Zoom IPO: 118 % growth, profitability and #3 Forbes Cloud.

On April 17 there will be the IPO of Zoom Video Communications - the developer of a platform for video and audio conferences. Offering will take place on the NASDAQ Stock Exchange under the ZM ticker. The offering volume will be $626 million with capitalization of $ 7,74 billion.

Zoom Video Communications, Inc. is one of the leaders in the field of modern video communications for various companies. One of the company's products is a cloud platform for video and audio conferences, chats, webinars using various mobile and stationary devices. The company was founded in 2011 by Eric Yuan, who initially worked at WebEx. WebEx was acquired by Cisco Systems in 2007 for $ 3.2 billion. Zoom Video is included in the Forbes Cloud 100 list (3rd place), and is also one of the leaders in the Gartner quadrant. The business model of the company is based on the subscription model. Subscription income mainly depends on the number of paid hosts and the purchase of additional products. The duration of contracts may vary from 1 year or more.

Zoom Video products. Zoom offers several types of products: conferences, webinar, Zoom Rooms and Zoom Phone. The platform has integration with cloud applications such as Atlassian, Dropbox, Google, LinkedIn, Microsoft, salesforce.com, Slack, and others.

Profitability with growth over 100%. The average growth rate over the past 3 years amounted to 134%. In FY of 2018, revenue growth rates were 149%, in FY of 2019 - 118%. In FY of 2019, the EBIT margin was 2%; the company earned the first $ 6 million of operating profit with revenue of $ 331 million. The company has no debt with a liquid position of $ 177 million in securities and cash.

The valuation by FCFF model projects the company’s valuation at $11,101 billion, and the equity capital valuation at $11,483 billion with a target price of $ 44.5 with an upside potential of 39%.

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