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Q3 Earnings Outperformers: Zoom (NASDAQ:ZM) And The Rest Of The Video Conferencing Stocks


Jabin Bastian /
2022/01/13 7:06 am EST
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The end of an earnings season can be a great time to assess how companies are handling the current business environment and discover new stocks. Let’s have a look at how Zoom (NASDAQ:ZM) and the rest of the video conferencing stocks fared in Q3.

Work is becoming more distributed, both across geographies and devices. In order for businesses to keep functioning efficiently, they need to be able to communicate as well as they did when the teams were co-located, which drives the demand for integrated communication platforms.

The 4 video conferencing stocks we track reported a solid Q3; on average, revenues beat analyst consensus estimates by 4.01%, while on average next quarter revenue guidance was 2.64% above consensus. Technology stocks have been hit hard on fears of higher interest rates and video conferencing stocks have not been spared, with share price down 21.7% since earnings, on average.

Zoom (NASDAQ:ZM)

Started by Eric Yuan who once ran engineering for Cisco’s video conferencing business, Zoom (NASDAQ:ZM) offers an easy to use, cloud-based platform for video conferencing, audio conferencing and screen sharing.

Zoom reported revenues of $1.05 billion, up 35.1% year on year, beating analyst expectations by 3.07%. It was a decent quarter for the company, with a very optimistic guidance for the next quarter but decelerating growth in new customers.

“In Q3, we held our premier user event, Zoomtopia, on our Zoom Events service. During this immersive, multi-track conference, we showcased how Zoom is placing people at the center of our communications platform, connecting their disparate work streams into our technology, moving beyond enterprises’ ability to collaborate internally, and empowering them to communicate face-to-face with their customers through Zoom Events and our upcoming Video Engagement Center. We also showcased innovations such as hot desking, whiteboarding, and smart gallery, all designed to empower both co-located and remote hybrid workforces as some companies test return to office programs,” said Zoom founder and CEO, Eric S. Yuan.

Zoom Total Revenue

The stock is down 27.6% since the results and currently trades at $174.95.

Is now the time to buy Zoom? Access our full analysis of the earnings results here, it's free.

Best Q3: Five9 (NASDAQ:FIVN)

Started in 2001, Five9 (NASDAQ: FIVN) offers software as a service that makes it easier for companies to set up and efficiently run call centers, and offer more tailored customer support.

In early 2021 Zoom Communications (ZM) attempted to buy Five9 in an all stock deal, but the acquisition fell through. Five9 reported revenues of $154.3 million, up 37.6% year on year, beating analyst expectations by 5.21%. It was a very strong quarter for the company, with a very optimistic guidance for the next quarter and an exceptional revenue growth.

Five9 Total Revenue

Five9 delivered the fastest revenue growth and highest full year guidance raise among its peers. The stock is down 5.4% since the results and currently trades at $137.26.

Is now the time to buy Five9? Access our full analysis of the earnings results here, it's free.

Weakest Q3: 8x8 (NYSE:EGHT)

Founded in 1987, 8x8 (NYSE:EGHT) provides software for organizations to efficiently communicate and collaborate with their customers, employees, and partners.

8x8 reported revenues of $151.5 million, up 17.3% year on year, beating analyst expectations by 2.39%. It was a weaker quarter for the company, with a decelerating growth in large customers and a slightly underwhelming guidance for Q4.

8x8 had the weakest performance against analyst estimates, slowest revenue growth, and weakest full year guidance update in the group. The company added 47 enterprise customers paying more than $100,000 annually to a total of 871. The stock is down 28.9% since the results and currently trades at $16.45.

Read our full analysis of 8x8's results here.

RingCentral (NYSE:RNG)

Founded in 1999 during the dot-com era, RingCentral (NYSE:RNG) provides software as a service that unifies phone, text, fax, video calls and chat in one platform.

RingCentral reported revenues of $414.6 million, up 36.5% year on year, beating analyst expectations by 5.38%. It was a very strong quarter for the company, with an exceptional revenue growth.

RingCentral scored the strongest analyst estimates beat among the peers. The stock is down 25.6% since the results and currently trades at $174.43.

Read our full, actionable report on RingCentral here, it's free.

The author has no position in any of the stocks mentioned