Zoom Video Q2 preview: Where next for Zoom shares?

Zoom Video Communications has provided a vital tool for businesses during the pandemic and the shift to hybrid working should maintain the momentum in demand going forward. We explain what to expect from the results and consider how the Zoom share price could react.

Charts (5)

When will Zoom release Q2 results?

Zoom Video Communications is due to release second quarter earnings on Monday August 30.

Zoom Q2 earnings preview: what to expect from the results

Zoom Video Communications has delivered exponential growth during the pandemic. The shift to remote working caused a surge in demand for its video chat tool. In fact, it booked over 50% more revenue in the last quarter than it did in the entirety of the financial year to the end of January 2020.

Although offices are expected to reopen as vaccination rates improve and restrictions ease, the shift to a more hybrid way of working means the need for digital tools from Zoom and its competitors will remain vital for individuals and businesses.

Analysts are expecting revenue to jump to $991 million in the second quarter from $663.5 million booked the year before. That would also be up sequentially from the record $956.2 million in revenue booked in the first quarter.

Net income is forecast to rise to $245.1 million from $185.7 million, or to $0.80 from $0.63 on a per share basis. Earnings are also expected to improve compared to the first quarter but remain below the record profits booked in the third quarter of 2020.

Other key numbers to watch include its customer metrics. It has continued to see stellar growth in the number of customers with 10 employees or less, which grew 87% in the last quarter to 497,000. That will be closely-watched as some analysts expect growth from smaller businesses to slow over the coming quarters. With that in mind, buoyant growth in the number of larger enterprise customers – defined as those that contribute over $100,000 in trailing 12-month revenue – would prove supportive after jumping 160% in the previous quarter to 1,999. Expectations will remain high for the enterprise segment considering it has delivered an expansion rate of larger customers of over 130% for 12 consecutive quarters.

Guidance will also be on the radar. Zoom is currently aiming to deliver annual revenue of $3.975 to $3.990 billion and adjusted EPS of $4.56 to $4.61. For perspective, Zoom reported $2.65 billion in revenue and EPS of $3.34 in the last financial year.

Investors will want to hear more about the recent acquisition of Kites to help boost its Machine Translation solutions and the $14.7 billion buy of Contact Centre as a Service firm Five9.

Where next for the Zoom share price?

The Zoom share price hit an all-time of $588 in October last year before starting its decent. The share price has been forming lower highs across the year. Since early June the Zoom share price has been trading within a descending channel, it trades below its 50 & 200 sma in a bearish chart. The RSI is supportive of further downside whilst it remains out of oversold territory. 

Immediate support can be seen at $328 the lower band of the channel, a break below this level could spark a deeper selloff to $317 the June low and on towards $274 the year to date low.  

Any recovery in the share price would need to retake the 200 sma at $364 and the 50 sma at $371 in order to attack the upper band of the descending channel. A move above the August high of $404 could see buyers gain traction. 

How to trade Zoom shares

You can trade Zoom shares with Forex.com in just four steps:

  1. Open a Forex.com account, or log-in if you’re already a customer.
  2. Search for ‘Zoom Video’ in our award-winning platform
  3. Choose your position and size, and your stop and limit levels
  4. Place the trade 

More from Equities

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account