How Zoom Messed Up Earnings Season (Podcast)
Summary
- We conclude a three-episode run of looking at the SaaS sector amidst earnings season.
- Zoom had a so-called 'greatest software quarter ever' report, which, two days before PagerDuty and Slack reported, threw expectations out of wack.
- We break down what happened in the market's reaction, and also what the underlying theses look like for the months and years to come.
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by Daniel Shvartsman
We've talked about Zoom (NASDAQ:ZM) vs. Slack (NYSE:WORK) with a side of PagerDuty (NYSE:PD) and Atlassian (TEAM) thrown in for the past two episodes on The Razor's Edge. So it's worthwhile to dig in again with earnings having come and gone. And it was something of a wild earnings week. Zoom earned plaudits usually reserved for achieving world peace for their blow-away report, but didn't move much as the stock had risen nearly 40% in the week before earnings. Slack and PagerDuty reported two days later, and while they both beat numbers, the market reaction was significantly more muted. And then a jobs report came out that fueled a 'back to normal' rally that took the wind out of SaaS (Software as a service) names.
So the questions are: did the story change for these names? Why does the timing of the reports matter so much? And is the market right to be skeptical about Slack's earnings especially, but also PagerDuty's? Akram's Razor, who continues to follow these names closely on his service, Razor's Edge, has his take on the matter. And since I've dipped into the sector with PagerDuty and Dropbox (DBX) positions, I share what concerns or intrigues me. Click play above to listen.
Topics Covered
- 2:00 minute mark – Digging into Zoom's guidance
- 6:00 – The timing of PagerDuty and Slack's earnings (two days after Zoom's).
- 8:00 – What about the expansion in large clients for Zoom and potential new verticals
- 13:30 – How did Zoom's report affect PagerDuty/Slack's reports
- 18:00 – Why isn’t guidance going higher for some of these SaaS names?
- 28:00 – The longer onboarding cycle for Slack/PagerDuty
- 33:00 – The convergence of the attention economy
- 36:00 – The Dropbox angle
- 42:00 – Ramping up of adoption curves
- 48:00 – Macro and sector context to keep in mind
This article was written by
Analyst’s Disclosure: I am/we are long PD, DBX, GOOG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Daniel Shvartsman is long PD, DBX, and GOOG.
Akram's Razor is long WORK, PD, and FB.
Nothing on this podcast should be taken as investment advice.
We will post a transcript in the coming days.
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