ZM: Beat And Raise


Zoom (ZM) reported an excellent 2Q23 after the close Monday. Revenue increased a more than expected 3.6% and EPS came in way ahead of expectations at $1.34. As a result, ZM marginally increased its full year revenue guidance and significantly increased its full year EPS guidance. The key to the quarter was an increase in operating margin to 40.5%. CEO Eric Yuan cited “strong operating discipline” in the press release for this result. ZM shares finished the after hours +3.79%.

After a quarter like this, ZM is just too cheap to ignore IMO. The company’s total market cap is $20 billion but they have $6 billion in cash and short term securities with no debt. That works out to $20/share so you’re getting the business for ~$50 if the stock opens at $70 on Tuesday. ZM guided full year 2023 EPS to $4.63-$4.67 so it’s trading at 12x current year EPS. I’ll likely increase my position somewhat tomorrow because ZM is looking less like a value trap after this quarter.

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