Zoom Video Zooms Higher As Earnings Again Top Estimates
Share Button

Zoom Video Zooms Higher As Earnings Again Top Estimates

The video conferencing company was a prime beneficiary of the Covid-19 pandemic as many workers and students stayed at home.

By Eric J. Savitz
Tue, Mar 2, 2021 12:25amGrey Clock 2 min

Zoom Video Communications posted better-than-expected results for its fiscal fourth quarter, ended Jan. 31, and stronger-than-expected guidance, driving the stock sharply higher in after-hours trading.

The video conferencing company, a prime beneficiary of the Covid-19 pandemic as many workers and students stayed at home for the last year, reported revenue for the quarter of US$882.5 million, up 369% from a year earlier, with adjusted profits of US$365.4 million, or $1.22 a share. Under generally accepted accounting principles or GAAP, the company earned US$256.1 million, or 87 cents a share.

Zoom shares, which had rallied 9.7% to $409.66 in Monday’s regular session, gained another 9% in late trading to $446.63.

For the full year, Zoom had revenue of $2.65 billion, up 326%, with non-GAAP profits of $995.7 million, or $3.34 a share. The company finished the year with $4.2 billion in cash and short-term investments.

Zoom had projected revenue for the quarter of $806 million to $811 million, with non-GAAP profits of 77 to 79 cents a share. Management has predicted full-year revenue of between $2.575 billion and $2.58 billion, with non-GAAP profits of $2.85 to $2.87 a share.

The consensus call on Wall Street was for January quarter revenue of $811.8 million, with non-GAAP profits of 79 cents a share.

The company said it had 467,000 customers with more than 10 employees, up 33,400 from a year ago. Enterprise customers, those with annual revenue above $100,000, rose 355 to 1,644. Zoom Phone customers increased 269% year-over-year to 10,700.

The company’s financial guidance was higher than Wall Street expected, but still underlines the fact that growth will slow considerably from here as the world begins to get past the pandemic.

For the April quarter, Zoom is projecting revenue of $900 million to $905 million, with non-GAAP profits of 95 to 97 cents a share. The Street had been projecting revenue of $804.8 billion and profits of 72 cents a share.

For the full year ending in January 2022, the company expects revenue of $3.76 billion to $3.78 billion, up 42% from the previous year at the midpoint of the range, with non-GAAP profits of $3.59 to $3.65 a share.

The Street previously had been projecting fiscal year January 2022 revenue of $3.52 billion with non-GAAP profits of $2.96 a share.

“The fourth quarter marked a strong finish to an unprecedented year for Zoom,” CEO and founder Eric Yuan said in a statement. “As we enter [fiscal year] 2022, we believe we are well-positioned for strong growth with our innovative video communications platform, on which our customers can build, run, and grow their businesses; our globally recognized brand; and a team ever focused on delivering happiness to our customers.”

Piper Sandler analyst James Fish noted in a brief research note published Monday after earnings that results came in above expectation on all metrics and that the full-year guidance suggested “the market dynamics remain strong” in cloud-based communications.


What a quarter-million dollars gets you in the western capital.

Alexandre de Betak and his wife are focusing on their most personal project yet.

Related Stories
To Find Winning Stocks, Investors Often Focus on the Laggards. They Shouldn’t.
By KEN SHREVE 12/06/2024
Louis Vuitton Unveils Its Most Extravagant High-Jewellery Collection Ahead of Olympics
By LAURIE KAHLE 09/06/2024
Sylvester Stallone Sells His Knockout Watch Collection, Including the Most Valuable Modern Timepiece Sold in Sotheby’s History
By ERIC GROSSMAN 08/06/2024

These stocks are getting hit for a reason. Instead, focus on stocks that show ‘relative strength.’ Here’s how.

Wed, Jun 12, 2024 4 min

A lot of investors get stock-picking wrong before they even get started: Instead of targeting the top-performing stocks in the market, they focus on the laggards—widely known companies that look as if they are on sale after a period of stock-price weakness.

