Zoom Video (ZM) To Report Q4 Earnings: What's In Store?

Zoom Video Communications (NASDAQ:ZM) is set to release fourth-quarter fiscal 2020 results on Mar 4.

For the quarter, the company expects non-GAAP earnings to be 7 cents per share. Total revenues are expected between $175 million and $176 million.

The Zacks Consensus Estimate for earnings stayed at 7 cents per share over the past 30 days. The consensus mark for revenues is pegged at $173.4 million.

Let’s see how things are shaping up for this announcement.

Zoom Video Communications, Inc. Price and EPS Surprise

Zoom Video Communications, Inc. Price and EPS Surprise

Zoom Video Communications, Inc. price-eps-surprise | Zoom Video Communications, Inc. Quote

Factors to Watch

Zoom Video’s expanding customer base is a major growth driver. At third-quarter fiscal 2020, while the number of customers (having more than 10 employees) grew 67% year over year, the same contributing to more than $100K of trailing 12-month revenues jumped 97%.

This momentum is expected to have driven the top line in the to-be-reported quarter. Notably, third-quarter fiscal 2020 revenues surged 85% year over year.

Moreover, new customers accounted for 61% of the company’s year-over-year subscription revenue growth in the fiscal third quarter. The remaining 39% was owing to additional purchases from existing customers.

The U.S. Federal Risk and Authorization Management Program (FedRAMP) authorization received by Zoom Video in May, 2019 is noteworthy in this regard. The authorization allows the U.S. Federal Government agencies and contractors to securely use Zoom Video’s solution for video meetings, API integrations and more.

In the last reported quarter, US Postal Service became the first major agency to use Zoom Video’s solution.

Additionally, the company’s strong partner base includes the likes of salesforce.com, Logitech, Lenovo and Verizon (NYSE:VZ). This is expected to have benefited the company in winning customers in the fiscal fourth quarter.

Moreover, Zoom Video’s initiatives to expand its international footprint are expected to have aided its top line.

However, increased sales & marketing expenses are expected to have hurt profitability in the to-be-reported quarter.

What Our Model Says

According to the Zacks model, a company with a positive Earnings ESP along with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates. But that’s not the case here.

Zoom Video has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some stocks worth considering as our model shows these too have the right combination of elements to beat on earnings.

Guidewire Software (NYSE:GWRE) has an Earnings ESP of +15.39% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Marvell Technology (NASDAQ:MRVL) has an Earnings ESP of +5.70% and a Zacks Rank of 3.

CrowdStrike (NASDAQ:CRWD) has an Earnings ESP of +5.26% and is Zacks #3 Ranked.



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