Zoom (ZM) Improved ARR From AI Enhanced Services To Look At.

Zoom beat analysts’ revenue expectations by 1.1% last quarter, reporting revenues of $1.16 billion, up 2.1% year on year. Last quarter was a very strong quarter for the company, with an impressive beat of analysts’ billings estimates and a solid beat of analysts’ EBITDA estimates.

It added 50 enterprise customers paying more than $100,000 annually to reach a total of 3,933.

Market expects ZM’s revenue for the quarter ending 31 October 2024, to increase 2.4% year-over-year to $1.16 billion, in line with the 3.2% increase same quarter last year. EPS for the same quarter is expected to rise 1.4% year-over-year to $1.31.

Some of Zoom’s peers in the video conferencing segment have already reported their third-quarter results, this should give us on how the segment could be doing.

Five9 delivered year-on-year revenue growth of 14.8%, beating analysts’ expectations by 3.6%, and 8x8 reported a revenue decline of 2.2%, topping estimates by 1.5%. Five9 traded up 12.1% following the results while 8x8 was also up 18.5%.

This has shown that there is positive sentiment among investors in the video conferencing segment, with share prices up 17.6% on average over the last month.

Zoom with 55.91% market share was up 19.42% and is heading into earnings and based on 22 Wall Street analysts offering 12 month price targets for Zoom Video Communications in the last 3 months. The average price target is $77.47 with a high forecast of $95.00 and a low forecast of $60.00. The average price target represents a -9.79% change from the last price of $85.88.

RNG management expects Q4 revenue to be between the range of $611.0 million to $613.0 million, indicating a 7% increase year-over-year. So if we were to look at how Zoom business model is similar but with a bigger market share, ZM provides a unified communications platform in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. The company offers Zoom Meetings, Zoom Phone, Zoom Chat, Zoom Rooms, Zoom Conference Room Connector, Zoom Events, OnZoom, and Zoom Webinars.

On 24 September, 2024, ZM announced new advanced enterprise offerings designed to enhance efficiency, security, and compliance for organizations, including features like Zoom Compliance Manager Plus and Zoom Meeting Survivability. These additions aim to address the complex needs of enterprises, ensuring reliable communication and collaboration while meeting regulatory obligations.

So if we were to look at Zoom revenue growth, Zoom's revenue has grown at a compound annual growth rate (CAGR) of 58.14% over the past five years.

If we looked at the technical, we can see from the chart, ZM make a recovery in mid-november after a low and consolidation, we are seeing this happen when ZM is still trading above the short-term and long-term MA, though MACD is showing a reversal on the bearish side, but we can see that a potential bullish crossover could be forming.

On the MTF, it is giving us a strong uptrend with confidence, so we could be seeing ZM beating the quarterly estimates again as the video conferencing segment is growing and we are seeing the business demand coming back.

We are looking at ZM earnings with some expectations as its peers and competitors who has reported their quarterly results giving mixed results, but one of the significant player, RNG is giving a pretty positive earnings and also guidance for the fourth-quarter, though RNG is having slightly more than 30% market share compared to ZM having more than 50% leading the segment, I believe ZM enterprise customers increase should helped in its upcoming earnings.

I am expecting ZM to make a surge in its stock price after its earnings after market close today (25 Nov) if ZM earnings and guidance for 2024 surprise.

Appreciate if you could share your thoughts in the comment section whether you think ZM would be able to surprise with more enterprise customers acquisition and improved ARR.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.