The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Zoom (NASDAQ:ZM) and the rest of the video conferencing stocks fared in Q1.
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 Q1. As a group, revenues beat analysts’ consensus estimates by 0.8% while next quarter’s revenue guidance was in line.
While some video conferencing stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 1.1% 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 $1.17 billion, up 2.9% year on year. This print exceeded analysts’ expectations by 0.8%. Overall, it was a strong quarter for the company with full-year EPS guidance exceeding analysts’ expectations and an impressive beat of analysts’ EBITDA estimates.
Zoom achieved the highest full-year guidance raise of the whole group. The company added 104 enterprise customers paying more than $100,000 annually to reach a total of 4,192. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 3.8% since reporting and currently trades at $78.96.
Is now the time to buy Zoom? Access our full analysis of the earnings results here, it’s free.
Best Q1: 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 to offer more tailored customer support.
Five9 reported revenues of $279.7 million, up 13.2% year on year, outperforming analysts’ expectations by 2.6%. The business had a very strong quarter with EPS guidance for next quarter exceeding analysts’ expectations and a solid beat of analysts’ EBITDA estimates.
Five9 scored the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 9.3% since reporting. It currently trades at $27.44.
Is now the time to buy Five9? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: 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 $177 million, down 1.3% year on year, in line with analysts’ expectations. It was a slower quarter as it posted a slight miss of analysts’ EBITDA estimates and billings in line with analysts’ estimates.
8x8 delivered the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update in the group. As expected, the stock is down 8.9% since the results and currently trades at $1.63.
Read our full analysis of 8x8’s results here.
RingCentral (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 $612.1 million, up 4.8% year on year. This result was in line with analysts’ expectations. Aside from that, it was a mixed quarter as it also produced a decent beat of analysts’ EBITDA estimates but a miss of analysts’ billings estimates.
The stock is down 1.1% since reporting and currently trades at $26.39.
Read our full, actionable report on RingCentral here, it’s free.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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