The second-quarter earnings season is almost done, but it certainly is going out with a bang! We have a few stragglers that will be reporting over the next two weeks, including Zoom Video Communications, Inc. (NASDAQ:ZM), which is up to bat with its results on Monday, August 30, after the market close.
For the second quarter, analysts expect earnings to increase 26.1% year-over-year (YOY) to $1.16 per share, up from $0.92 per share in the same quarter a year ago. Revenue is expected to come in at $990.96 million.
Zoom has continually exceeded analyst expectations. For example, Zoom achieved triple-digit earnings and revenue growth last quarter, thanks to continuing demand for its online communications platform. For its first quarter in fiscal year 2022, Zoom had 497,000 customers with more than 10 employees and nearly 2,000 customers contributed more than $100,000 in trailing 12 months revenue.
For the first quarter, Zoom reported earnings of $402.1 million, or $1.32 per share, and revenue of $956.2 million. That represented 589.7% YOY earnings growth and 191% YOY revenue growth. Analysts were expecting earnings of $0.99 per share on $906.03 million in revenue, so Zoom posted a 33.3% earnings surprise and a 5.5% revenue surprise.
Interestingly, ZM currently holds a C-rating in Portfolio Grader, making it a “Hold” heading into Monday’s earnings report. The truth of the matter is that institutional buying pressure has eased up a bit, as evident by its C-rating for its Quantitative Grade. (I discuss how the Quantitative Grade works more in-depth in this Friday’s Growth Investor Monthly Issue for September. If you’re interested, you can click here to sign up now.)
However, let me say now that ZM’s outlook is very promising. So, I look for a fresh wave of buying pressure to drive up the stock following its earnings report and to upgrade ZM to a “Buy” again. So, while it’s not a stock I would buy right now, it’s not one I’d recommend selling yet either.
Here’s why…
Why I’m Especially Excited for ZM’s Earnings
In order to understand my excitement for the online video platform’s earnings, we have to back up and take a dive into one thing the federal government has done right during the COVID-19 pandemic.
That one thing is put money into the hands of consumers and businesses who can spend the money more effectively. The money supply has soared 40% in the past year. This has improved the velocity of money as life returned to some normalcy, which in turn boosts economic activity.
This is all to say that as the government becomes less and less effective, the private sector takes over and prosperity begins to soar. In other words, there is opportunity in the chaos. This is great news for companies like Zoom Video Communications, which has been implementing transformable change recently.
The online platform the company provides has enabled businesses and individuals to stay connected during the global pandemic. It’s become indispensable during the last year.
My Growth Investor Buy List is chock-full of similar stocks that are revolutionizing the way we live.
In fact, I just added two more stocks that are revolutionizing the world around us and have the potential to be some of the biggest winners in the shift to electric vehicles (EVs). I released those stocks’ names in yesterday’s Growth Investor Monthly Issue for September, and if you sign up now, you can read the issue while it’s still hot off the presses.
Once you sign up, you’ll also have access to my two newest Elite Dividend Payers recommendations, one of which has the coveted AAA-rating. This means the stock has an A-rating in both Portfolio Grader and Dividend Grader, as well as an A for Quantitative Grade.
You’ll also get immediate access to my latest Top 5 High-Growth Investment Stock List, which I select each month based on their Quantitative Grade. In other words, these stocks are supported by strong institutional buying pressure, as well as superior fundamentals. If you’re interested, I encourage you to join me at Growth Investor today.
Sincerely,
Louis Navellier
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The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
Zoom Video Communications, Inc. (ZM)
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