Analyst Note| Dan Romanoff, CPA |
No-moat Zoom continues to blow past investor expectations with significant upside compared to guidance, while delivering a better outlook and higher guidance for the full year. The video-first communications platform company continues to penetrate the market by leveraging its cloud-based solutions’ ease of use and innovative features, such as OnZoom and Zapps, both introduced at Zoomtopia in November of last year. Management also disclosed 1.5 million Zoom Phone subscribers, which represents 50% growth in the last five months. We see a long runway for growth as the company gains traction with Zoom Phone and evolves its main application to a communication platform, and we are impressed by management’s ability to over deliver in terms of both growth and margins. Given exceptional results and strong guidance, we are once again raising our estimates, which drives our fair value estimate to $245 per share from $223. We still view shares as overvalued.