Analyst Note| Dan Romanoff, CPA |
Much as it did for the last two quarters, no-moat Zoom continues to deliver significant upside compared with consensus expectations while delivering upside to guidance that somehow still seems conservative to us. 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. 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. We view guidance as conservative but appreciate that management is facing extreme macro uncertainty and unprecedented new business wins that have signed on as month-to-month users. Ultimately, we are once again raising our estimates, which drives our fair value estimate to $176 per share from $153. We continue to struggle with Zoom’s valuation and view shares as overvalued.