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Now that Zoom has reported it's Q3, we have a bit more data that we can use to extrapolate forward to make a best guess at their revenue next year. Of course, this is going to be dependent on a number of factors such as COVID cases, the vaccine, growth of Zoom Phone and Room, churn rates for those with < 10 employees, WFH/hybrid work life, how schools/universities adapt, etc. but I think with the latest report, we have enough data that we can make some rough estimates.

What I am focusing on, is the growth of revenue sequentially and the guidance provided for next quarter. For next quarters revenue, I am going to assume they beat the top end of their guidance by 10%. I would say this is a fairly conservative estimate considering they beat the last two quarters guidance by 13% and 33%. Here is what that breakdown would look like for the full year -

Q1 Q2 Q3 Q4 FY
Revenue $328 $664 $777 $892 $2661
QoQ Change % 74% 102% 17% 15%
YoY Change % 169% 355% 367% 374% 327%

Using this assumption for Q4, look at the dollar amount of growth QoQ in Q3 & Q4; $114M in Q3 and $115M in Q4. I know two quarters of data does not make for a firm trend (especially considering one of those data points is an assumption), but I do think this gives us a good idea of what growth might look like next year. Below I modeled out what their revenue will look like if they continue to grow each quarter by $115M.
 
Q1 Q2 Q3 Q4 FY
Revenue $1,007 $1,122 $1,237 $1,352 $4,718
QoQ Change % 13% 11% 10% 9%
YoY Change % 207% 69% 59% 52% 77%


If you'd like to be conservative and assume growth falls to $50M per quarter, revenue would look like this -
 
Q1 Q2 Q3 Q4 FY
Revenue $942 $992 $1,042 $1,092 $4,068
QoQ Change % 6% 5% 5% 5%
YoY Change % 187% 50% 34% 22% 53%


And if you are a perma-bull and think growth will clock in at $200M per quarter, revenue would look like this -
 
Q1 Q2 Q3 Q4 FY
Revenue $1,092 $1,292 $1,492 $1,692 $5,568
QoQ Change % 22% 18% 15% 13%
YoY Change % 233% 95% 92% 90% 109%


All this modeling gets us to a guesstimate of somewhere between $4-5.5B in revenue. A pretty wide range I'll admit, but I think that first forecast will land within a $500M of the final number. My best guess would be revenue of about $4.5B, which would be good for 69% growth YoY. That's pretty incredible for a company at that scale and maybe it is too ambitious, but I have a lot of faith in Yuan and this company to continue to innovate and grow over the next twelve+ months.

If Zoom were to report $4.5B in revenue next year, I would expect them to trade around 35x sales. That would be pretty reasonable given their growth and incredible profitability. This would give them a market cap of $158B, which is up about 32% from today's market cap of $119B. Nothing compared to the returns seen this year, but I won't sneeze at a 32% return. Anyways, I just found the growth of $115M sequentially to be pretty interesting and believe it gives us a baseline to drive assumptions for next year. What say you?

Rex
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