Zoom went on Nasdaq with the IPO price of $36 (target range of $33 to $35 per share), opened at ~$65 and closed at $62 (up 72%), making it in par with Lyft.
Several things to note here:
-
- Zoom is relatively young. It maintained high growth (2018 revenue of $331 million, 2017 revenue of $151 million) and is expected to grow fast.
-
- Zoom is making a net profit in 2018 (~2.3% profit margin) and has maintained a high gross margin (~80%).
-
- Growth in customers – “As of January 31, 2017, 2018 and 2019, we had approximately 10,900, 25,800 and 50,800 customers with more than 10 employees.” they “represented 69%, 75% and 78% of revenue“
-
- Market Size – In the US, business with
-
-
- 10-19 employees: 46,635
-
-
-
- 20-49 employees: 37,495
-
-
-
- 50-249 employees: 23,065
-
-
-
- 250 or more: 5,672
-
-
-
- ~113k in total, so Zoom has another 50% room to grow (will be harder and more costly)
-
-
- market penetration and growth opportunity in large enterprise customers – “greater than 50% of the Fortune 500 had at least one paid Zoom host, compared to only 4% that contributed more than $100,000 of revenue. We believe this demonstrates that our product has already gained a foothold in many of the largest enterprises in the United States, and there is a large opportunity to expand within these large enterprise customers”
-
- Revenue per large enterprise customer will grow, easily – “Some of our larger enterprise customers start with a single deployment of Zoom Meetings with one team, location or geography, before rolling out our platform throughout their organization.” “As of January 31, 2017, 2018 and 2019, we had 54, 143 and 344 customers that contributed more than $100,000 of revenue in each of their respective fiscal years”
-
- Zoom’s future depends on its business outside video conferencing; it could grow into an essential infrastructure for business operations; it could do more than video conferencing, but also scheduling, internal messaging and other management tools.
-
- It should be compared with Slack ($221 million revenue in the year ended in January 2018, currently in the process of a direct listing on NYSE with valuation $10 billion)
Zoom, Slack, Alibaba’s Dingding (DingTalk), WeChat for Enterprise will meetup in the future, in the battle of office app/platform.
Read More on Zoom’s IPO