Zoom Video Communications (ZM) shares surged in pre-market trading Friday after the web conferencing platform group posted stronger-than-expected first quarter profits in its first-ever report as a public company.
Zoom said non-GAAP earnings for the three months ending in April, the company's fiscal first quarter, came in at 3 cents per share, swinging from a 2 cents per share loss over the same period last year and topping the Street consensus forecast by 2 cents. Group revenues, Zoom said, more than doubled from last year to $122 million and came in firmly ahead of analysts' estimates of $111.6 million.
Looking into 2019, Zoom said it sees revenues in the region of $535 million and $540 million, firmly higher than the Refinitiv forecast of $520 million, and non-GAAP earnings as high as 3 cents per share.
"We believe the growth opportunity for Zoom is significant. Based on IDC estimates the (total addressable market opportunity) is huge, a $43 billion dollar market by 2022," CEO Eric Yuan told investors on a conference call late Thursday. "But we believe that it is even larger than that as we are in the early stages of video becoming the new voice."
"Our platform is fundamentally transforming the way organizations of all sizes communicate," he added. "Zoom is enabling far greater effectiveness and intimacy in human-to-human interactions over a distance, and we are witnessing the rapid adoption of Zoom for diverse use cases that were not possible with legacy technology."
Zoom shares were marked 14.2% higher in pre-market trading Friday to indicate an opening bell price of $90.68 each, a move that would extend gains from their April 18 IPO to around 39.5% and value the San Jose, California-based group at just over $23.1 billion.
"Zoom reported exceptionally strong results for its first quarter as a public company with metrics that surpassed sell-side and buy-side expectations," said Credit Suisse analyst Bvrad Zelnick, who boosted his price target on the stock to $90 a share with a market-neutral rating. "FY20 was
guided above our model and likely remains conservative."
"The quarter epitomizes our view that Zoom's product and technology differentiation creates a sustainable advantage within the Unified Communications market and we expect the viral nature of Zoom's product to drive continued growth momentum," he added.
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