Technology stocks such as Zoom Video (NASDAQ: ZM) and Snap (NYSE: SNAP) are trading significantly below all-time highs due to the ongoing sell-off surrounding the equity market. While shares of Zoom Video are gaining momentum, Snap stock is down over 30% in pre-market trading today. Let’s see why the two companies are under the investor radar today.
Zoom Video reports revenue of $1.07 billion
In the fiscal first quarter of 2022 (ended in April), Zoom Video reported revenue of $1.07 billion and adjusted earnings per share of $0.87. Analysts forecast Zoom to report revenue of $1.07 billion and adjusted earnings of $0.87 per share.
In fiscal Q2 of 2023, Zoom Video forecast revenue between $1.115 billion and $1.12 billion with earnings per share between $0.90 and $0.92. Comparatively, Wall Street forecast Q2 sales at $1.11 billion with adjusted earnings of $0.88.
We can see Zoom Video surpassed consensus estimates in Q1 and provided a better-than-expected forecast for the July quarter driving the stock higher.
Zoom confirmed it ended Q1 with 198,900 enterprise customers, an increase of 24% year over year. In the last 12 months, Zoom’s net dollar expansion rate for enterprise-facing customers stood at 123%. It means existing customers increased spending on the Zoom platform by 23%.
Zoom also stated that 2,916 customers generate more than $100,000 in annual sales, an increase of 46% compared to the year-ago period. The company continues to expand its suite of products and services allowing it to onboard new customers and increase spending by existing ones.
In Q1 it launched the Zoom Contact Center, Zoom Whiteboard, and Zoom IQ for Sales. These solutions should expand the total addressable market for Zoom which will drive revenue growth in the future.
Zoom reported quarterly revenue of more than $1 billion for the first time ever as its solutions such as Zoom Rooms and Zoom Phone continued to gain traction. In Q1, Zoom’s adjusted operating margin stood at 37% while its adjusted free cash flow margin was 46%.
ZM stock is down 84% from all-time highs valuing the company at $25.3 billion, by market cap. It's valued at 5.5 times forward sales and a price to earnings multiple of 25x which is quite reasonable.
Snap lowers guidance for Q2
In early 2021, Snap claimed it is positioned to generate revenue growth of 50% for several years. But Apple (NASDAQ: AAPL) soon launched a privacy update on iOS which impacted revenue for Snap and several other social media platforms, resulting in a sell-off over the last few months.
In 2021, Snap reported sales of $4.1 billion, an increase of 64% year over year. In 2022, analysts forecast sales growth to decelerate to 33% in 2022. The company ended Q1 with 332 daily active users, an increase of 18% year over year, while average revenue per user surged by 17%.
Snap’s adjusted EBITA turned positive in 2020 and increased by an impressive 1,300% last year. This year analysts expect Snap to report revenue of $1.22 billion in Q2 and $5.5 billion in 2022.
However, in a regulatory filing Snap stated its revenue and adjusted EBITDA will be below the lower end of its previous guidance. It explained, “Since we issued guidance on April 21, 2022, the macroeconomic environment has deteriorated further and faster than anticipated. As a result, we believe it is likely that we will report revenue and adjusted EBITDA below the low end of our Q2 2022 guidance range.”