The COVID-19 global pandemic has altered everything about how we conduct business and live our lives. In today's climate of disconnecting, technology companies that have created methods to bring us together safely — from six feet to six time zones away — are a strong play right now, and worthy of a long look. Here are three such stocks with the right tools and tech for a world under quarantine.
Videoconferencing is a way of life right now, whether we're discussing sales quotas and quarterly projections at work or gathering around the laptop to wish grandma a happy birthday. Zoom Video Communications (ZM -0.06%), a San Jose-based technology company, created a cloud-based communications platform to redefine the way digital connections work.
Zoom's screen sharing, collaborative file sharing, and the option to enable virtual backgrounds (still photos and video) for video calls blunt the corporate edges of teleconferencing. Want to do a video chat from San Francisco? From Earth orbit? From your Hawaii vacation last year? Zoom provides several options, and third-party outlets give you options to download hundreds more, or you can use any photo from your library. Zoom says it can support a video conference with 1,000 active participants and up to 10,000 viewers.
Zoom went public in March 2019 and has become a wildly popular application through "frictionless video, voice, chat and content sharing." Zoom has been enjoying financial success since its IPO, and that's important, but wise investors know the view ahead is preferable to the rearview. Virtual gathering solutions are going to be big players during this pandemic and the time beyond. Companies that can't see three months or three years down the road will be novelties rather than sustainers.
Okta's 2020 Businesses at Work report named Zoom the top videoconferencing application, and Gartner placed it in the 2019 Magic Quadrant for Meeting Solutions as a Leader. Why? User experience. Game developers and video producers say they prefer the video streaming resolution in Zoom better than the alternatives. It also enables users to easily record sessions and shifting screen sharing between users is a snap. Zoom has a virtual whiteboard where participants can brainstorm. Companies are using Zoom right now to broadcast, record, and rebroadcast webinars. Zoom plays well with others, too, with over 25 integration partners from Salesforce to IBM to Marketo and Google, to name a few.
Zoom CFO Kelly Steckelberg, as reported by Fool Beth McKenna, said the coronavirus crisis is a boon to business right now, but he expects that curve to flatten as the outbreak dwindles.
"Due to the coronavirus, we have already seen significant usage of our platform and accordingly we will expand our capacity to meet the increased demands of both paid and free users," he said. "For (fiscal 2021), we believe our [adjusted] gross margins will be at the lower end of our long-term target of 80% to 82%."
Slack Technologies (WORK) was founded in 2006 and offers both a free and paid application for instant communications based on channels. Like breakout rooms at conferences, it enables groups to exchange information and files in smaller, manageable clusters. Slack's communicator also allows users to jump onto a voice or video call through integration with Zoom, Skype, Google, and Webex, to name a few.
In its quarterly earnings call on March 12, it reported $181.9 million in revenue for Q4, up 49% from the previous year, and $630.4 million in total revenue for FY2020, up 57% from the year before. On the paid side, it reported 70 customers with annual recurring revenue over $1 million — almost doubling those ranks from the previous year.
Slack CFO Allen Shim, in the company's Q4 earnings call, reported it finished FY2020 with 110,000 paid customers and 893 of them paid more than $100,000 per year in subscription fees. CEO Steward Butterfield said he expects the company to collect between $842 million and $862 million in revenue in fiscal 2021, amounting to year-over-year growth of between 37% to 39%.
Butterfield told investors the company is running with the demand, and agility is key.
"A lot of this is changing," he said. "The world looked a little different 24 hours ago and it looked different 24 hours before that and 24 hours before that. So a lot of this is unfolding near real-time. There's a great opportunity to help. We've been running a lot of webinars. Our customer success teams are activated."
With the strain the coronavirus pandemic has placed on hospitals, doctor's offices, and other medical facilities, telemedicine has gained even more acceptance. Virtual visits keep patients and providers connected without exhausting valuable resources like personal protective equipment.
Teladoc Health (TDOC 2.00%) recorded a 50% surge in virtual visits in the United States for the week ending Friday, March 13 as COVID-19 cases continued to rise around the world. The demand reached 15,000 virtual visits by midweek. Lew Levy, MD, the chief medical officer at Teladoc, said there was a steep rise in the number of patients reporting upper respiratory issues, consistent with the rise in reported novel coronavirus cases.
"As we saw during the flu epidemic of 2018, a community's health-care system can become overwhelmed and virtual care can help provide needed relief," Levy said in a March 13 Teladoc press release.
The company went public in 2019 like the aforementioned Zoom and has grown fast, but not at the rate Zoom has ... to date. As the coronavirus crisis continues, Teladoc will likely see a surge in users. The cost of a Teladoc visit depends on your health plan and its copay scale. Virtual doctor visits are the wave of the present and future as the healthcare community struggles to flatten the curve of COVID-19 cases.
In its recent earnings call on Feb. 26, 2020, Teladoc CEO Jason Gorevic reported that year-over-year Q4 revenue grew 27% to $156.5 million and total virtual visits increased 44% to 1.2 million. He added that over the entire fiscal year, year-over-year revenue grew 32% to $553.3 million. The total number of virtual visits increased by 57% to 4.1 million over the same timeframe. As we look ahead into 2020 and beyond, it's only logical that Teladoc will grow, providing at least one mitigating method to fight the pandemic.
Staying close...at a distance
As the coronavirus pandemic continues, we will rely more and more on technology to connect us. Shelter-in-place orders, social distancing, and pandemic precautions demand it. Companies like Zoom, Slack, and Teladoc are the digital bridges and safety nets we need to navigate a currently uncertain world. With their inevitable growth, they make strong arguments for investors' consideration.