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Winners And Losers Of Q3: Zoom (NASDAQ:ZM) Vs The Rest Of The Video Conferencing Stocks

By: StockStory

December 30, 2024 at 04:01 AM EST

ZM Cover Image

Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Zoom (NASDAQ: ZM) and the best and worst performers in the video conferencing industry.

Work is becoming more distributed, both across geographies and devices. In order for businesses to keep functioning efficiently, they need to be able to communicate as well as they did when the teams were co-located, which drives the demand for integrated communication platforms.

The 4 video conferencing stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 1.8% while next quarter’s revenue guidance was 0.7% below.

Thankfully, share prices of the companies have been resilient as they are up 5.3% on average since the latest earnings results.

Zoom (NASDAQ: ZM)

Started by Eric Yuan who once ran engineering for Cisco’s video conferencing business, Zoom (NASDAQ: ZM) offers an easy to use, cloud-based platform for video conferencing, audio conferencing and screen sharing.

Zoom reported revenues of $1.18 billion, up 3.6% year on year. This print exceeded analysts’ expectations by 1.2%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ billings estimates and a solid beat of analysts’ EBITDA estimates.

“At Zoomtopia we announced major milestones such as AI Companion 2.0 and paid add-ons for AI Companion and industry-specific AI customization, further cementing our vision to deliver a differentiated AI-first work platform that empowers customers to achieve more than ever,” said Eric S. Yuan, Zoom founder and CEO.

The stock is down 6.4% since reporting and currently trades at $83.30.

Is now the time to buy Zoom? Access our full analysis of the earnings results here, it’s free.

Best Q3: Five9 (NASDAQ: FIVN)

Started in 2001, Five9 (NASDAQ: FIVN) offers software-as-a-service that makes it easier for companies to set up and efficiently run call centers to offer more tailored customer support.

Five9 reported revenues of $264.2 million, up 14.8% year on year, outperforming analysts’ expectations by 3.6%. The business had a very strong quarter with a solid beat of analysts’ EBITDA estimates and full-year EPS guidance exceeding analysts’ expectations.

Five9 scored the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 24.6% since reporting. It currently trades at $40.91.

Is now the time to buy Five9? Access our full analysis of the earnings results here, it’s free.

Weakest Q3: RingCentral (NYSE: RNG)

Founded in 1999 during the dot-com era, RingCentral (NYSE: RNG) provides software as a service that unifies phone, text, fax, video calls and chat in one platform.

RingCentral reported revenues of $608.8 million, up 9.1% year on year, exceeding analysts’ expectations by 1.1%. Still, it was a mixed quarter as it posted annual recurring revenue in line with analysts’ estimates.

RingCentral delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 6.9% since the results and currently trades at $36.11.

Read our full analysis of RingCentral’s results here.

8x8 (NASDAQ: EGHT)

Founded in 1987, 8x8 (NYSE: EGHT) provides software for organizations to efficiently communicate and collaborate with their customers, employees, and partners.

8x8 reported revenues of $181 million, down 2.2% year on year. This number surpassed analysts’ expectations by 1.5%. Aside from that, it was a mixed quarter as it also logged a solid beat of analysts’ EBITDA estimates but a slight miss of analysts’ annual recurring revenue estimates.

8x8 had the slowest revenue growth and weakest full-year guidance update among its peers. The stock is up 9.9% since reporting and currently trades at $2.55.

Read our full, actionable report on 8x8 here, it’s free.

Market Update

Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.

Want to invest in winners with rock-solid fundamentals? Check out our Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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