Microsoft out of all competitors is the one that scares me most. Particularly when you're trying to grab share from their bread and butter which is enterprise collaboration software. Apple-music was never core for Apple so i like Spotify's chances better. Shopify was needed because there were conflicting interests of merchants selling on Amazon vs Amazon. I don't think they are comparable, but wish you best of luck with your Zoom investment. I'd rather wait until i see some sort of meaningful acceleration or this feels like it can be dead money for some time.
Thanks Eric and Antonio¡ Long time awaited a contrarian view of Zoom.... a company totally underestimated by the market. Holding since March 2020, and currently down -50%, but still planning to average down.
When thinking about ZM long term future, always come to mind Buffets insight with Gillete... I sleep very well because men will always shave in the morning whatever happens with the economy. And so will videoconferencing and collaborative work in the long term for years on end.
I don't read anything about SBC in the text, the canary in the coalmine in my eyes for Zoom. If you subtract the SBC from the CFO then FCF will tumble from 1471,89 to 414,73 and FCF per share will tumble from $4,89 to $1,35.
You are right if the SBC happens in reasonable proportions. That is not the case with Zoom.
If the SBC is far too large then it only enriches those who share in it, not the other shareholders.
Most investors ignore stock compensation as a cash expense, which causes overvaluation of share prices - over 70% of equity analysts fail in this regard.
Is stock-based compensation truly free? No. The company will either have to spend cash repurchasing shares from the open market or dilute the ownership of existing shareholders.
ZM Operating Income '22, '23, '24: $1.063,59 $245,43 $598,27
Microsoft out of all competitors is the one that scares me most. Particularly when you're trying to grab share from their bread and butter which is enterprise collaboration software. Apple-music was never core for Apple so i like Spotify's chances better. Shopify was needed because there were conflicting interests of merchants selling on Amazon vs Amazon. I don't think they are comparable, but wish you best of luck with your Zoom investment. I'd rather wait until i see some sort of meaningful acceleration or this feels like it can be dead money for some time.
Thanks for your comment, Gonzalo.
The market is big and growing, I believe there is space for both, even if Zoom doesn't manage to meaningfully take market share away from Teams.
I see your point, although I would expect Zoom's share price to rise as meaningful acceleration is visible to everyone in the market.
Best of luck - thoughts on earnings?
Thanks Gonzalo.
Solid IMO. Very excited about CCaaS though.
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Thanks Eric and Antonio¡ Long time awaited a contrarian view of Zoom.... a company totally underestimated by the market. Holding since March 2020, and currently down -50%, but still planning to average down.
Thanks for your comment, Carlos. Hopefully the stock will catch up soon with the business.
When thinking about ZM long term future, always come to mind Buffets insight with Gillete... I sleep very well because men will always shave in the morning whatever happens with the economy. And so will videoconferencing and collaborative work in the long term for years on end.
Thanks for your feedback I have something profitble för U wh@tpp @ PTÉ
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100% agree here : I actually wrote two articles about it
https://www.growthgauge.com.au/p/significant-partnerships-zooms-strategic
and
https://www.growthgauge.com.au/p/zooming-ahead-of-market-sentiments
Looking forward to the result on Monday.
Disc: I own
I don't read anything about SBC in the text, the canary in the coalmine in my eyes for Zoom. If you subtract the SBC from the CFO then FCF will tumble from 1471,89 to 414,73 and FCF per share will tumble from $4,89 to $1,35.
Thanks for your comment.
SBC is key for retaining top talent.
Why would you subtract a non-cash expense from CFO? SBC is already taken into account through dilution.
Hi Eric, could you eleborate more on "SBC is already taken into account through dilution". ?
FCF per Share = Total FCF / Shares outstanding.
As a result of SBC, the number of shares outstanding increases, which is considered in the FCF per share graph in the post.
You are right if the SBC happens in reasonable proportions. That is not the case with Zoom.
If the SBC is far too large then it only enriches those who share in it, not the other shareholders.
Most investors ignore stock compensation as a cash expense, which causes overvaluation of share prices - over 70% of equity analysts fail in this regard.
Is stock-based compensation truly free? No. The company will either have to spend cash repurchasing shares from the open market or dilute the ownership of existing shareholders.
ZM Operating Income '22, '23, '24: $1.063,59 $245,43 $598,27
ZM SBC '22, '23, '24: $477,29 $1.285,75 $1.057,16
There are many interesting articles about this on the internet, here is one: https://mannhowie.com/stock-compensation-dcf
Hi Guido,
I had a look at the articles you provided and you were right. Morgan Stanley also deducts SBC from FCF to acocunt for this dilution (https://www.morganstanley.com/im/publication/insights/articles/article_stockbasedcompensation.pdf)
I have included this metric in the Q1 Earnings Digest Review (https://open.substack.com/pub/ericsanta/p/zm-all-eyes-on-up-market?r=3wgsd6&utm_campaign=post&utm_medium=web) and will include it going forward.
Thanks!
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