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BenzingaEditorial

Zoom Delivered But Its Meteoric Rise Appears to Be Slowing Down

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Zoom Video Communications (NASDAQ: ZM) continues to defy Wall Street forecasts as it managed to beat expectations for third-quarter earnings and guidance for the undergoing quarter. This fall, Zoom has made its way to smart-home devices made by Amazon (NASDAQ: AMZN), Facebook (NASDAQ: FB) and Google (NASDAQ: GOOG). But investors were not dazzled as the guidance shows that Zoom’s meteoric growth appears to be slowing down.Consequently, shares fell about 5% in extended trading on Monday after the results.

Q3 Results

Adjusted earnings of 99 cents per share topped the Refinitiv estimate of 76 cents per share with revenue of $777.2 million also exceeding estimates of $694.0 million. The pandemic is still making Zoom to be the place for work, school and even family meetings. Revenue grew 367% on an annualized basis in the quarter which ended October 31st, which is more than 355% and 169% achieved in the prior two quarters.

But Zoom’s gross margin is shrinking as it went from previous quarter’s 67.3% to 66.7% from. The gross margin suffered as teachers and students boosted the platform’s free subscribers userbase as school resumed followed by Zoom’s higher-than-usual reliance on public cloud resources.

Kelly Steckelberg, the company’s chief financial officer revealed that more than 80% of the fiscal third-quarter revenue gain came from new customers’ subscriptions. Revenue in the Asia Pacific and Europe, Middle East and Africa grew 629%, compared with over 300% growth in the Americas. There were 433,700 customers with over 10 employees over the quarter which marks a 485% YoY increase, exceeding the growth of 355% from the prior quarter.

Premium Zoom Phone cloud-phone service had also expanded to over 40 countries and territories. OnZoom was also revealed as a tool for organising live virtual events that can be attended by paying a fee.

Q4 guidance

Zoom called for fiscal Q4 adjusted earnings in the range between 77 cents to 79 cents per share on $806 million to $811 million in revenue, implying 329% revenue growth at the middle of the range and therefore a slowdown that investors were not pleased with. Analysts polled by Refinitiv had been expecting Zoom to come out with a guidance of 66 cents in adjusted earnings per share and revenue of $730.1 million.

Until the earnings release, Zoom’s stock skyrocketed 591% since the start of this unprecedented year, leaving the S&P 500 index far behind with its 12% rise over the same timeframe.

All is well, all is great, actually. But, that is not good enough for investors.

This was another blowout quarter for the video chat software provider with revenue jumping 367% YoY. But Zoom raised the bar with this year’s mind-blowing performance, and the revenue growth of 329% in the quarter ahead is not good enough as it means the astronomical growth is slowing down. Therefore, investors appear to be cautious about the company’s continued trajectory, despite its Q4 forecast beating expectations. On the other hand, if this year has taught us anything is that future is promised to no one, especially amid the current dynamic of the crisis and its underlying uncertainty.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

This Earnings Week Will Be a Busy One

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Apply (NASDAQ: AAPL), Facebook (NASDAQ: FB), Microsoft (NASDAQ: MSFT) and Tesla (NASDAQ: TSLA) are ready to report record sales this week, along with nearly a quarter of S&P 500 companies scheduled to release their earnings reports. It will also be a busy week, or more precisely a busy Tuesday, for the Dow with 3M (NYSE: MMM), Johnson & Johnson (NYSE: JNJ), American Express (NYSE: AXP) and Verizon (NYSE: VZ) joining Microsoft as fourth-quarter earnings season gets into full swing.

Tuesday

The chip saga continues with Advanced Micro Devices (NASDAQ: AMD) whose shares rose about 5% over the past week and are now up 1.2% year to date. Expectations are high due to its strong fourth quarter results and Intel Corporation’s (NASDAQ: INTC) upside guidance that was issued last week. Wall Street expects earnings of47 cents per share on revenue of $3.02 billion as it assumes the pandemic made a minimal disruption to its business with positive trends in the datacenter business and PC sales. AMD has steadily gained market share from Intel in both of these categories.

Microsoft will also report after the close with Wall Street expecting earnings of $1.64 per share on revenue of $40.18 billion. The trends of working and learning from home continue to intensify demands for Microsoft’s offerings, as evidenced by the strong Q4 demand. But its biggest strength over the past year has been the commercial cloud business and Wall Street remains strongly positive about the company’s outlook for fiscal 2021 due to Azure’s momentum as it’s revenue was up 48% on a YoY basis in the previous quarter. But, this is a slight deceleration from the 50% growth in Q4 and investors will want some evidence that both Azure and Microsoft’s Teams that competes against Zoom (NASDAQ: ZM) can continue fueling its revenues to new heights.

Wednesday

Apple will report after the close and Wall Street expects earnings of$1.40 per share on revenue of $102.76 billion. Holiday quarter is the quarter for Apple and it needs to meet these high expectations as last year’s quarter saw earnings of $1.25 per share on revenue of $88.5 billion. This quarter will be all about sales of the iPhone 12 that has been lauded as revolutionary. The iPhone 12 came with 5G capabilities and features such as its world-facing LIDAR sensor. However, Apple is about more than the iPhone as its services business now accounts for almost 22% of total revenue. Last quarter, its revenue surged to a new record of $14.5 billion.

