Can Zoom tolerate workers returning to the office?

With pandemic restrictions lifted worldwide excluding Continental Europe, Mizuho Securities analyst Siti Panigrahi wouldn’t be surprised to see “rising turmoil” among companies with few more than 10 employees. Accordingly, Zoom’s management has “reduced risk” by “embedding higher churn expectations,” he wrote.

“We expect Zoom to deliver revenue growth driven primarily by the enterprise segment [more than 10 employees and more than $100,000 revenue],” Panigrahi said in a November 15 note that rates Zoom’s stock as buy with a price target of $350.

Competition is also gradually eroding Zoom’s growth rate. Pat Walravens, equity research analyst at JMP Securities, points out that monthly visits to Zoom fell 27% to 2.06 billion in September 2021 from a peak of 2.81 billion in March 2021. Meanwhile, Microsoft Corp.
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The competitive Teams software has expanded to more than 250 million active users, Walravens said in an October 19 note.

Then came the aftermath of the failed $14.9 billion acquisition of cloud contact center software company Five9 Inc.
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after Five shareholders scrambled to buy all shares, mainly because Zoom’s stock price decreased gradually.

For more: Zoom and Five9 may not be separated forever

Buying Five9 “presented an engaging means of giving our customers an integrated contact center service,” wrote Zoom CEO Eric Yuan in a blog post. blog post. “That said, it is not fundamental to the success of our platform, nor is it the only way for us to offer our customers an attractive contact center solution. .”

The authorized consulting firm Institutional Shareholder Services has recommended that shareholders vote against the proposal, which has been reviewed by a branch of the Department of Justice for potential foreign involvement, according to a The August 27 letter was sent to the Federal Communications Commission.

What to expect

Income: Analysts on average expect Zoom to report earnings of $1.09 a share, compared with net income of 66 cents a share a year ago. Contributors to Estimize – a community sourcing platform that collects estimates from Wall Street analysts as well as buy-side analysts, fund managers, corporate executives, academics and others – are predicting median earnings of $1.09 a share.

Revenue: Analysts on average expect Zoom to report $1.02 billion in revenue in the first quarter, up from $777 million in the same quarter a year ago. Estimize contributors also predicted $1.02 billion on average.

Ancient movement: Zoom shares are down 25% this year, while the S&P 500
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has increased by 25%.

What else to look for

The era of COVID has forever changed the way individuals and corporations communicate, and Zoom will be the constant platform. The only question is whether the company will reach the top.

“Where we are now in the pandemic cycle, we believe that ZM’s core business is near or near complete penetration,” Evercore ISI analyst Peter Levine said in a note. 28 that the Zoom stock rating aligns with a $255 price target.

“If you haven’t issued ZM licenses to your employees, it’s unlikely at this point that we’ll see meaningful returns to offset the increase in time, We expect rotations between the investor base from the high-growth investor to the more GARP/secular investor base, and these transitions take time to take effect. “

Additionally, the decision by Five9 shareholders to decline Zoom’s $14.9 billion acquisition offer will cause investors to redefine their growth expectations, Levine wrote.