No. of Recommendations: 4
Zoom Video Communications, Inc ZM 5.9% Portfolio Allocation

ZM reports this evening after the market close.

The company sells Video Conferencing expertise and has a wacked out crazy valuation that everyone thinks they will grow exponentially into as they take over the world. I suppose I must think so also to as here I am.

You can find out more here:

https://seekingalpha.com/news/3523756-zoom-video-communicati...

You can register for the CC Webinar here:

https://investors.zoom.us/events/event-details/zoom-third-qu...

The company last reported Sept 5th for FYQ2 2020 and you can do a brief review of the Press Release and CC Transcript here:

https://seekingalpha.com/pr/17623743

https://seekingalpha.com/article/4290088

As a bonus I am throwing in Slides from the presentation here:

https://seekingalpha.com/article/4290048

A few Highlights Include:

* Revenue Increased 96% Y/Y
* Customer Base Increased 78% Y/Y
* Net Expansion Rate above 130%

Simply an incredible report!

So what are the expectations for today?

https://seekingalpha.com/news/3523756-zoom-video-communicati...

And thats that. Nothing left to do but rake in the chips or grumble incoherently later this evening by the fire. The good news here is that I have a large fireplace and a lot of really nice wine. My best guess is that it will be a good report but that the market will decide it needs to be beaten anyway. The opposite point of view would be that the company stock is already priced about 35% off its high and a good report could offer stability and assurances that all is well and the future remains bright. In such case it might even gain a point or two which could soften the blow of CRWD getting clubbed mercilessly.

Happy Holidays
....and....
All the Best,
Print the post Back To Top
No. of Recommendations: 2
ZM's report was really excellent and for its good work it is getting pummeled in the After Hours currently down by about $5.50 or so per share - or right in the 7.5% to 8% range.

Here is the Press Release:

https://seekingalpha.com/pr/17720377-zoom-video-communicatio...

A few Highlights:

* Revenue Growth of 85% Y/Y

* Non-GAAP Income from Ops came in at $21.3M compared to $1.6M in Q3 2019

* Cash Flow of $61.9M compared to $18.2M in Q3 2019

* Customers with more than 10 employees increased by 67%

* Customers contributing over $100K increased 97%

* NER of greater than 130% for 6th QTR in a row

Just a great QTR. Taking a beating -as far as I can determine - on nothing more than perhaps valuation but at the end of the day the CC will probably determine where it goes tomorrow.

Happy Holidays
....and....
All the Best,
Print the post Back To Top
No. of Recommendations: 12
Update with ZM CC Slide Deck Presentation here:

https://seekingalpha.com/article/4310934-zoom-video-communic...

Its impossible to go through the slide deck and not be overly impressed by both what ZM is accomplishing and its long runway TAM ahead of it. So why - after such a great report is the stock selling off? For what its worth I think there are two basic reasons:

1) As I mentioned earlier, Zoom's valuation has always been something of a white elephant in the room. You can discuss it all you like - both pros and cons - but at the end of the discussion you still have nosebleed, sky-high, Holy Bat Signal Valuation. It is what it is.

2) If you look at the Guidance for Q4 it calls for revenue between $175M to $176M. Not much of a spread. If they were to hit the $176M it would represent Rev Growth of about 66% over Q4 2019. Any way you look at that number it represents entirely reach-for-the-tums really big, pump the breaks slow down from this reports 85%. Moreover, Sherlockian deduction has to conclude that - combined with valuation - this perceived and self inflicted wound is entirely why the stock sold off in After Hours. All of this with one massive caveat: that there was no wringing of hands, woe is us, Chicken Little moment on a conference call.

Now - for what its worth - which is surprisingly little, absolutely none of us heavy hitter, whale sized growth investing stalwarts think for one moment that ZM is being serious. No...they will beat the $176M number.. or.. worse selloffs are in our future. But the question is....by how much? By how much can we realistically expect them to beat the measly $176M guidance? Well, lets see.

