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A billion-dollar quarter for ZoomINTL

A billion-dollar quarter for Zoom

What was life like before Zoom (ZM) meetings? We’re struggling to remember, and Zoom definitely doesn’t want to remind us. The company just saw its Q2 net profit surge 71% to $316.9m. The main driver behind this growth is the rising demand for video conferencing as businesses worldwide adopt hybrid work models due to the Covid-19 pandemic. In addition, the company’s revenue surged 6.8% quarterly to $1.02b — that’s a 54% increase compared to 12 months ago. This is Zoom’s first billion-dollar revenue quarter.     

Everything seems to be going great over at Zoom, but wait a moment — if net profit is skyrocketing and revenue is hitting new highs, why was the company’s stock down nearly 16% on the Nasdaq? The drop has a lot to do with the slowing sales growth — from a 355% growth this time last year to an expected 30% growth in the next quarter. 

Zoom will use part of its profits to buy Five9 (FIVN), a cloud contact center software that will help the company diversify.

why it matters

For a stock that jumped 400% in 2020, a slowing sales growth will bring down its share value back to "normal levels." Meanwhile, its acquisition of Five9 could strengthen its position against competitors such as Microsoft (MSFT) Teams, Skype, and Cisco (CSCO) Webex.