Analyst Note| Dan Romanoff, CPA |
Much as it did for the first quarter, no-moat Zoom crushed its second-quarter results and once again substantially raised full year revenue guidance. While it was virtually impossible to top last quarter’s once-in-a-generation results, Zoom delivered a tremendous encore. The video-first communications platform company continues to penetrate the market by leveraging its cloud-based solutions’ ease of use and innovative features. We see a long runway for growth as the company gains traction with its Zoom Phones solutions as well, and we are impressed by management’s ability to over deliver in terms of both growth and margins. We struggled with guidance that we think is conservative in the face of two straight unbelievable quarters, but we certainly sympathize with management’s guard rails of macro uncertainty and unprecedented new business wins that have signed on as month to month users. Ultimately we are significantly raising our estimates, which drives our fair value estimate to $153 per share from $116. We still cannot support the current share price within our discounted cash flow model.