Zoom Video Communications Inc Rockets 60% During September Sell-Off

zm stockZoom Video Communications up 621% in 2020

Zoom Video Communications Inc (NASDAQ:ZM) has been a runaway success. Even before the coronavirus pandemic forced people to work from home, Zoom Video was reporting strong financial results. COVID-19 just made Zoom Video stock virtually unstoppable.

I actually looked at Zoom back in early March, just before everyone learned about how damaging to the global economy COVID-19 would really be. At the time, ZM stock was trading around $112.00 per share, putting it up 60% year-to-date.

A 60% gain in the opening months of the year is solid. But since then, Zoom Video’s share price has been on a meteoric trajectory, rising 511% year-over-year and 621% year-to-date. Even during the September sell-off, which has dragged tech stocks lower, ZM has soared higher, advancing 60%.

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Chart courtesy of StockCharts.com

ZM Stock Overview

Zoom Video Communications provides a video communications platform that allows people to connect with each other anywhere. With the company’s cloud platform, you can facilitate video meetings, voice conversations, and webinars across any communication device, including desktop computers, mobile devices, and conference room systems.

Q2 Revenue Soars 355%

There’s a good reason why Zoom Video stock has, so far, soared 60% in September.

On August 31, Zoom reported stunning results for the second quarter of fiscal 2021, ended June 30, and provided excellent guidance. (Source: “Zoom Reports Second Quarter Results for Fiscal Year 2021,” Zoom Video Communications Inc, August 31, 2020.)

Revenue for the second quarter of 2020 soared 355% year-over-year to $663.5 million. Income from operations was $188.1 million, compared to $2.3 million in the second quarter of fiscal 2020.

Net income was $185.7 million, or $0.63 per share, compared to second-quarter 2020 net income of $5.5 million, or $0.02 per share.

During the quarter, the number of the company’s customers with more than 10 employees jumped 458% year-over-year to 370,200. The number of customers contributing more than $100,000 in trailing 12 months revenue was up 112% at 988.

Zoom’s Business Outlook

For the third quarter of fiscal 2021, Zoom expects to report:

  • Total revenue of between $685.0 million and $690.0 million.
  • Adjusted net income from operations in the range of $225.0 million to $230.0 million
  • Adjusted diluted earnings per share of between $0.73 and $0.74

For fiscal 2021, Zoom expects to report:

  • Total revenue of between $2.37 billion and $2.39 billion
  • Adjusted income from operations between $730.0 million and $750.0 million
  • Adjusted diluted earnings at $2.40 to $2.47

Analyst Take

Zoom Video stock seems virtually unstoppable at this point. While the company’s share price has soared during the coronavirus pandemic, there is every reason to believe it will continue to do well even after a vaccine becomes available and things get back to “normal.”

That’s because the new norm will include more people working remotely, learning anywhere and connecting everywhere.