Zoom Video (ZM) to Report Q2 Earnings: What’s in Store?

Zoom Video Communications ZM is set to release second-quarter fiscal 2020 results on Sep 5.

In the last reported quarter, the company posted non-GAAP earnings of 3 cents per share compared with the Zacks Consensus Estimate of a break-even.

Moreover, revenues surged 103% year over year to $122 million, which comfortably surpassed the consensus mark of $110 million.

For the second quarter, the company expects total revenues between $129 million and $130 million. Non-GAAP earnings are expected between 1 cent and 2 cents.

The Zacks Consensus Estimate for earnings stayed flat at 1 cent over the past 30 days. The consensus mark for revenues is pegged at $129.69 million.

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

Factors to Watch

Zoom’s expanding customer base is a key catalyst. At the end of first-quarter fiscal 2020, the company had roughly 58,500 customers (with more than 10 employees), up 86% year over year.

Moreover, the U.S. Federal Risk and Authorization Management Program (FedRAMP) authorization received by Zoom in May is a significant development. The authorization will allow the U.S. Federal Government agencies and contractors to securely use Zoom for video meetings, API integrations and more.

In June, the company announced enhanced features for its video-first unified communications platform, Zoom Rooms. The company partnered with the likes of Logitech LOGI and Lenovo LNVGY to boost the capabilities of the platform.

Notably, Zoom has a strong partner base that includes the likes of salesforce.com and Slack.

The company also announced the availability of Zoom Phone cloud phone service in Australia and the U.K. in July.

The aforesaid factors are expected to have helped Zoom expand user base in the to-be-reported quarter. However, increased expenses related to new sales representative hires are expected to hurt profitability.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Zoom 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.

A Stock With Favorable Combination

Here is a stock you may want to consider, as our model shows that it has the right combination of elements to post an earnings beat.

CrowdStrike Holdings CRWD has an Earnings ESP of +24.02% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

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