In their three public ER's they have Beaten on Revenue by 9.2%; 11.7%, and today 6.6%. By using the top secret MGoose WAG formula designed entirely for these sorts of fishing expeditions I am projecting that Q4 Revenue will come in at between $192M to $196M - I base this largely on not only historical analysis but a great deal of smoke and mirrors forecasting. BUT - that does not mean I am wrong. (There are a great many other reasons I could be wrong and I wouldn't trust a word of this if I were you!)

So - assuming my pie in the sky forecast is only semi-accurate and they hit $190M in Revenue it would represent growth of about 80%. Slowing - but slowing slightly and gradually and unlikely to spook the head - especially from the brand new lower valuation base we now find ourselves at. Now...let say they hit my high end at $196M...why that would just be dandy and equal to Revenue Growth of 85.9%. But AHAAAAA...I don't expect them to hit the high end but to come in somewhere in between that and the low projection representing Revenue Growth for the 4th QTR of anywhere between 80 - 83.5%.

Note 2: You should develop your own forecasting model and you too could become an icon of investing wisdom - or - you could just wire me $15 for my How-I-did-it-and-How-you-can-to Guide to stock forecasting riches. Its a short guide of only 7 pages but jam packed with hand drawn diagrams and clipped pirated illustrations and amusing antidotes.

Anyway - thats what I think will happen.

Happy Holidays
....and....
All the Best,
Print the post Back To Top
No. of Recommendations: 2
Please forgive my poor grammar and spelling in the post above, not to mention my incorrect use of the word 'antidote' for anecdote. For the past several days I have been dealing with a nagging head cold and am Dayquiled/Nyquiled and Rtussined out.

Note: I did not catch these errors myself as I usually do not proof nor re-read whatever I happened to write to begin with. An astute board member emailed me and gently nudged me to take another look at what I wrote. She is correct and I appreciate her not calling me a complete simpleton. Be that as it may.

Due to the aforementioned unforced errors I am knocking $1.50 off my revenue forecasting booklet for the first 1000 customers! These MGoose insider tips and easily followed guidelines represent a collection of past experiences along with special one of a kind wisdom gleaned insights direct to you from Kooba the Stock Dog's tenure as Head Mongoose. These make wonderful Christmas presents and there might be available discounts on orders of 5 booklets or more. We gift wrap on request and signed and numbered copies are available for slight additional costs.

Happy Holidays
....and....
All the Best,
Print the post Back To Top
No. of Recommendations: 0
These make wonderful Christmas presents and there might be available discounts on orders of 5 booklets or more. We gift wrap on request and signed and numbered copies are available for slight additional costs.

And if you order today we will throw in a free set off Ginzu knives!!!
Print the post Back To Top
No. of Recommendations: 1
*set of Ginzu Steak Knives*
Print the post Back To Top
No. of Recommendations: 19
Nice update.

So my feeling is that a blowout quarter might keep you from selling off right now.

A good quarter like ESTC had and you get a big down day.

CRWD had a fantastic report tonight and the stock reacted first with a selloff after hours and then moving up about 4%. When the cloud names were running hot, a quarter like that would have moved the stock up 20%. Not now.

DDOG also had a fantastic quarterly report last week and the stock did explode to the upside. Now a week or so later it’s all the way back down below pre earnings report.

ZM did have a solid quarter, yet it sells off.

So for the moment my only conclusion is that money managers aren’t buying hyper growth right now. They are weary and looking for better valuations, safer places to park their clients money.

All we can do as investors is keep our eye on the longer term prize, which is to invest in great growth companies. Best to be patient in doing so as this market is going to continue to give us great opportunities to buy shares are much better prices in companies we want to own longer term.

Just be comfortable accepting that this could last a while longer, maybe even a year longer. These names shorter term may underperform the overall market, but that’s ok, at least for me. I’ll keep adding shares when I see opportunity.

Patience my friends. Patience.
Print the post Back To Top