Macro Conditions Come for Zoom in Q2 Even As Phone Shines; FVE Down to $115

Zoom reported mixed results for its fiscal second quarter, featuring a revenue miss with strong profitability, and lowered outlook on both measures for the year. Enterprise strength was overshadowed by online weakness, while currency headwinds worsened, consistent with most of our software coverage, and macroeconomic conditions hurt. The firm delivered eye-popping Zoom Phone results, with seats surpassing the 4 million milestone during the quarter. Contact center was also strong and is tracking 18 to 24 months ahead of internal projections in terms of deal size. Our forecast was previously skewed to the top end of guidance range, but after results and a guide down, we are lowering our growth and margin profile by several hundred basis points each throughout our forecast, and therefore lowering our fair value estimate to $115 per share, from $160.