Great write up and congratulations on your return! What do you see will keep ZM growing at this pace once people are back to office? I know some companies won’t stop work from home until next year but that has to end sometime in 2022. And that’s where the majority of ZM revenue comes from. Business use of ZM won’t stay like DOCU which is a permanent trend of shifting to electronic contract, as most companies just won’t have their employees work from home forever.
I don’t think anyone expects ZM to keep growing at this pace. A company this large posting 350%+ growth rates is so abnormal it might literally be one of a kind. To your point, the current environment is likely to exist deep into 2021. That means ZM should keep raking in top line revenues and bottom line profits for the foreseeable future. In fact, Zoom just might be the best company on the market as far as its combination of growth, gross margins, cash flow, and profits. That’s why it continues to be expensive. Personally, I don’t see that advantage disappearing any time soon.
As far as post-COVID, let’s not forget ZM was one of the best performing companies on the market pre-COVID when it only sold to corporate customers. It didn’t even enter the consumer market until this spring. So, Zoom has literally figured this out on the fly in the middle of a pandemic while seeing the stresses on its platform grow exponentially. Zoom handled it so successfully the brand has now become a verb (have you WebExed anyone lately?). That in and of itself suggests to me ZM’s ability to stay at the front of this market shouldn't be a problem.
As far as return to office, no one knows exactly what that will look like. However, there’s a good chance 2022 and beyond ends up as some sort of hybrid set up for most firms. In that case, Zoom seems perfectly positioned to take advantage. Zoom Phone, Zoom Rooms, the home set up Zoom released last month, new encryption standards…Zoom is setting itself up with the perfect end-to-end solution for whatever hybrid mix develops. Again, ZM's core business has always been enterprise, so they are very in tune with the needs of those customers. Our world has gotten more complicated, which has in turn put more pressure on businesses finding solutions that “just work.” While there’s no way Zoom can maintain its current growth, the potential growth it does have should be plenty big enough to propel the stock over the next couple of years. At least that’s the way I’m thinking about it.
Great perspective. I can see a lot of companies such as tech might continue some hybrid mode 2022 and beyond, but I’m worried more companies that do in-person businesses such as financial services and real estate will quit Zoom eventually, which is the majority of Zoom’s revenue. Hopefully Zoom’s new offerings can backfill this vacancy.
Fantastic write up TheStockNovice. Thoroughly enjoyed it!
Great write up and congratulations on your return! What do you see will keep ZM growing at this pace once people are back to office? I know some companies won’t stop work from home until next year but that has to end sometime in 2022. And that’s where the majority of ZM revenue comes from. Business use of ZM won’t stay like DOCU which is a permanent trend of shifting to electronic contract, as most companies just won’t have their employees work from home forever.
Thanks for the note, Chris.
I don’t think anyone expects ZM to keep growing at this pace. A company this large posting 350%+ growth rates is so abnormal it might literally be one of a kind. To your point, the current environment is likely to exist deep into 2021. That means ZM should keep raking in top line revenues and bottom line profits for the foreseeable future. In fact, Zoom just might be the best company on the market as far as its combination of growth, gross margins, cash flow, and profits. That’s why it continues to be expensive. Personally, I don’t see that advantage disappearing any time soon.
As far as post-COVID, let’s not forget ZM was one of the best performing companies on the market pre-COVID when it only sold to corporate customers. It didn’t even enter the consumer market until this spring. So, Zoom has literally figured this out on the fly in the middle of a pandemic while seeing the stresses on its platform grow exponentially. Zoom handled it so successfully the brand has now become a verb (have you WebExed anyone lately?). That in and of itself suggests to me ZM’s ability to stay at the front of this market shouldn't be a problem.
As far as return to office, no one knows exactly what that will look like. However, there’s a good chance 2022 and beyond ends up as some sort of hybrid set up for most firms. In that case, Zoom seems perfectly positioned to take advantage. Zoom Phone, Zoom Rooms, the home set up Zoom released last month, new encryption standards…Zoom is setting itself up with the perfect end-to-end solution for whatever hybrid mix develops. Again, ZM's core business has always been enterprise, so they are very in tune with the needs of those customers. Our world has gotten more complicated, which has in turn put more pressure on businesses finding solutions that “just work.” While there’s no way Zoom can maintain its current growth, the potential growth it does have should be plenty big enough to propel the stock over the next couple of years. At least that’s the way I’m thinking about it.
Hope that answers your question.
Great perspective. I can see a lot of companies such as tech might continue some hybrid mode 2022 and beyond, but I’m worried more companies that do in-person businesses such as financial services and real estate will quit Zoom eventually, which is the majority of Zoom’s revenue. Hopefully Zoom’s new offerings can backfill this vacancy.