Zoom Video Communications Inc (NASDAQ: ZM) is the
leader in modern enterprise video communications, with a cloud platform for
video and audio conferencing, chat, and webinars across mobile, desktop, and
On May 22, Zoom reported that its April-quarter earnings handily beat
estimates but weakening trends in its enterprise business spooked ZM stock
Zoom earnings for the company's first quarter rose 13% to $1.16 per
adjusted per share amid cost-cutting moves. Also, revenue climbed 3% to $1.105
billion. A year earlier, Zoom earned $1.03 a share on sales of $1.074 billion.
On Friday, Zoom stock was up 4%. Shares are about 50% off their 52-week
Why the Original Zoom Video
Communications Shares Weekly Options Trade was Executed?
Zoom Video Communications Inc on
Monday raised its full-year forecasts for revenue and profit even as growth
winds down from a pandemic boom and business spending slows in a tough economy.
Zoom became a household name during
lockdowns, but growth has cooled off since then as offices reopen and
competition heats up from deep-pocketed rivals including Microsoft Corp's
Teams, Cisco's Webex and Salesforce's Slack.
San Jose, California-based Zoom
raised its annual revenue forecast to between $4.47 billion and $4.49 billion,
representing growth of just about 2% from last year. Its earlier forecast was
for $4.44 billion to $4.46 billion.
customers see Zoom as mission-critical in how they collaborate internally and
externally across the globe,” Chief Executive Officer Eric Yuan said in the statement.
“This relationship with our customers helped us to exceed our guidance due to
enterprise growth and stabilizing online revenue.”
Online revenue fell 8% to $473.4
million for the quarter ended April 30. Zoom expects it to reach nearly $480
million in the second quarter and be relatively flat thereafter in fiscal 2024.
"I think the stock is paring
gains on the implied guidance for enterprise, which suggests it will continue
to decelerate to ~6% growth," said RBC analyst Rishi Jaluria.
Quarterly sales in its enterprise
business rose 13% to $632 million.
Zoom's online customers range from
individuals to small- and medium-sized businesses, while enterprise customers
consist of bigger businesses.
The company now expects annual
adjusted profit per share between $4.25 and $4.31, compared with an earlier
estimate of $4.11 to $4.18.
First-quarter revenue beat Wall
On an adjusted basis, the company
earned $1.16 per share in the first quarter, above estimates of 99 cents.
Weekly Options Trade Explained.....
** OPTION TRADE: Buy ZM JUN
09 2023 75.000 CALLS - price at last close was $3.35 - adjust accordingly.
Obviously the results will vary from trader to trader
depending on entry cost and exit price that was undertaken.
Entered the ZOOM Weekly Options (CALL) Trade on Tuesday, May 23, 2023 for $0.37.
Sold half the ZOOM weekly options contracts on Friday, May 26, 2023 for $0.68; a potential profit of 71%.
Total Dollar Profit is $68
- $37 (cost of contract) = $31
Holding the remaining ZM weekly options contracts for
further profit as the new week progresses.
Don’t miss out on further trades – become a member today!
a hypergrowth stock during the pandemic as people flocked to its video
conferencing platform to attend online classes, work remotely, and stay in
touch with their family and friends. Its catchy brand, simple interface, and
freemium model also gave it an edge against older enterprise video conferencing
However, Zoom's massive growth spurt set it up for a tough post-pandemic
slowdown. Zoom's explosive pandemic-era growth rates, along with the buying
frenzy in growth and meme stocks, propelled its stock to a record high of
$568.34 per share on Oct. 19, 2020.
Earnings Report - May 22
Zoom posted its latest earnings report on
May 22. For the first quarter of fiscal 2024 (ended on April 30), the
cloud-based video conferencing company's revenue grew 3% year over year to
$1.11 billion and exceeded analysts' estimates by $30 million. Its adjusted net
income increased 12% to $353 million, or $1.16 per share, which also cleared
the consensus forecast by $0.17.
2024, Zoom expects its revenue to only rise 2% as its adjusted EPS dips 1%-3%.
It attributes that slowdown to its weakness in Europe and Asia, which is
offsetting its growth in North America, as well as a strong dollar and macro
headwinds in the enterprise market. However, Zoom's revenue and EPS forecasts
still topped analysts' expectations.
Zoom is stabilizing
its margins with aggressive cost-cutting measures -- including layoffs for
approximately 15% of its employees earlier this year. That's why its adjusted
operating margin expanded 100 basis points year over year to 38.2% in the first
quarter of fiscal 2024. It expects to post an adjusted operating margin of
36.5%-36.8% for the full year, compared to its operating margin of 35.9% in
Zoom is also
still gaining larger customers, which generate more than $100,000 in trailing
12-month revenue, in this tough macroeconomic environment. That higher-value
cohort grew 23% year over year to 3,580 customers in the first quarter, which
suggests it isn't losing ground to Webex, Messenger, Meet, and other video
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