Zoom Soars 6% After Revenue Beat

The online chat provider expects to continue strong growth, nearly doubling its full-year guidance.

Author: Anthony Russo   

The stock in Zoom Video Communications Inc. (Nasdaq: ZM) soared nearly 6% to $220 per share after blowing away analyst expectations in the first quarter fiscal year 2021.

The California-based online chat provider said in a statement on Tuesday aftermarket that revenues in the three months through April more than doubled to $328.17 million, up 169% year-over-year. Net income was $27.08 million, or 9 cents a share, compared with $198,000 in the same period of 2019. Analysts polled by Factset expected revenues of $230.6 million on adjusted earnings of 9 cents per share. 

Zoom attributed the growth to its roughly 265,400 customers, representing a 354% year-over-year increase. It has also been active in telehealth, as Zoom offers features that allow doctors and specialists to connect with patients, medical device integrations, and recorded session reviews.

"The Covid-19 crisis has driven higher demand for distributed, face-to-face interactions and collaboration using Zoom," Eric S. Yuan, the founder and chief executive officer of Zoom, said in a statement Tuesday. 

He added, "Use cases have grown rapidly as people integrated Zoom into their work, learning, and personal lives."

Covid-19 has helped send Zoom to a new level, as its shares are now up an astonishing 220% year-to-date. 

The company received upgrades from analysts on the news, including from D.A. Davidson analyst Rishi Jaluria, who upgraded it from neutral with a new price target of $240 praising its quarterly performance in a note titled: "One of the Best Quarters in Software History." 

Expect Zoom to continue strong growth, as the company has nearly doubled its guidance and now expects revenue in the range of $1.78 billion to $1.8 billion for the full-year. It also expects full-year adjusted earnings to come in the range of $1.21 per share and $1.29 per share compared with the annual profit of 42 to 45 cents per share it previously expected.

Meanwhile, U.S. stocks were lifted across the board. The Nasdaq Composite added 63 points and Dow Jones rose more than 1% to 26,113.42 points. For the first time since early March, the Dow has surpassed 26,000 points. Investors continue to be optimistic regarding positive vaccine news and business reopenings across the U.S. 

Microsoft Zooms in for the Kill?

Microsoft has Zoom in its sights, announcing a new video conferencing app, a modification of its Teams feature, that will expand the gallery view on a video call enabling the user to see up to 49 participants, according to Forbes. Currently, Microsoft Teams only gives you the option to see nine. This may effectively end the main advantage of Zoom over Teams. With this announcement, the video-conferencing race continues to heat up.