Zoom Earnings: Enterprise Strength Building

We are maintaining our fair value estimate of $89 per share for narrow-moat Zoom after the company reported good fiscal second-quarter results that were above our expectations on both the top and bottom lines. At the same time, full-year guidance was raised but by more than upside in the quarter. Based on guidance, we made only modest changes to our model and continue to view the stock as undervalued. Stabilization trends continue, consistent with the last several quarters, with enterprise growth and margins being the most obvious areas of strength. We are aligned with management’s belief that revenues will accelerate in the third quarter. Lastly, Zoom announced that Kelly Steckelberg, CFO, will leave after the firm’s third-quarter results to pursue a startup opportunity.