Shares of videoconferencing stock Zoom Video Communications (NASDAQ: ZM) have been soaring recently. In just three months, they are up 145%, versus a 20% decline in the S&P 500 over this same time frame as the broader market takes a hit amid the coronavirus outbreak. Shares have risen particularly sharply recently, climbing about 50% in the last 30 days alone.
As the stock skyrockets, here's some context on why shares are trading higher, as well as five specific metrics that Zoom investors are likely excited about.
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A work-from-home trade
Some investors are likely simply betting on Zoom stock now because its platform is poised to benefit from a shift by many employees around the world to working from home as the pandemic worsens. Some countries have enforced travel restrictions, and a growing number of U.S. states have even issued stay-at-home orders requiring citizens to leave their residences only for essential needs.
Since Zoom's video conferencing technology is built to make working away from the office easier, it stands to reason that the company would see a boost in users and usage as more individuals around the world are performing their work remotely. To this end, Zoom said in an earnings call this month that the company has seen an uptick in usage as a result of the coronavirus.
Zoom's recently reported fourth quarter of fiscal 2020 ended before the coronavirus had become a major issue outside of China, making it difficult to quantify the impact the outbreak will have on its business. But it's worth looking at five numbers from the company's quarterly results to have a better understanding of Zoom's momentum going into the pandemic. It's already-staggering growth could accelerate as companies enable more employees to work from home.
1. Revenue soared 78%
Zoom's fiscal fourth-quarter revenue jumped 78% year over year to $188.3 million. This crushed management's guidance for revenue during the period between $175 million and $176 million.
2. Adjusted earnings per share nearly quadrupled
The company's non-GAAP (adjusted) earnings per share rose from $0.04 in the year-ago period to $0.15. GAAP earnings per share also skyrocketed, climbing from $0.01 to $0.06 over the same time frame.
3. Free cash flow was $26.6 million
Unlike many young, fast-growing tech companies, Zoom is already profitable on both a GAAP and cash-flow basis. The company's free cash flow, or cash from operations less capital expenditures, was $26.6 million in fiscal Q4, up from $5.7 million in the year-ago period.
4. Total large customers jumped 86%
Customers contributing $100,000 more in trailing-12-month revenue increased 86% year over year during the period, highlighting Zoom's growing appeal to large enterprises.
5. Cash increased to $855 million
If it comes down to it, Zoom has plenty of cash to weather a recession. The tech company ended the year with $855 million in cash, cash equivalents, and marketable securities. This is up from $176 million in the year-ago period and $811 million in the prior quarter. Furthermore, Zoom has no debt.
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Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Zoom Video Communications and recommends the following options: short May 2020 $120 calls on Zoom Video Communications. The Motley Fool has a disclosure policy.
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