As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the video conferencing industry, including Zoom (NASDAQ:ZM) and its peers.
Work is becoming more distributed, both across geographies and devices. In order for businesses to keep functioning efficiently, they need to be able to communicate as well as they did when the teams were co-located, which drives the demand for integrated communication platforms.
The 4 video conferencing stocks we track reported a satisfactory Q2. As a group, revenues beat analysts’ consensus estimates by 1.2% while next quarter’s revenue guidance was 1.4% below.
Inflation progressed towards the Fed's 2% goal recently, leading the Fed to reduce its policy rate by 50bps (half a percent or 0.5%) in September 2024. This is the first cut in four years. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be debating whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
Amidst this news, video conferencing stocks have had a rough stretch. On average, share prices are down 9% since the latest earnings results.
Zoom (NASDAQ:ZM)
Started by Eric Yuan who once ran engineering for Cisco’s video conferencing business, Zoom (NASDAQ:ZM) offers an easy to use, cloud-based platform for video conferencing, audio conferencing and screen sharing.Zoom reported revenues of $1.16 billion, up 2.1% year on year. This print exceeded analysts’ expectations by 1.1%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ billings estimates and full-year revenue guidance exceeding analysts’ expectations.
“In Q2, we outperformed our guidance across the board and grew operating cash flow and free cash flow by 33.7% and 26.2% year over year, respectively, demonstrating our continued commitment to efficient growth.” said Eric S. Yuan, Zoom founder, and CEO.
Zoom delivered the weakest full-year guidance update of the whole group. The company added 50 enterprise customers paying more than $100,000 annually to reach a total of 3,933. Interestingly, the stock is up 13.1% since reporting and currently trades at $68.17.
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Best Q2: RingCentral (NYSE:NYSE:RNG)
Founded in 1999 during the dot-com era, RingCentral (NYSE:RNG) provides software as a service that unifies phone, text, fax, video calls and chat in one platform.RingCentral reported revenues of $592.9 million, up 9.9% year on year, outperforming analysts’ expectations by 1.1%. The business had a strong quarter with full-year revenue guidance exceeding analysts’ expectations and a decent beat of analysts’ billings estimates.
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 2.2% since reporting. It currently trades at $32.71.
Weakest Q2: 8x8 (NASDAQ:EGHT)
Founded in 1987, 8x8 (NYSE:EGHT) provides software for organizations to efficiently communicate and collaborate with their customers, employees, and partners.8x8 reported revenues of $178.1 million, down 2.8% year on year, in line with analysts’ expectations. It was a slower quarter as it posted a miss of analysts’ billings and ARR (annual recurring revenue) estimates.
8x8 delivered the highest full-year guidance raise but had the weakest performance against analyst estimates and weakest performance against analyst estimates in the group. As expected, the stock is down 20.5% since the results and currently trades at $2.05.
Five9 (NASDAQ:FIVN)
Started in 2001, Five9 (NASDAQ: FIVN) offers software as a service that makes it easier for companies to set up and efficiently run call centers, and offer more tailored customer support.Five9 reported revenues of $252.1 million, up 13.1% year on year. This number beat analysts’ expectations by 2.8%. Aside from that, it was a satisfactory quarter as it also produced full-year revenue guidance exceeding analysts’ expectations but a decline in its gross margin.
Five9 achieved the biggest analyst estimates beat and fastest revenue growth among its peers. The stock is down 26.3% since reporting and currently trades at $31.35.
This content was originally published on Stock Story
