Why Zoom Video Communications Inc (NASDAQ: ZM) stock is going gangbusters today

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Zoom Video Communications Inc (NASDAQ: ZM) stock rose over 21% on 7th June, 2019 (as of 12:40 pm GMT-4 ; Source: Google finance) after the company posted better-than-expected earnings and sales for its fiscal 2020 first quarter and provided strong second-quarter guidance. The company has posted the Non-GAAP operating income of $8 million, which means a 6.7% non-GAAP operating margin for the first quarter. This was 8 percentage points increase compared to the modest non-GAAP operating loss in Q1 of last year. ZM has ended the first with approximately $737 million in cash, cash equivalents and marketable securities, which is up from $176 million at the end of Q4. The significant increase in cash is due to $543 million of net proceeds from the IPO and the growth in cash flow from operations. Operating cash flow is pf $22 million in the first quarter, up from $3 million in the same period a year ago. The company posted the free cash flow of $50 million in Q1, compared to negative $1 million in the same period a year ago.

Why Zoom Video Communications Inc (NASDAQ: ZM) stock is going gangbusters today

ZM in the first quarter of FY 20 has reported the adjusted earnings per share of 3 cents, beating the analysts’ estimates for the adjusted earnings per share of 1 cents. The company had reported the adjusted revenue growth of 103 percent to $122 million in the first quarter of FY 20, beating the analysts’ estimates for revenue of $111.7 million. At the end of the first quarter of fiscal 2020, the company had 405 customers contributing more than $100,000 in trailing 12 months revenue, which is up approximately 120% from the same quarter last year.

For the second-quarter, ZM expects revenue to be in the range of $129 million to $130 million, compared with an estimate of $122.1 million from analysts polled by FactSet. Earnings are expected to be of between 1 and 2 cents per share for the second-quarter 2020 and non-GAAP operating income are expecte to be in the range of $2 million to $3 million.

For the full year 2020, Zoom is forecasting profits of 2 to 3 cents per share on revenue of $535 million to $540 million. Analysts had forecast full-year earnings of 3 cents per share on revenue of just $520.3 million. ZM expect non-GAAP operating income to be in the range of breakeven to $3 million. This forecast includes the impact in Q3 of the premier user event, Zoomtopia.

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