Zoom, the plucky little video conferencing service from the Before Times has become a verb ever since hit.
Since then, much of our real-life social interaction has been replaced by Zoom meetings. Not only are regular folks like us using Zoom, but so are celebrities like the Obamas, Oprah, Tom Brady, and Jane Fonda. A Twitter feed (originally meant for Skype) has even popped up to rate the rooms shown in the background of celebrity Zoom videos.
There's no doubt that Zoom has zoomed into our collective consciousness since the early days of COVID-19. But what does all that attention mean for Zoom Video Communications, Inc. (NASDAQ: ZM) as a business? We took a deep dive into Zoom's quarterly reports, analyst briefings, and stock market value to get a better look.
What follows are eight charts that show you how Zoom transitioned from a mild-mannered video conference service to the resource it has become, holding together by sheer digital bits, the families, workers, and classrooms of the world during this incredibly painful pandemic.
Zoom market capitalization
Market capitalization is the overall value of a company, defined as the number of shares multiplied by the share value. For investors, bigger is better. In this case, Zoom zoomed up in value over the pandemic year, peaking on October 12 with a market cap in excess of $159B. It began 2021 at $102.52B.
Zoom quarterly revenue
When you compare revenue to market value, you begin to see an insane discrepancy. According to Macrotrends data, Zoom still hasn't popped the $1B threshold, even though its market capitalization exceeds $100B. For those curious, Macrotrends has very well-defined explanation of how they calculate revenue.
Zoom income from operations
If you want to see a bunch of accountants fight it out like they're at a backyard no-holds-barred wrestling match, put a bunch of them in a hotel conference room and make them debate the merits of GAAP vs non-GAAP reporting.
GAAP, or generally-accepted accounting principles, is a standard way of calculating financial results, but some companies feel it hides or reduces performance they'd like to showcase. Non-GAAP is financial reporting using approaches that vary from accountant to accountant, and while it might provide more insight into some performance details, is non-standard and allows for more "creativity" in the presentation of values.
You can see these differences in the following chart, which showcases Zoom's net income in both GAAP and non-GAAP formulations.
One other detail is important. Zoom's fiscal year is rather odd. For example, the calendar quarter ending on October 31, 2020 is considered the third fiscal quarter of 2021. While many of us were desperate to escape from 2020 early, Zoom calculates its fiscal year a full year ahead of the calendar year. Accountants. Go figure.
To make the data readable by normal humans, we've recast the charts in this article based on actual calendar dates.
Zoom net cash vs. free cash flow
To really understand this metric, a good resource is this Investopedia article. A quick summary is that free cash flow is the measure of cash available (usually to stockholders) after all expenses have been paid from revenue.
Free cash flow, therefore, is essentially the profit the company makes. Internet companies often show great market capitalization and even lots of revenue, but when you dig down, you find out they're losing money. Free cash flow is a solid indicator of whether or not the company is actually making actual money.
Zoom calculates free cash flow as net cash provided by operating activities, less purchases of property and equipment.
You can see how cash flow blossomed after the beginning of the pandemic. The pandemic has been very good for Zoom.
Zoom cash holdings
Zoom actually started 2020 with a hefty amount of cash on hand. The company defines cash as "Total cash, cash equivalents, and marketable securities." They ended 2020 with quite a bit more on hand.
Zoom customer growth
Here, we're looking at two metrics: the number of small customers (defined as more than 10 employees) and the number of "whale" customers (defined as spending more than $100,000 over 12 months).
Annualized meeting minutes
Finally, let's look at what really matters: how much use is Zoom getting from its users? A good measure of this is what Zoom calls "annualized meeting minutes." This is a calculation that takes the number of meeting minutes of a given month and multiplies it by 12, giving an estimate of what the next year's usage would be if it tracked with the current month or quarter.
Note that the data for the quarter ending on October 31, 2020 only contains data up to September 30, 2020.
Do you use Zoom (or, I guess, more accurately, how often do you use Zoom)? What about Microsoft Teams, Google Hangouts, and even Skype? Are you all about the Zoom or have you found an alternative for keeping connected? Are you using Zoom's free version or are you paying for Zoom's advanced features and longer conference time? Let us know in the comments below.
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