But these weak performers usually are going down for good reasons, such as for deteriorating sales and earnings, market-share losses or mutual-fund managers who are unwinding positions.

Decades of Investor’s Business Daily research shows these aren’t the stocks that tend to become stock-market leaders. The stocks that reward investors with handsome gains for months or years are more often  already  the strongest price performers, usually because of outstanding earnings and sales growth and increasing fund ownership.

Of course, many investors already chase performance and pour money into winning stocks. So how can a discerning investor find the winning stocks that have more room to run?

Enter “relative strength”—the notion that strength begets more strength. Relative strength measures stocks’ recent performance relative to the overall market. Investing in stocks with high relative strength means going with the winners, rather than picking stocks in hopes of a rebound. Why bet on a last-place team when you can wager on the leader?

One of the easiest ways to identify the strongest price performers is with IBD’s Relative Strength Rating. Ranked on a scale of 1-99, a stock with an RS rating of 99 has outperformed 99% of all stocks based on 12-month price performance.

How to use the metric

To capitalise on relative strength, an investor’s search should be focused on stocks with RS ratings of at least 80.

But beware: While the goal is to buy stocks that are performing better than the overall market, stocks with the highest RS ratings aren’t  always  the best to buy. No doubt, some stocks extend rallies for years. But others will be too far into their price run-up and ready to start a longer-term price decline.

Thus, there is a limit to chasing performance. To avoid this pitfall, investors should focus on stocks that have strong relative strength but have seen a moderate price decline and are just coming out of weeks or months of trading within a limited range. This range will vary by stock, but IBD research shows that most good trading patterns can show declines of up to one-third.

Here, a relative strength line on a chart may be helpful for confirming an RS rating’s buy signal. Offered on some stock-charting tools, including IBD’s, the line is a way to visualise relative strength by comparing a stock’s price performance relative to the movement of the S&P 500 or other benchmark.

When the line is sloping upward, it means the stock is outperforming the benchmark. When it is sloping downward, the stock is lagging behind the benchmark. One reason the RS line is helpful is that the line can rise even when a stock price is falling, meaning its value is falling at a slower pace than the benchmark.

A case study

The value of relative strength could be seen in Google parent Alphabet in January 2020, when its RS rating was 89 before it started a 10-month run when the stock rose 64%. Meta Platforms ’ RS rating was 96 before the Facebook parent hit new highs in March 2023 and ran up 65% in four months. Abercrombie & Fitch , one of 2023’s best-performing stocks, had a 94 rating before it soared 342% in nine months starting in June 2023.

Those stocks weren’t flukes. In a study of the biggest stock-market winners from the early 1950s through 2008, the average RS rating of the best performers before they began their major price runs was 87.

To see relative strength in action, consider Nvidia . The chip stock was an established leader, having shot up 365% from its October 2022 low to its high of $504.48 in late August 2023.

But then it spent the next four months rangebound—giving up some ground, then gaining some back. Through this period, shares held between $392.30 and the August peak, declining no more than 22% from top to bottom.

On Jan. 8, Nvidia broke out of its trading range to new highs. The previous session, Nvidia’s RS rating was 97. And that week, the stock’s relative strength line hit new highs. The catalyst: Investors cheered the company’s update on its latest advancements in artificial intelligence.

Nvidia then rose 16% on Feb. 22 after the company said earnings for the January-ended quarter soared 486% year over year to $5.16 a share. Revenue more than tripled to $22.1 billion. It also significantly raised its earnings and revenue guidance for the quarter that was to end in April. In all, Nvidia climbed 89% from Jan. 5 to its March 7 close.

And the stock has continued to run up, surging past $1,000 a share in late May after the company exceeded that guidance for the April-ended quarter and delivered record revenue of $26 billion and record net profit of $14.88 billion.

Ken Shreve  is a senior markets writer at Investor’s Business Daily. Follow him on X  @IBD_KShreve  for more stock-market analysis and insights, or contact him at  ken.shreve@investors.com .