Jim Cramer: Zoom Is the Work From Home Winner

DanKuhn14

Can you recall the last meeting you had that wasn’t on Zoom?

Zoom Video Communications reported earnings after the closing bell Tuesday. The platform reported diluted earnings per share of 20 cents, exceeding Wall Street estimates. Notably, revenue of $328.2 million marked a 169% increase from the same quarter in 2019.

Zoom’s customer base of companies with more than 10 employees tripled to more than 265,000.

For the full year, Zoom now expects revenue to come in between $1.78 to $1.8 billion, almost doubling its prior forecast.

So why isn’t the stock zooming higher? Higher use also means higher costs. Costs rose 330% in the quarter to $103.7 million, cutting 13% from its gross margin.

“Although in early March we originally guided lower based on an increase in usage of our platform, our gross margin was further impacted by the elevated demand, especially higher levels of free meeting minutes, including those from K to 12 schools in March and April…Higher incremental cost also resulted from leveraging the public cloud providers, which was critical to our ability to meet the sudden exponential growth in usage as the crisis spread and governments instituted stay-in-place policies around the world,” CFO Kelly Steckelberg explained during the earnings.

Zoom’s year-to-date gains have been pegged at around 212%. Has the stock soared too far, too fast?

Despite fears the stock may be peaking, Jim Cramer says that he anticipates the stock to be a winner for the long-term as he expects many to work from home on a more permanent basis. Watch more on the future of Zoom in the video above.

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