups Do To Raise Seed Capital in 2021?
. Guardant Seeks to Disrupt Oncology Testing
. Dropbox Adds Security Capabilities
. Domo Growing Steadily
. Nutanix Focuses on the Hybrid Cloud
. IBM Fails to Impress

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