Eugene Ng Profile picture
Investor. Author. Angel. Fool. Founder@Vision Capital. Investing in companies that reflect our best vision for our future. Musings on investing & life.

Nov 23, 2021, 11 tweets

Zoom $ZM 3Q22 Earnings 💪🏻
- Rev $1.05b +35% ↗️
- GP $778m +50% ↗️ margin 74% +750bps ✅
- NG EBIT $411m +41% margin 39% +1728bps ✅
- NG Net Income $338m +14% margin 39% ⭐️ +173bps ✅
- OCF $395m -4% ↘️ margin 38% ⭐️ -1539bps ↘️
- FCF $375m -3% ↘️ margin 36% ⭐️ -1428bps ↘️

➡️ $ZM Strong Business Metrics 💪🏻

- 26% incremental rev from existing cust
- Cust > TTM $100k 2,507 +94% 🚀
- Cust >10 staff 512K +18% ↗️
- TTM NDER (>10) >130% 14th cons Q ⭐️

- 4Q22 Rev Guide Flat QoQ $1.05b ➡️
- 4Q33 NDRR to be modestly below 130% mark ➡️

1 | Q4 - Lowest Seasonality

“…for deferred revenue there's two things to remember, which is the seasonality trend of our renewals is that Q1 is the largest quarter for renewals order for renewals and Q4 is the lowest.”

2 | Advertising - More to Explore

“Zoom still offers good value, obviously, we got to do think about how to monetize it differently. Again, this is something new for us, and we would like to explore more in the next few quarters.”

3 | ROW growing faster than Americas

- Rev Americas $700m +30%
- Rev ROW $350m +47%

4 | Very Strong RPO Growth (even faster than revenue)
- RPO $2.5b +51% ↗️↗️
- Current RPO $1.6b +38% ↗️
- Non-Current RPO $822m +82% 🚀

If one is focused on just “slower” near-term growth, they are missing the “longer-term” aspect.

4 | Very Strong RPO Growth (cont’d)

“We expect to recognize ~67% of the total RPO as revenue over the next 12 months as compared to 72% in 3Q21 , reflecting a shift back towards longer-term plans.”

5 | Very Strong Cash Flows and Cash Position

6 | Zoom’s $ZM stock price is down from all-time-highs.

7 | Arguably Zoom’s $ZM stock price has lagged the actual business fundamentals (growing revenues, profits and cash flows) in the near-term significantly.

Would be worth watching long-term, when this gap closes back up.

➡️ Final Takeaway on Zoom $ZM:

Strong combination of growth and very strong profitability, supported by product expansion (Phone, Apps, Events) to further strengthen the platform. Drawdown from ATH does not bother me, still holding it. Valuations are extremely undemanding.

Share this Scrolly Tale with your friends.

A Scrolly Tale is a new way to read Twitter threads with a more visually immersive experience.
Discover more beautiful Scrolly Tales like this.

Keep scrolling