Facebook will also report after the close with Wall Street expecting earnings of $3.19 per share on revenue of $26.34 billion. Facebook shares had an impressive run over the past week, suggesting that the concerns over digital advertising due to the pandemic have vanished. The social media giant topped consensus earnings expectations in each of the past eleven quarters and has missed earnings estimates just once over the past half of a decade. Yet, over the past year, its shares have been under-performing due to fears of regulatory and political risk. But if it shows a strong surge in daily and monthly active users with an upbeat revenue guidance, its stock should be just fine.

Tesla (NASDAQ: TSLA) will report its first quarter since it became part of the S&P 500 after the close. Wall Street expects earnings of$1.00 per share on revenue of $10.32 billion. Tesla’s shares are up 20% year to date and 99.9% since the company last reported earnings on October 21st, confirming that it is not showing any signs of slowing down. Elon Musk’s focus has been on executing the strategy that brought top and bottom-line improvements, while delivering almost half a million vehicles in 2020. Now, the electric vehicle pioneer has to show it intends to keep pressing the gas pedal.

Takeaway

A number of Republicans don’t support President Joe Biden’s $1.9 trillion new round of fiscal stimulus and have even criticized the price tag. Fortunately, mega tech companies that are reporting this week don’t depend on fiscal stimulus that much, as dar revenue and earnings growth is concerned.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

This Week Will Be About More Than Inauguration Day Alone

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Since 2020 March lows, the market saw a nothing short of extraordinary record-shattering rally. But how much higher can it go as COVID continues to rage across the US and Europe? That answer will become a bit clearer as traders have returned from the long holiday weekend and equity markets have reopened. This week will be defined by the first days of the Biden administration and by another batch of corporate earnings reports.

Inauguration in times of COVID-19

On Wednesday, president-elect Joe Biden’s inauguration ceremony will take place as a dialed-down event, due to the ongoing pandemic. Americans have been urged to avoid the city on the day, given the risk of violence surrounding the event. Last Wednesday, Airbnb (NASDAQ: ABNB) announced it would block and cancel reservations in the D.C. metro area this week, refunding guests and reimbursing hosts who already made bookings. Interestingly, the stock rallied nearly 6% upon the announcement. Marriott (NASDAQ: MAR) which has close to 200 hotels in the D.C. area and owns brands including The Ritz-Carlton said it would honor existing reservations, along with IntercontinentalHotelGroup (NYSE: IHG), Hilton (NYSE: HLT), Hyatt (NYSE: H) and Expedia-owned VRBO (NASDAQ: EXPE).

Biden also said he aims to roll out 100 million vaccines in his first 100 days in office, which would significantly accelerate the pace of current efforts to counteract the pandemic. On January 20th, Biden is seeking to sign about a dozen executive actions to address the pandemic, as well as a virus-stricken economy, climate change and racial equity.

Earnings

One of this week’s key earnings reports will come from Netflix (NASDAQ: NFLX) on Tuesday after market close. Last quarter’s results showed disappointing signs that the skyrocketing user growth that Netflix enjoyed during pandemic was slowing down. The streaming giant missed even its own conservative third-quarter new subscriber guidance for the summer, adding just 2.2 million new members as opposed the 2.5 million the company had expected. For the fourth quarter, Netflix expects 6 million net paid additions to its streaming platform, representing another YoY decline after adding 8.8 million in the fourth quarter of 2019.

Netflix, while still the leader among U.S. streaming platforms when it comes to total users, has also faced increasing competition over the past year, especially from relative newcomer Disney+ (NYSE: DIS). Disney’s streaming service had 86.8 million paying subscribers as of December 2nd, compared to the more than 195 million Netflix reported at the end of September. Disney also revealed it would be raising the monthly price of its streaming subscription starting in March, suggesting the entertainment giant believes it has the user demand and pricing power to command higher fees. Netflix needs to prove it can maintain its status as the king of streaming among this intense competition.

Wall Street expects earnings $1.38 per share on revenue of $6.61 billion, compared to the year-ago quarter when earnings were $1.30 per share on $5.47 billion in revenue.

Also, on Tuesday, Tuesday: Halliburton (NYSE: HAL), Charles Schwab (NYSE: SCHW), Bank of America (NYSE: BAC) and Goldman Sachs (NYSE: GS) will report their earnings before market open.

Wednesday

Morgan Stanley (NYSE: MS), US Bancorp (NYSE: USB), Citizens Financial Group (NYSE: CFG), Bank of New York Mellon Co. (NYSE: BK), Procter & Gamble (NYSE: PG), UnitedHealth Group (NYSE: UNH) will report before market open whereas Alcoa (NYSE: AA) and United Airlines (NASDAQ: UAL) will report after market close. Wall Street expects United Airlines to lose $6.58 per share on revenue of $3.46 billion. This compares to the year-ago quarter when earnings came to $2.67 per share on revenue of $10.89 billion. United had some $24 billion of capital expenditure commitments as of Q3 so amid the decline in travel demand, its aim is to reduce that spending as much as possible. Investors will be looking at such economic improvements to justify the argument that UAL is better positioned than other airlines to survive this downturn.

