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How Zoom Messed Up Earnings Season (Podcast)

Jun. 11, 2020 6:30 AM ETPagerDuty, Inc. (PD), WORK, ZMWSM, TEAM, GPS, WDAY, CRM, TWLO, ZS, EVBG, MSFT, META2 Comments
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The Investing Edge


  • 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

The Investing Edge profile picture
The Investing Edge is a podcast channel on Seeking Alpha that features shows from different Seeking Alpha authors, with a focus on their unique investing style. Authors will speak with CEOs and industry experts, break down key market stories and topics, and share insights on how they research new investments.The first two shows on The Investing Edge are:Value Investor's Edge Live, hosted by J Mintzmyer of Value Investor's Edge. The show will feature J's conversations with publicly traded shipping company CEOs, sector experts, and fellow deep value investors about their companies and investing approaches. - This will now be posted on the SA Marketplace Roundtable Channel - https://seekingalpha.com/author/sa-marketplace-roundtable-podcast#regular_articlesThe Razor's Edge, hosted by SA podcast host Daniel Shvartsman and Seeking Alpha author Akram's Razor of The Razor's Edge. The two will talk about ideas from Akram's Razor's current watch list or portfolio, including specifics on the ideas as well as discussion about the research process and the background itself.Stay tuned for the launch of this channel on October 3rd, and watch out for new shows on The Investing Edge over coming months.

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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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