Focus on profits Tuesday: will they exceed expectations for the ninth consecutive time?

Zoom Video Communications (NASDAQ: ZM) is expected to release its results for its first fiscal quarter of 2022 (which is for the period ended April 30) after market close on Tuesday, June 1.

Investors are likely to approach the video conferencing specialist’s report with cautious optimism. On the one hand, in the last quarter, the company crushed Wall Street consensus estimates for revenue and profit, which it has been doing consistently since even before the start of the COVID-19 pandemic.

On the other hand, many investors are naturally worried about Zoom’s ability to continue to generate strong growth in an environment where the pandemic is diminishing in the United States and certain other countries, thanks to programs of successful vaccination.

Like many so-called “coronavirus stocks,” Zoom’s stock has declined since its peak in the fall, which is when a lot of good news broke on the vaccine front. Despite the significant pullback, the stock remains a big winner over the one-year period up to May 28: it rose about 103%, compared to the 41% return of the S&P 500. (A stock chart follows below. below.)

Image source: Zoom Video Communications.

Zoom Video’s key figures

Here are Zoom’s results for a year ago and Wall Street estimates to use as a benchmark.

Metric Results for the first quarter of fiscal 2021 Wall Street consensus estimate for the first quarter of fiscal 2022 Growth projected over one year
Returned $ 328.2 million $ 905.7 million 176%
Adjusted earnings per share (EPS) $ 0.20 $ 0.99 395%

Data sources: Zoom Video Communications and Yahoo! Finance. YOY = year after year.

Zoom’s management guided for revenues of between $ 900 million and $ 905 million, representing a 175% year-over-year growth midway through. He also expects Adjusted EPS to be between $ 0.95 and $ 0.97, which is 380% year-over-year growth at the midpoint.

The upcoming report marks Zoom’s last relatively easy year-over-year comparison. It covers the period from February to April, so the period of a year ago only includes about a month and a half which was spurred by the pandemic, which has closed many workplaces, schools and places. of recreation and entertainment in the United States and around the world. mid-March 2020.

As a reminder, in the last quarter, Zoom’s revenues climbed 369% year over year to $ 882.5 million, exceeding the $ 811.8 million expected by Wall Street. Generally Accepted Accounting Principles (GAAP) based EPS fell from $ 0.05 to $ 0.87, while adjusted EPS soared 713% to $ 1.22. This result was magnified by the analyst consensus estimate of $ 0.79.

Zoom has easily exceeded earnings expectations on the streets in each of the eight quarters released since its initial public offering (IPO) in April 2019. It seems more likely than not that its next report will keep its streak alive. consecutive beats.

ZM Chart

Data by YCharts.

Zoom on guidance

The stock market is looking to the future, so Zoom’s forecast for its second fiscal quarter will be very important. Indeed, any move in the stock after the earnings release will likely depend more on the company’s second-quarter guidance than its first-quarter results, compared to Wall Street estimates.

For the second quarter of the fiscal year, analysts model for the company to post adjusted EPS of $ 0.94 on revenue of $ 931.6 million, year-over-year growth of 2% and 40%, respectively.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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About Aldrich Stanley

Aldrich Stanley

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