Following its earnings report for Q2 FY21, Zoom’s market capitalization skyrocketed to cross the $100 billion mark for the first time. According to the research data analyzed and published by ForexSchoolOnline.com, the videoconferencing company added a whopping $37.4 billion to its market cap on Tuesday, September 1, 2020.
To put that figure in perspective, consider that eBay Inc. has a market cap of about $36.6 billion. Zoom’s one-day upsurge exceeded this valuation. As a result, it ended the day with a market cap of $129.1 billion.
Furthermore, it shares skyrocketed a massive 40.8% on the same day. It went on record as its strongest single-day performance since its shares started trading publicly in April 2019. The rally took place following the release of its earnings report for the second quarter of the fiscal year 2021.
During the said quarter which covered May, June and July 2020, the company made as much as it did in the entire 2019. Sales for the period amounted to $663.5 million, over four times the $146 million reported in Q2 of the previous year. Among NASDAQ 100 companies, Zoom had the second largest surge in sales during the period.
The net income during the three-month period was $185.7 million. In comparison, Zoom made sales totaling $622.3 million in all of 2019, with a net income of $101.2 million.
Adjusted earnings per share for Q2 FY21 were 92 cents per share, a remarkable jump from 8 cents per share. According to FactSet, the expected adjusted EPS was 45 cents and $500.3 million in sales. Zoom outperformed expectations in both respects.
Zoom’s revenue grew 355% year-on-year (YoY) during the quarter and its free cash flow shot up from $17 million in Q2 FY20 to $373.4 million in Q2 FY21.
Zoom Stock Price Rallies Over 500% YTD as Corporate Clients Increase By 458%
Zoom has turned out to be one of the biggest beneficiaries of the work-from-home trend occasioned by the global coronavirus outbreak. Its stock price has rallied more than 500% YTD and the market cap of over $129 billion makes it bigger than bigwigs Boeing ($97 billion) and IBM ($110 billion).
In April 2019 when it went public, Zoom was only worth around $16 billion after its first day of public trading. Though it offers videoconferencing services to all manner of clients, most of its money comes from corporate clients. Over the past year, it has added 370,200 such clients, with 10 employees or more, an increase of 458% YoY. Some of the biggest clients it landed during Q2 included Activision Blizzard and Exxon Mobil Corp.
For the first half of 2020, Zoom’s stock ranked second on the list of top 10 NASDAQ stocks with a market cap of $10 billion or more. At the time, it had grown 272.6%, behind Nikola, which had registered a 554.4% growth. Other big names on the list included Tesla (158.1%) and Etsy (139.8%).
As a result of this year’s impressive performance, Zoom’s executives have adjusted Q3 FY21 earnings to 74 cents per share on $690 million revenue. According to FactSet, analysts had estimated Q3 EPS of 35 cents on $491.8 million sales. Executives also raised the revenue outlook for the year to $2.37 billion to $2.39 billion, a 281% to 284% YoY increase.
With over $1.42 billion in contracts for future revenue, more than triple the figure it had at the same time last year, it is confident about post-COVID performance. JPMorgan’s per share target of $425 by December 2021 also shows optimism. Its previous target was $220 by December 2020 and its rating went from hold to buy.
Goldman Sachs, which had a price target of $187 per share and a sell rating on its stock, raised its one-year target to $402 per share and the rating to neutral.
Fastly Revenue Grows By 62%, Cloudflare By 48% and Docusign By 45% in Q2 2020
Zoom is by no means the only company to have benefitted from the pandemic as somewhat similar momentum has been experienced by other remote-work firms. For instance, at the end of June, Fastly was recognized as the top-performing work-from-home stock.
At the time, Fastly had recorded a 222% upsurge from its February 19 peak. Zoom had during the same period only rallied 159%. Fastly’s Q2 revenue was $75 million, an increase of 62% YoY. Another top performer during the period was Cloudflare, up by 114% YTD at the end of June. Its Q2 revenue was nearly $100 million, marking a 48% increase YoY.
Docusign also registered impressive growth, as it was up by 132.4% during the first half of 2020. It was ranked 9th on the list of top 10 NASDAQ stocks during the period. Its revenue for the second quarter increased by 45% YoY to $342 million while billings grew from 61% YoY to $406 million.