FINANCIAL REPORTING AND ANALYSIS GREAT LAKES INSTITUTE OF MANAGEMENT Dr.

Sudhakar Balachandran

UNDERSTANDING A QUARTERLY EARNINGS REPORT

Zoom Video Communications, Inc. (ZM: NASDAQ).

This assignment explores the information found in Zoom’s Quarterly Report.

You are asked to answer the following questions about Zoom’s Quarterly Report. Be sure to
address all parts of each question for full credit.

You should submit your assignment at the CAMU LINK Provided by Dr. Umayal, This Link May
be separate from other used to submit Homework #6

This file is designed for you to type or write (very clearly!) your answers in the space provided
and upload this document into CAMU as Instructed.

Honor Code Statement:

I pledge my honor that I have not violated the Honor Code during this assignment. I recognize
that this is an individual assignment and that I have turned in my own effort even if I have
discussed the assignment or worked in a group setting in preparing this assignment.

Signature: RUPIKA R G

Print name: RUPIKA R G(FT232076)

Part 2: Quarterly earnings information

Zoom Released first quarter of 2023 quarterly report on Monday May 23, 2022

You can find the Quarterly report at Zoom’s Investor Relations website, or on CAMU. To access
via Zoom Website Directly, use Link:
https://investors.zoom.us/news-releases/news-release-details/zoom-video-communications-
reports-financial-results-first

1. Describe Zoom’s earnings release, including what type of document was issued by Zoom
and a brief summary of the actual news that Zoom relayed about its third quarter
financial performance.
Sol: Zoom Earning’s Release:
First quarter total revenue of $1,073.8 million, up 12% year over year
First quarter GAAP operating margin of 17.4% and non-GAAP operating margin of 37.2%
First quarter net cash provided by operating activities of $526.2 million, a 49.0% margin
Number of customers contributing more than $100,000 in trailing 12 months revenue up 46%
year over year.

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FINANCIAL REPORTING AND ANALYSIS GREAT LAKES INSTITUTE OF MANAGEMENT Dr. Sudhakar Balachandran

Brief summary of actual news:

SAN JOSE, Calif., May 23, 2022 (GLOBE NEWSWIRE) -- Zoom Video Communications, Inc.
(NASDAQ: ZM), today announced financial results for
the first fiscal quarter ended April 30, 2022.
“In Q1, we launched Zoom Contact Center, Zoom Whiteboard and Zoom IQ for Sales,
demonstrating our continued focus on enhancing the customer
experience and promoting hybrid work. We believe these innovative solutions will further
expand our market opportunity for future growth and
expansion with customers,” said Zoom founder and CEO, Eric S. Yuan. “Additionally, in Q1, we
delivered revenue of over one billion dollars driven by
ongoing success in Enterprise, Zoom Rooms, and Zoom Phone, which reached 3 million seats
during the quarter. We also maintained strong
profitability and cash flow, including 17% in GAAP operating margin, approximately 37% non-
GAAP operating margin, approximately 49% operating
cash flow margin, and over 46% adjusted free cash flow margin.”

2. Would you view the information Zoom Released as “Good News” or “Bad News,” Why or
Why Not?

Sol: The information released by Zoom was “Good News”, as they have mention about
the milestone achieved in Q1 that they have delivered revenue of over one billion dollars
in Enterprise, Zoom Rooms, and Zoom Phone, which reached 3 million seats during the
quarter.
As per CEO they are also maintained strong profitability and cash flow, including 17% in
GAAP operating margin, approximately 37% non-GAAP operating margin, approximately
49% operating cash flow margin, and over 46% adjusted free cash flow margin.”

Part 2: Quarterly earnings information – continued

3. Using Yahoo! Finance or another website with stock market price information, obtain
historical Stock Price Data for Zoom’s (ZM: NASDAQ).

Use the Link below if you want to easily find stock data on Zoom at Yahoo finance:

https://finance.yahoo.com/quote/ZM/history?p=ZM

Find the closing stock price the day before (Friday May/20), the day of (Monday, May/23)
and the day after (Tuesday, May/23) the earnings information was released.

a) Describe the stock market reaction to the information by computing the percentage
change in price over this 2 day period (both from t-1 to t and from t to t+1 where t
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FINANCIAL REPORTING AND ANALYSIS GREAT LAKES INSTITUTE OF MANAGEMENT Dr. Sudhakar Balachandran

is the announcement day). In other words, if you purchased a share of Zoom at the
Closing price on that Friday and Sold it at the closing price on Tuesday, what precent
return would you have generated for yourself. Be sure to show the details of your
calculation.
Sol:
Closing stock price, the day before (Friday May/20) = $ 89.74
Closing stock price, the day of (Monday May/23) = $ 89.33
Closing stock price, the day after (Tuesday May/23) = $ 94.34

Percentage change in stock price between May 20 & May 22 = (89.33-89.74)/89.74 = -0.45%
So, it’s showing 0.45% decrease on the stock price between Friday closing & Monday closing.

Percentage change in stock price between May 22 & May 23 = (94.34-89.33)/89.33 = 5.6%
So, it’s showing 5.6% increase on the stock price between Monday closing & Tuesday closing.

Percentage change in stock price between May 20 & May 23 = (94.34-89.74)/89.74 = 5.12%
So, it’s showing 5.12% increase on the stock price between Friday closing & Tuesday closing.

b) Are you surprised by the size and direction of the market reaction based on the
earnings release? Discuss why or why not.

Sol: I am not surprised by the size and direction of the market reaction based on earning
release. The rise in the earning was expected because of high use of Zoom by large
organization and educational institute post covid.