Thursday will feature IBM and Intel

Wall Street expects International Business Machines Corporation (NYSE: IBM) to earn $1.79 per share on revenue of $20.63 billion but what investors are really wondering is when will the real turnaround begin? Its cloud ambitions have promised to return value to shareholders, but shares still haven’t regained even their pre-COVID levels while the rest of the market has seen record highs. Cloud leaders such as Amazon (NASDAQ: AMZN), Microsoft (NASDAQ: MSFT) and Google (NASDAQ: GOOG)(NASDAQ: GOOGL) are seemingly too far ahead for IBM to catch up. The new CEO Arvind Krishna is tasked with elevating Big Blue into a leading cloud and AI position, while distancing the company from the legacy business. Investors want to hear progress on these fronts.

Truist Financial (NYSE: TFC), Baker Hughes (NYSE: BKR), Union Pacific (NYSE: UNP) will also report on the same day before market open and Intel (NASDAQ: INTC) will make its appearance after market close.  Wall Street expects Intel to earn $1.10 per share on revenue of $17.48 billion, whereas the same quarter last year saw earnings of $1.52 per share on revenue of $20.21 billion. Intel shares have soared more than 10% Wednesday after the company confirmed that CEO Bob Swan will step down on February 15 and be replaced by Pat Gelsinger, the current CEO of VMWare (NYSE: VMW). On several important chip development fronts, Intel has lost ground to rivals AMD (NASDAQ: AMD) and Nvidia (NASDAQ: NVDA). On Thursday, it must show the right things to support the confidence that Gelsinger can turn things around and quickly.

The week will be closed on Friday with earnings from Kansas City Southern (NYSE: KSU), Schlumberger (NYSE: SLB) and Ally Invest (NYSE: ALLY) who will all report before the stock market opens.

The inauguration may signal a dramatic shift and increase in government spending, but it remains to be seen whether hopes of a transformation can survive the reality of a narrowly divided Congress.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

This Week’s IPOs

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This week brings us four IPOs which are aiming to raise $1.8 billion. These four companies operate in different markets and they come from different countries, but they share at least one thing, they all want to go public.

RLX Technology

RLX Technology (NYSE: RLX) is a leading e-cigarette brand in China. The company announced its terms for its IPO on Friday, and it plans to $1.0 billion through offering 116.5 million units at a price between $8 and $10. That means RLX Technology would have a market cap of $14.0 billion. This company is profitable and fast-growing. In 2019, it was holding around 63% of the e-vapor market share in China. RLX believes in the strength of the retails sales, therefore it has more than 110 authorized distributors, so their products are present in more than 250 cities in China, through 5,000 branded stores and over 100,000 other retail outlets. As of the end of September 2020, the revenues have doubled compared to 2019. This is all very promising having in mind that the company was founded in 2018.

Patria Investments

One of the leading private markets investment firms in Brazil and Latin America, Patria Investments Limited (NASDQAQ: PAX), announced that it has launched its IPO. The company offers 26,650,000 Class A common shares in total. The estimated price range of the offered units is between $14 and $16, so the plan is to raise $400 million at a $2.0 billion market cap. The net proceeds from the offering are planned to be used for general corporate purposes, expansion of the company’s operations (through new distribution channels, acquisitions of asset managers and portfolios), and to fund capital commitments to its existing and new contracts. As one of the leading PE firms in Brazil, the company’s investment portfolio includes over 55 companies and it has raised more than $8.7 billion since 2015.

MYT Netherlands

MYT Netherlands (NYSE: MYTE), a Germany-based luxury fashion site, which operates under the brand name Mytheresa, likes to say it offers the Finest Edit in Luxury Fashion. As in the company’s store with the same name (The Mytheresa store in Munich), fashion “doyens” can find some of the renowned brands like Balmain, Gucci, Prada, Saint Laurent, and Fendi, and their latest collections. As the pandemic has ravaged the luxury goods sector, the salvation might be in the online sales of luxury goods, which rose between 12% and 23%. Therefore, Mytheresa decided to go public, planning to raise $266 million at a $1.5 billion market cap and to focus on offering clothing, shoes, and accessories from many luxury brands through its e-commerce platform.

Dream Finders Homes 

After successful completion of several acquisitions and expanding nationally, the Florida-based homebuilder Dream Finders Homes (NASDAQ: DFH) decided to launch its IPO and to raise $130 million at a $1.2 billion market cap. For the first nine months of 2020, the company announced an increase of 29% of pro forma revenues (pro forma – a method of calculating financial results using certain projections or presumptions) and an increased EBITDA margin of 9%.

These companies and their IPOs are offering a lot of variety and potential. So far, 2021 looks promising.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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