Investing in Zoom Stock (ZM)

Here’s what you should know about investing in Zoom

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Investing in Zoom Stock (ZM)
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Zoom Video Communications Inc. (ZM) offers a video-first communications platform used by millions of people worldwide for both business and personal use. The platform connects people via video, phone, chat, and content sharing and can be integrated across a broad range of devices.

Meetings on the platform can host as many as 1,000 participants, while webinars can scale up to as many as 50,000. Zoom generates revenue by selling subscriptions.

Zoom was founded in 2011 by Eric Yuan as SaaSbee Inc. The company changed its name to Zoom Video Communications Inc. in 2012. Zoom went public on April 18, 2019, and trades on the Nasdaq stock exchange under the ticker symbol ZM.

The company is headquartered in San Jose, Calif., and has additional offices in more than 15 locations in the United States, Europe, Asia, and Australia. Yuan is the chief executive officer (CEO) of Zoom.

Zoom is a member of the information technology sector and operates within the software industry. Led by Yuan, Zoom competes against a long list of rivals. They include legacy web-based meeting service providers such as Cisco Systems Inc.’s (CSCO) WebEx and LogMeIn Inc.’s GoToMeeting. Rivals also include bundled productivity solution providers with video functionality such as Alphabet Inc.’s (GOOGL) Google G Suite and Microsoft Inc.’s (MSFT) Microsoft Teams. Other competitors are unified communications as a service (UCaaS) and legacy private bank exchange (PBX) providers such as 8×8 Inc. (EGHT), Avaya Holdings Corp. (AVYA), and RingCentral Inc. (RNG).

Zoom’s latest fiscal year (FY) was FY 2021, ended Jan. 31, 2021. For that period, the company reported net income of $672.3 million on revenue of $2.7 billion.

Key Takeaways

  • Zoom provides a video-first communications platform for businesses and personal use.
  • The company’s biggest rivals include Cisco Systems Inc. (CSCO), Microsoft Inc. (MSFT) and Alphabet Inc. (GOOG).
  • For fiscal year (FY) 2021, ended Jan. 31, 2021, Zoom reported net income of $672.3 million on revenue of $2.7 billion.
  • On Sept. 30, 2021, Zoom’s agreement to purchase cloud contact center services provider Five9 Inc. for $14.7 billion in stock was rejected by Five9 shareholders.

Zoom’s Recent Developments

  • On Sept. 30, 2021, Zoom’s agreement to acquire cloud contact center software provider Five9 Inc. (FIVN) was rejected by Five9 shareholders (see details below).

What’s Happening With Zoom’s Acquisition of Five9?

On July 18, 2021, Zoom announced that it had agreed to acquire cloud contact center solutions company Five9 Inc. in an all-stock transaction valued at roughly $14.7 billion. Five9 shareholders were to receive 0.5533 share of Zoom Class A common stock for each share of Five9 Inc.

As mentioned above, on Sept. 30, 2021, Five9 announced that the two parties had mutually agreed to abandon the deal. The company said that the agreement had not received the required number of votes from Five9 shareholders to approve the merger. Earlier in September, The Wall Street Journal reported that a U.S. Department of Justice-led panel, named Team Telecom, was investigating the proposed merger’s potential national security risks. The panel’s focus was mainly on Zoom’s ties to China.

The U.S. government has been increasing its scrutiny of Zoom on several fronts. In 2020, the United States charged a China-based Zoom executive with conspiring to disrupt videoconference commemorations of the 1989 Tiananmen Square democracy protests. Zoom is also the focus of several ongoing federal investigations related to its dealings with Beijing, according to the Journal.

FAQs

Has Zoom (ZM) ever split its stock?

No, it has not.

Does Zoom (ZM) pay a dividend?

No, it does not.

How many shares of Zoom (ZM) stock are there?

As of Aug. 23, 2021, Zoom had 240,744,533 outstanding shares of Class A common stock and 56,383,369 outstanding shares of Class B common stock.

Who is Zoom’s CEO?

Zoom’s CEO is Eric Yuan, who founded the company in 2011. Prior to founding Zoom, Yuan was corporate vice president of engineering at Cisco, and was a founding engineer and vice president of engineering for web and videoconferencing platform Webex.

Article Sources

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  1. Zoom Video Communications. “Form 10-K for the Fiscal Year Ended January 31, 2021,” Page 45. Accessed Oct. 20, 2021.

  2. Forbes. “A Biography of Eric Yuan, Founder and CEO of Zoom.” Accessed Oct. 20, 2021.

  3. Zoom Video Communications. “Our Team.” Accessed Oct. 18, 2021.

  4. Zoom Video Communications. “Investor FAQs.” Accessed Oct. 20 2021.

  5. Zoom Video Communications. “About.” Accessed Oct. 18, 2021.

  6. Zoom Video Communications. “Form 10-K for the Fiscal Year Ended January 31, 2021,” Page 9. Accessed Oct. 20, 2021.

  7. Zoom Video Communications. “Form 10-K for the Fiscal Year Ended January 31, 2021,” Page 44. Accessed Oct. 18, 2021.

  8. CNBC. “Zoom and Five9 Abandon $14.7 Billion Acquisition.” Accessed Oct. 18, 2021.

  9. Zoom Video Communications. “Zoom to Acquire Five9.” Accessed Oct. 18, 2021.

  10. Business Wire. “Five9 and Zoom Mutually Agree to Terminate Merger Agreement.” Accessed Oct. 18, 2021.

  11. The Wall Street Journal. “Zoom’s Nearly $15 Billion Deal for Five9 Under U.S. Government Review Over China Ties.” Accessed Oct. 18, 2021.

  12. Zoom Video Communications. “Form 10-Q for the Quarterly Period Ended July 31, 2021,” Page 1. Accessed Oct. 18, 2021.