ZM

Growth acceleration, a catalyst to unlock value. 2-2.5x Return Potential.

Post the covid stock bubble, a laser focused management team at Zoom works to transform from a single-product company to an Enterprise platform. Revenue growth acceleration from low single-digits to high single-digits could be the catalyst for positive earnings revisions and potentially multiple re-rating.

In the second episode of Pitch the PM, ex-Citadel Analyst & Millennium Senior Portfolio Manager, Doug Garber, is swayed by Sean Emory’s ZM pitch. Sean has high-conviction in his ZM thesis with a mid-teens weight in his portfolios. After more research, Doug also took a position.

Disclaimer: This is for educational purposes. It is not Investment advice. Contact your financial advisor for suitable investments for you.

Transcript...

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Transcript

Show Notes

02:42 What ACTION do I want the Portfolio Manager to take?
- Buy

1:13:16 Do I UNDERSTAND this business and industry?
- Yes, Sean uses it for his business.

1:13:49 Is the stock available at a REASONABLE price today?
- Yes, at 10x EV/EBITDA and at the low end of the Enterprise Software peers.

1:14:01 Why is this stock MIS-PRICED?
- Low growth at 3% as the Online Segment churn at 2-3%/month has reduced the overall company’s growth rate from the Enterprise Segment.

1:15:03 What is my VARIANT VIEW vs the street?
- Growth accelerating to high single-digits from low single-digits.
- Adoption of Zoom phone and Zoom Call Center and stability from the Online Segment.

1:16:28 What is my EVIDENCE?
- AlphaSense expert calls demonstrate the uplift from Zoom Phone can be 3x for an Enterprise client.
- And AlphaSense expert calls also discuss the strong, founder-led culture that is laser focused on winning in UCaaS.

48:37 What are the CATALYSTS for the street to realize my view?
- Quarterly results with accelerating Enterprise revenue growth and stable Online revenue.

1:20:01 What is the company WORTH if my bet is right?
- $100 – $210 based on $5-$7 in FCF/share at 20-30x P/FCF.

1:01:29 What is the OTHER SIDE of the bet?
- Competition makes it hard for Zoom to accelerate Enterprise growth and/or the Online Segment churn increases.

1:03:47 Is management ALIGNED with ownership?
- Yes, this is a founder led company with 8% insider ownership and a laser focus on being the best in UCaaS.

Thank you for tuning in. We would be grateful for your comment or like!

Disclaimer: This is for educational purposes. It is not investment advice. Contact your financial advisor for suitable investments for you.

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