Remote work is here to stay
Brian Withers (ZM): Zoom Video Communications or Zoom for short has become a household name over the course of the pandemic. Its easy-to-use software attracted millions of consumers and businesses that now depend on its video platform that “just works.” Even as employees head back to the office, many will adopt hybrid work situations, earning virtual meetings (and Zoom) a permanent part of our daily lives.
Investors might be thinking, this is just a “pandemic stock” and its shares will get crushed once growth slows down. The latest quarterly results show otherwise. Not surprisingly, the year-over-year results are stellar, but what’s telling is the change over sequential quarters. Revenue gained 8% Q4 to Q1. Large customers generating more than $100,000 in revenue grew 22% over the same period. Remaining performance obligations, the sum of all contract values not yet received, grew 18%. All three of these metrics show that even as the pandemic wanes, this business is still showing strong growth.
|
Metrics |
Q1 FY2021 |
Q4 FY2021 |
Q1 FY2022 |
QoQ change |
YoY change |
|---|---|---|---|---|---|
|
Revenue |
$328 million |
$883 million |
$956 million |
8% |
191% |
|
Customers generating >$100K in TTM revenue |
769 |
1,644 |
1,999 |
22% |
160% |
|
Remaining performance obligations |
$1,068 million |
$1,751 million |
$2,073 million |
18% |
94% |
Note: Q1 FY2022 ended April 30, 2021. Data source: Company earnings presentation.
But what should have investors even more excited is the opportunity for its Zoom Rooms product. This product is a combination of Zoom software and inexpensive hardware setups that make it easy to convert an in-person-only conference room to a hybrid one. As businesses move to accommodate a hybrid workplace with a much larger portion of their staff working remotely, these solutions are just the ticket.
Even if you are excited to head back to the theaters to catch a movie this summer, as an investor, AMC is not where you should put your hard-earned savings. You would be much better off buying shares of an innovative growth company that will be a permanent fixture for the workplace of the future. Why not pick up a few shares of Zoom today? Your future self will thank you.
