![]() ![]() I mean, most church and synagogue rabbis and priests didn't even know about Zoom, right? And now everybody knows about it.īut the problem is it really needed to pivot to the Enterprise to grow. The problem is that you had 300% year over year growth in the heat of the pandemic. So I mean, Cisco also is a networking company, a security company, but has Unified Communications and Webex, right? I do think it can be a standalone company. And look at how many of the proliferation of products they've added just in the last three years. They're very good at innovation and engineering. I mean, the CEO has done a phenomenal job. Does just having the video calling piece or even the Zoom Phone piece, does it make sense without more stuff around it?ĬATHARINE TREBNICK: Well, I think it is a very good well run company. JULIE HYMAN: Catharine, I think it's worth digging into some of these individual things, but first, I have sort of a more existential question about Zoom, which is, does it make sense to have a video calling company as a standalone entity? In other words, we see something like Microsoft Teams, which I think has taken some market share, right? And it can be part of a suite of offerings from the likes of Microsoft. So, just a combination of a few things made us think maybe we need to move to the sidelines. For example, you can't sell Zoom phones in France if you don't have a staff in France to sell the phones, right? So it was even though on a positive point, the Zoom Phone is doing extremely well, and they've done 4 million seats in less than three years, but they sold so many, they don't have enough staff on-site right now to really help with the elegant integration and delivery. ![]() So they're looking to really figure out how to excel in France and Germany. So that isn't happening.Īlso, countrywide, we've been hearing from our proprietary research that they're excelling in some countries and not others. They've put in a $14 million headwind for their guide. Obviously, we've had really heavy foreign exchange headwinds with that. So between the very tight budgets, we had thought international would be a big factor in growth in '23 and '24. We're forecasting 23 in FY '23 and only 10,000 in FY '24. In 2022, they added 50 new Enterprise logos. And what's happening is, they're not adding enough new logos in the Enterprise department. ![]() To just give you some stats, Enterprise was- we're expecting it to be 55% in FY '23 and going to 60%, but only growing at 14% year over year. And so I decided to move to the sidelines. ![]() So, basically, with a saturated video market, I had expected the enterprise to really take off with the cohort group, but that just didn't happen. People are looking to consolidate down the number of vendors they have in the IT departments, keep things on track, keep costs low. I mean, right now, you have really tight budgets. Great to have you here with us today, and thanks for taking the time take us through your thesis here on Zoom.ĬATHARINE TREBNICK: So basically, my original thesis was that their cohort groups of Zoom Room, Zoom Chat, Zoom Phone, Events, White Board, would actually reaccelerate revenue. The analyst behind the call, Catharine Trebnick, joins us now. MKM Partners turning bearish, downgrading the video communications company from buy to hold, slashing its price target along the way to $75 from $100, citing limited risk-reward at these levels. Video TranscriptīRAD SMITH: A gloomy outlook for Zoom Video. MKM Partners Managing Director Catharine Trebnick to discuss downgrading Zoom stock amid ongoing macro pressures, competing with Microsoft Teams and Google Meet, Tesla integration, and the outlook for Zoom. ![]()
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