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Why Zoom Video Shares Soared 44.6% in September

By Royston Yang – Oct 5, 2020 at 10:45AM

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A stunning earnings report, coupled with the company's upcoming annual user conference, have buoyed expectations.

What happened

Shares of Zoom Video Communications (ZM 3.68%) soared 44.6% in September, according to data provided by S&P Global Market Intelligence.

The videoconferencing company's stock has been on a tear, rising nearly sixfold since the start of the year to all-time highs.

Video-conferencing on laptop with nine othet colleague

Image source: Getty Images.

So what

Zoom released an impressive set of earnings for its second quarter, reaffirming that it's still on a stunning growth path. Revenue jumped more than threefold year over year to $663.5 million, while net income catapulted from $5 million to $185 million. More businesses are shifting their operations to include telecommuting as part of the new normal, and Zoom is a direct beneficiary.

The company is also building a robust customer base that can contribute recurring revenue. The number of large customers (those contributing more than $100,000 in trailing-12-month revenue) was up 112% year over year. Zoom also saw a more than fourfold growth in smaller businesses to over 370,000 during the quarter.

Now what

The company continues to build through partnerships. A recent collaboration with Lumen Technologies (LUMN 1.21%) will see Zoom's communications platform being pushed out to all Lumen customers around the world. Oracle (ORCL 0.71%) is also working with Zoom to integrate video into its workflow to enhance interactions with its customers. There may be more such partnerships in the coming months as Zoom remains a top choice for videoconferencing solutions.

Zoomtopia, on Oct. 14 and 15, is the company's annual user conference, where it will showcase the latest technologies for business communications.

Royston Yang has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Zoom Video Communications. The Motley Fool has a disclosure policy.

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