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The week ahead: Is the ‘zoomification’ of work over?

Video communications company Zoom (ticker: ZM) is poised to release its Q1 FY22 results this Tuesday, June 1.



Zoom became a market darling in 2020 – as countries shut their borders and companies were forced to close their doors. Things of course didn’t stop, they were merely taken online.

Amongst trendy startups and individual customers, Zoom – which is just a video chat app (albeit a really good one) – helped people stay connected.




That’s reflected starkly in the company’s operational performance. Check out the highlights, from the company’s latest quarterly (Q4 FY21) release:

  • Revenues hit $882 million, up 369%

  • GAAP net income reached $251 million, up 2327%

  • Operating cash flow climbed to $399 million, up 993%

That popularity is emblematic of how work and communications more broadly have changed during the pandemic. People are increasingly working and interacting remotely. While this approach to work has many proponents – it also has its detractors.

WeWork’s CEO recently whipped up a media firestorm, after saying that he thought employees who preferred to work from home were the least engaged. He later walked back those comments.

And Forbes recently ran an article titled ‘Study Shows People Working From Home Are Having Sex, Dating, Taking Naps And Doing Side Hustles On Company Time’. Such headlines likely caused alarm in HR departments across the globe.

Market anxiety over our inevitable return to the office – and it is inevitable – looms large over stocks such as ZM. And while companies such as Zoom have distinctively changed the way we work, as the global rollout of the covid-19 vaccine rages on, the permanency of those changes look to be on shakier ground than ever.

The market knows it too.

Despite the stock being up 62% in the last year; the Zoom share price is 43% off the 52-week high it recorded last October.

Ouch.

That anxiety has flowed through to the sell-side. Analysts on average expect Zoom to report Q1 revenues of $906 million this week, according to Yahoo Finance.

Sure, year-on-year that would mark more stellar growth. But quarter-over-quarter, that’s what? ~3% growth on the top-line. Is that enough for a stock trading on 37x sales and with a market cap close to $100 billion?

I guess we’ll see this Tuesday.