Soar

Zoom's quarterly profit soars 3,330% as abnormal becomes its normal

Wednesday, September 2, 2020 by Robinhood Snacks | Disclosures
_Corporate happy hour intensifies_

Corporate happy hour intensifies

Corporate Happy Hour has never been happier... Zoom absolutely smashed earnings last quarter (for a reason that requires no explanation). In just 3 months, the videoconferencing service made double the amount of money that it did during its entire 2019 fiscal year:

  • +355%: Zoom's quarterly sales more than quadrupled compared to the same quarter last year, clocking in at $663M. Sales for its entire 2019 fiscal year were $331M. Womp.
  • +3,300%: Zoom's quarterly profit was almost 33X bigger, coming in at $186M compared to $5.5M last year. Double womp.

Zoom, zoom, zoom... Investors brought Zoom to their room on Tuesday, sending the stock soaring 40%. Zoom's market cap is now $129B, up from $25B a year ago. It's worth more than IBM and Lyft combined, or as much as four Twitters. Why the wild stock surge?

  • Wild growth: Sure, other corona-conomy winners like Netflix and Clorox did well. Compared to Zoom, their growth was as yawn-worthy as a beachside virtual background.
  • Wild forecast: Zoom significantly upped its full-year growth forecast. Corona winners like Netflix and Home Depot didn't, suggesting they may have passed peak pandemic surge.
  • Wild situation: Zoom investors believe you'll be Zooming into the future, whether you stay remote or return to the office.
THE TAKEAWAY

This is abnormally fast growth... for a publicly-traded, relatively mature company. For reference, let's look at some best quarters from the past: Apple killed it in 2008 with iPhone 3 and 90% sales growth. Facebook liked itself in 2014 with 72% growth. Netflix won an Oscar in 2011 with 50% growth. Zoom slayed in 2020 with 355% growth. Zoom is growing abnormally fast because its product was/is positioned to thrive during these abnormal times.