Zoom Video Communications (NASDAQ: ZM) has seen its stock enjoy phenomenal growth since the start of 2020, jumping 133% higher this year. Now, investor optimism for the videoconferencing company, led by chief executive Eric Yuan (pictured), is growing stronger ahead of the company’s first-quarter earnings release on Tuesday.
The San Jose, California-based firm is expected to post earnings per share of $0.09 share on $203m in revenue, as the business was perfectly positioned to benefit from the rise of work-from-home trends during the lockdown.
Zoom stock started trading in 2019, hit a record high of $181.50 per share in 2020, and is currently trading near $164 a share.
The firm’s share price has been able to ride out security flaws in the past, including a vulnerability which allows attackers to remove attendees from meetings, spoof messages from users and hijacked shared screens. Another flaw saw Mac users forced into calls without their knowledge.
The company has apologized and released a Zoom 5.0 version in April, which it says addresses many of these concerns. However, a number of firms and government bodies bar their staff from using Zoom, including SpaceX, Elon Musk’s space exploration company, Google, NASA, the US Senate, and New York City’s Department of Education.
Zoom shares demonstrated outstanding gains along with strong performance results in its most recent quarter. For its fourth quarter of fiscal 2020, which ended on 31 January, the company saw its adjusted revenue skyrocket 78% year over year to $188.3m, while net income climbed even faster, rising from $10m in the year-ago quarter to $43.2m.
The same leverage was true for the company’s full-year results. Fiscal 2020 revenue grew 88% year over year while full-year GAAP and non-GAAP net income increased 106% and 487% year over year, respectively.
Zoom Video’s strong partner base includes the likes of Atlassian TEAM and Dropbox. This is also expected to have benefited the company in winning customers in the fiscal first quarter. Notably, Zoom was able to rapidly grow its customer base thanks to its freemium business model.