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No. of Recommendations: 69
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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No. of Recommendations: 5
Rex, thanks for these scenarios. I think that the market can’t figure out at the moment if next year Zoom will be growing at 50% or below - more like 30%.

I think that if Zoom will be able to grow next year at 80-100% there is a huge upside from today’s price like 50-70% or so.

If we will see more like 50-60% topline growth - I agree that upside on share price is more like 30-40%.

If we’ll see growth in 30s - well then probably we have to start reducing the position as I wouldn’t see much upside on share price in this scenarios.

ZM is still large position for me competing for the first place with CRWD, and I’m trying to figure out - like most of us on the board - what to do next.

I’d say that middle scenario is base case at the moment with hope in the first scenario. But we don’t invest in hope here.

What would others say?

Best,
V
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No. of Recommendations: 17
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

It seems pretty darn hard to predict next year's revenue for ZM, but let me use some of your assumptions (as I understand them) and overlay my own viewpoint.

I would take your expected end-of-year revenue run rate, NOT the total year's revenue (looking at THIS conservative version of your work):

Q1 Q2 Q3 Q4 FY
Revenue $1,007 $1,122 $1,237 $1,352 $4,718


..... and I'd say the end-of-year revenue run rate is about $5.4B.... and I'd say a PS of 40-45 is still not unreasonable. That puts the market cap at $215B - $245B.

That's roughly DOUBLE CURRENT VALUE.

Only crazy people (like me) think that's reasonable. And I'll give it a bit of consideration as to whether I need to buy more ZM (Deep thought....ummm....YEAH! Me buy more!). After all, I'm an old retired geezer and I have to consider the future. ;)

Rob
Rule Breaker Home Fool & STMP/MTH Maintenance Coverage Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.
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No. of Recommendations: 145
Others would say y'all humans often get too cute for your own britches.

Consider that every so often, a company comes along that is truly exceptional due to that ethereal mix of product, context that demands the product, devotion from fans, superb leadership and a huge open and early-stage market. Monkey is thinking, easily, of say:

Apple
Netflix
Amazon
Shopify
Tesla

You all know that all of these went through huge up and down swings, but had you bought early in the game and fallen asleep for 5 to 10 to 15 years, you'd wake up with more zeros in your banana stash than you'd know what to do with.

At this moment, Zoom is in a unique position to be welcomed into this club.

It is keeping the world together at time unlike any other. It has a superb mission statement and leadership team. It has tremendous opportunities to keep expanding. The context couldn't be better either: peak of a pandemic that forever changed how the entire world works and interacts with each other.

Competition: webex is dead. Teams is free and still people are going to buy billions worth of Zoom gadgets.

And Zoom has only been on the public markets for how long? 1.5 years?

And y'all trying to decide on whether to sell based on a few percentage points of revenue growth here or there???? Your big brains are sooooo heavy sometimes!

Let's spit and shake on this bet, therefore: Monkey doesn't sell a single share of his Zoomies for 5 years. Y'all do your crazy smart thinking and sell and buy and rotate your sectors and whatever. Let's return to this post on 12/4/2025 and see whose banana stack is larger. Winner gets all kinds of delicious bottles of banana flavored bourbon. Any takers?

When one of those once-twice-three-times in a lifetime companies comes along, being cute is not high on Monkey's priority list; making serious 'naners is. Know which camp you're in. Revisit posts written by this board's homo sapiens selling their "overpriced" shares of SHOP at $250/share while admitting just how special the company is to jump-start your memory.

Until Zoom starts faltering due to lack of execution or lack of vision or boneheaded errors, consider what faith even means in an investing context and whether you're an investor in real things and real people or a numbers weenie playing with charts and graphs; it's the former who become wealthier in your's truly experience.

Hugs and Wet Smooches,

Monkey (long ZM)
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No. of Recommendations: 10
Let's spit and shake on this bet, therefore: Monkey doesn't sell a single share of his Zoomies for 5 years. Y'all do your crazy smart thinking and sell and buy and rotate your sectors and whatever. Let's return to this post on 12/4/2025 and see whose banana stack is larger. Winner gets all kinds of delicious bottles of banana flavored bourbon. Any takers? -- Monkey

Your thoughts are fine, Monkey, but my mind is on a different track right now. NOT looking at selling any ZM. I'm looking at ALL our investments and trying to figure out where it makes sense to sell in order to buy more ZM. That has nothing to do with your shares of ZM or even my existing shares of ZM.

It has everything to do with deciding how many more shares to buy. I've already decided NOT to buy more ZM calls, given the likely gains, risks and call premiums. But it might be a good idea for me to double our position to 30%. I love the idea of 15% more portfolio in ZM.... but it means selling 15% of other companies that are doing great!

Since we own other good ones like CRWD, etc..... I have to evaluate each company and assess their current growth rate and market value against ZM. It would be easy to just sell stuff blindly and buy more ZM.... but I'm just probably fooling myself that I can optimize the process to sell just the least promising companies. At least I'll take my best shot....

So far, companies on my chopping block to fund more ZM: OKTA (very good, but not AS good).

It's hard to part with more positions right now, but I'm looking at what we've got....

Rob
Rule Breaker Home Fool & STMP/MTH Maintenance Coverage Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.
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No. of Recommendations: 5
great discussion on this thread..

I also believe ZM will add ~$100M+ q/q for next several quarters.. and therefore, upside from here is anywhere between 30% to 100% over next year or two..

While I like Monkey's astute write up, my cynical brain says that Zoom's primary revenue source is from enterprise customers and that domain is very different from consumer domain. Just because Zoom has become verb, it does not translate into continuous success in enterprise world.. unlike consumer world, growing spend with any vendor in enterprise world goes through scrutiny..
So, yes, they are gaining traction with consumers, OnZoom initiatives, they are still heavily dependent on enterprises.. and Zoom application - video conf - is not like ERP, it is relatively easier to switch..
No I am not a nay-sayer on Zoom, all I am saying is Zoom is not in a comparable bucket as Apple or Amazon or Tesla.. can they get there, yes, but I would not have blind faith.. I would want to see actual progress.

I do have big hope for Zoom on their Phone initiative.. this is one thing that is keeping me from pulling trigger on selling Zoom.. overall phone is bigger (may be 2x or 3x) opportunity for Zoom than video conf in enterprise world.. and it is much stickier (does not get replaced for at-least five years.. many cases of 10+ years).. and it is generally fixed budget (sorry, unlikely to get built in expansion every year).. the big obstacle here is that it is sticky.. so it takes a lot replace incumbent.. Zoom has once in a lifetime opportunity get this replacement right and also get it done fast (relatively)..

So my hope is that Zoom's enterprise phone business has started ramping right now and so while 2021 may see ~$100M+ per quarter, phone business can accelerate that going 2022 (how much.. may be $200M q/q.. may be higher, who knows it is very large market)..

So my strategy is to keep moderate size position in Zoom - 7% to 12% - depending on price up / down with market.. and I intend to be patient with my Zoom position (specially in taxable account) all the way in to 2022 on this thesis.. hopefully by mid-21 Zoom will start sharing success metrics for phone biz that will allow us to track progress.
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