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 Video (NASDAQ:ZM) and the rest of the video conferencing stocks fared in Q1.
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 mixed Q1; on average, revenues beat analyst consensus estimates by 2.25%, while on average next quarter revenue guidance was 1.03% above consensus. There has been a stampede out of high valuation technology stocks and while some of the video conferencing stocks have fared somewhat better, they have not been spared, with share price declining 11.3% since earnings, on average.
Zoom Video (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 Video reported revenues of $1.07 billion, up 12.2% year on year, in line with analyst expectations. Despite the stock rising on the results, it was a weaker quarter for the company, with a decline in net revenue retention rate and a slow revenue growth.
“In Q1, we launched Zoom Contact Center, Zoom Whiteboard and Zoom IQ for Sales, demonstrating our continued focus on enhancing the customer experience and promoting hybrid work. We believe these innovative solutions will further expand our market opportunity for future growth and expansion with customers,” said Zoom founder and CEO, Eric S. Yuan.
Zoom Video delivered the slowest revenue growth of the whole group. The company added 191 enterprise customers paying more than $100,000 annually to a total of 2,916. The stock is up 26.4% since the results and currently trades at $113.
Best Q1: 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 $181.3 million, up 25.3% year on year, missing analyst expectations by 0.02%. It was a decent quarter for the company, with an increase in gross margin and accelerating growth in large customers.
8x8 had the weakest performance against analyst estimates among its peers. The company added 413 enterprise customers paying more than $100,000 annually to a total of 1,320. The stock is down 31.1% since the results and currently trades at $5.31.
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Weakest Q1: 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 $467.6 million, up 32.7% year on year, beating analyst expectations by 2.02%. It was a weaker quarter for the company, with a full year guidance missing analysts' expectations and a decline in gross margin.
RingCentral achieved the fastest revenue growth but had the weakest full year guidance update in the group. The stock is down 25.1% since the results and currently trades at $51.56.
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.
Five9 reported revenues of $182.7 million, up 32.5% year on year, beating analyst expectations by 6.96%. It was a strong quarter for the company, with a solid beat of analyst estimates.
Five9 scored the strongest analyst estimates beat and highest full year guidance raise among the peers. The stock is down 15.6% since the results and currently trades at $86.77.
The author has no position in any of the stocks mentioned