Considering the company’s growth during its relatively short history, Zoom stock is likely to continue to rise. The Enterprise business has been outperforming, and the Online segment is moving in the right direction. The Company’s market cap is around $16 billion.
Enterprise business is outperforming
Among the many things that Zoom does, its enterprise business is arguably one of the best. This segment of the company generates a ton of cash, has a large customer base, and is a reliable source of revenue. It has a high-margin product and offers more than just video conferencing.
It’s worth noting that the enterprise business is outperforming the stock despite the stock’s current downturn. The Zoom video conferencing company’s enterprise business is now 56% of its overall revenue. This means that its largest business isn’t vulnerable to the same video conferencing pullback that smaller enterprise customers have been facing.
The Zoom enterprise story isn’t over yet. The company’s chief financial officer expects the online business to stabilize in the second quarter. This could give the company some much-needed confidence. The company recently unveiled email and calendar services, which should help it keep more workers on its platform.
The company also saw its stock fall a whopping 16% last week. While the stock is still a strong performer, the company’s valuation is at a multi-year low.
The online segment is moving in the right direction
During the recent fiscal fourth quarter, Zoom’s online segment is moving in the right direction. This is a good sign because the company is starting to see growth in its self-serve business, a segment that has had a tough time in the past.
On the flip side, investors are concerned about the company’s lackluster earnings and revenue growth. In a recent conference call, CEO Matthew Harrigan said that he is “wary” about the likely muted revenue outlook for the next fiscal year. However, he also noted that “we continue to believe that there is a solid opportunity for the company to drive further growth in its existing and emerging markets.”
The company reported the most notable metric: it generated a whopping $5.8 billion in free cash flow during the period, which is a surprisingly large number considering that Zoom typically uses the cash it generates to invest in real estate or other property. It was also the first time in its history that Zoom had a positive free cash flow in a full fiscal year.
The market cap is around $16 billion
Earlier this week, Zoom Video Communications Inc. (Zoom) announced an initial public offering, which saw its market capitalization skyrocket to nearly $16 billion. Before the IPO, the company was valued at $10 billion.
At the end of January, Zoom had 509,800 customers and more than 10 employees. The company also has $5.4 billion in cash and other assets.
As of the end of the period, the company’s net dollar expansion rate was more than 130% for companies with more than 10 employees. And despite an industry-leading advantage, it has warned investors that its growth will slow down in the coming year.
During the quarter, the company posted a profit of $7.6 million on revenue of $331 million. The stock rose 23% after earnings were released. The company expects its EPS to drop 31% this fiscal year.
The company plans to spend a lot of money on R&D over the next year to make its service more profitable. It will also invest in more advertising revenue streams, which could allow it to maintain its lead in the web conferencing market.
Company’s growth during its relatively short history
During its relatively short history, Zoom stock has experienced impressive growth. The company has beaten the top and bottom lines while overcoming concerns about videoconferencing. It was one of the most successful tech IPOs of the year. However, it has struggled to keep up with demand. Its market cap is now over $106 billion.
While the company hasn’t hit its highs yet, it has taken advantage of its gains by acquiring a major player. Its acquisition of cloud center service provider Five9 was the second biggest U.S. tech deal of 2021. It has caused worries among investors, regulators, and law enforcement interests.
The acquisition of Five9 comes with significant national security risks. The Federal Communications Commission is already studying the deal, and the US Department of Justice has raised its concerns. The deal could create a conflict of interest between the US and a foreign company.
After the announcement, the company’s shares fell. Some investors feared that business would slow down in the post-pandemic world. The company responded by lowering its sales and earnings guidance. In the first quarter, Zoom reported revenue of $122 million. The company also saw its monthly active users increase to 2.22m.