The pandemic has likely caused a significant increase in remote working and the trend is here to stay. Teleconferencing and telework technology have advanced to the point where some businesses can thrive with completely remote teams.
Therefore, investors can consider buying Zoom Video Communications, Inc. (ZM), DocuSign, Inc. (DOCU), and Fiverr International Ltd. (FVRR), which are benefitting from the shift to remote work.
Over 55% of Americans believe their work can be done remotely in their industry. Moreover, mobile workers with communicative employers are 5X more productive and 3X less likely to experience burnout.
According to Remote Work Statistics, as of 2022, the majority of business spending by remote businesses is on Web conferencing software (67%).
The digital workplace is a modern version of traditional workplaces that provides employees with personalized role-based services. To meet their demands, employees have quick access to data and services from anywhere at any time. The global digital workplace industry is expected to reach $234 billion by 2032. The market is predicted to grow at a CAGR of 22.3% until 2032.
Investors’ interest in growth stocks is evident from the Vanguard Growth ETF (VUG) 16.9% returns over the past six months.
Let’s delve deeper into the fundamentals of the stocks.
Zoom Video Communications, Inc. (ZM)
ZM is a provider of video communication platforms. The Company provides a unified communications and collaboration platform that delivers fundamental changes how people interact, connecting them through frictionless and secure meetings, phone, chat, content sharing, and more.
On April 15, 2023, ZM announced the acquisition of Workvivo in order to expand Zoom’s platform and provide new ways for customers to keep employees informed, engaged, and connected.
On March 27, 2023, ZM announced the extension of Zoom IQ, a smart companion that encourages collaboration and unlocks people’s potential by summarizing chat threads, organizing ideas, generating material for chats, emails, and whiteboard sessions, preparing meeting agendas, and more.
The company also announced that it will use OpenAI to strengthen its unique federated approach to AI based on flexibility.
ZM’s forward EV/EBIT multiple of 7.76 is 53.4% lower than the industry average of 16.65. Its forward EV/EBITDA multiple of 7.33% is 45% lower than the industry average of 13.33.
ZM’s trailing-12-month levered FCF margin of 37.41% is 462.8% higher than the industry average of 6.65%. Its trailing-12-month ROTA of 1.28% is 118.5% higher than the industry average of 0.58%.
For the fiscal fourth quarter that ended January 31, 2023, ZM’s revenue came in at $1.12 billion, up 4.3% year-over-year. The company’s gross profit increased 1.2% year-over-year to $823.45 million during the same period.
Its total current assets came in at $6.36 billion for the period that ended January 31, 2023, compared to $6.18 billion for the period that ended January 31, 2022.
ZM’s revenue grew at a CAGR of 91.8% over the past three years. In addition, its EBIT grew at a CAGR of 168.4% over the past three years.
Analysts expect ZM’s revenue to increase marginally year-over-year to $4.46 billion in 2024. It’s EPS to come in at $4.21 in 2024. It surpassed EPS estimates in all the four trailing quarters. ZM’s shares have gained 2.3% intraday to close the last trading session at $62.22.
ZM’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
ZM has a B grade for Value and Quality. Within the Technology - Services industry, it is ranked #25 out of 79 stocks. Click here for the additional POWR Ratings for Stability, Sentiment, Growth, and Momentum for ZM.
DocuSign, Inc. (DOCU)
DOCU provides electronic signature solution in the United States and internationally. The company offers the DocuSign e-signature solution, Contract Lifecycle Management (CLM), and Gen for Salesforce. The company sells its products through direct and partner-assisted sales and web-based self-service purchasing.
Its forward Price/Cash Flow of 13.40x is 24.6% lower than the industry average of 17.78x, while its forward EV/EBIT multiple of 15.63 is 6.1% lower than the industry average of 16.65.
DOCU’s trailing-12-month gross profit margin and levered FCF margins of 78.82% and 29.46% are 59.3% and 341% higher than the industry averages of 49.47% and 6.68%, respectively.
DOCU’s total revenue came in at $659.58 million for the fiscal fourth quarter that ended January 31, 2023, up 13.6% year-over-year. Its gross profit increased 16.2% year-over-year to $522.15 million.
Its non-GAAP net income attributable to common shareholders and non-GAAP net income per share came in at $133.28 million and $0.65, up 33.5% and 35.4% year-over-year, respectively.
DOCU’s revenue grew at a CAGR of 37.2% over the past three years. In addition, its levered FCF grew at a CAGR of 48.6% over the past three years.
Street expects DOCU’s revenue to increase 7.5% year-over-year to $2.70 billion in 2024. It’s EPS is expected to grow 18.7% year-over-year to $2.41 for the same period. It surpassed EPS estimates in all four trailing quarters. Over the past six months, the stock has gained 16.4% to close the last trading session at $47.54.
It’s no surprise that DOCU has an overall B rating, equating to a Buy in our POWR Ratings system. It has an A grade for Growth and a B for Quality. It is ranked #3 out of 25 stocks in the Software - SAAS industry.
Beyond what is stated above, we’ve also rated DOCU for Value, Sentiment, Stability, and Momentum. Get all DOCU ratings here.
Fiverr International Ltd. (FVRR)
Headquartered in Tel Aviv, Israel, FVRR operates an online marketplace worldwide. Its platform enables sellers to sell their services and buyers to buy them.
FVRR’s trailing-12-month gross profit margin of 80.45x is 168.1% higher than the 30.01x industry average. Its trailing-12-month levered FCF margin of 10.64% is 1% higher than the 4.81% industry average.
For the fiscal fourth quarter ended December 31, 2022, FVRR’s revenue came in at $83.13 million, up 4.2% year-over-year. Its gross profit came in at $67.32 million, up 4.3% year-over-year.
Its total current assets came in at $625.22 million for the period that ended December 31, 2022, compared to $468.22 million for the period that ended December 31, 2021.
FVRR’s revenue grew at a CAGR of 46.6% over the past three years. In addition, its total assets grew at a CAGR of 57.5% over the past three years.
The consensus revenue estimate of $426.21 million for the year ending 2024 represents an 18.5% increase year-over-year. Its EPS is expected to grow 39.2% year-over-year to $1.70 in 2024. It surpassed EPS estimates in all four trailing quarters. FVRR’s shares lost 5.5% intraday to close its last trading session at $26.39.
FVRR’s strong fundamentals are reflected in its POWR Ratings.
It is ranked #19 in the Internet industry. It has a B for Growth. To see additional FVRR’s rating for Sentiment, Quality, Stability, Value, and Momentum, click here.
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ZM shares were trading at $63.82 per share on Friday morning, up $1.60 (+2.57%). Year-to-date, ZM has declined -5.79%, versus a 7.92% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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