What to expect from Zoom earnings tomorrow

Zoom is set to report earnings after the bell on Tuesday. Yahoo Finance’s Dan Howley joins Kristin Myers to discuss.

Video Transcript

KRISTIN MYERS: Let's switch and talk about Zoom, which has been essentially a winner. If the airline travel was a loser over the last couple of months, we have seen Zoom essentially be the winner, up over 13% today. So we're joined now by Dan Howley about what we can expect from the earnings report tomorrow. Dan?

DAN HOWLEY: Yeah, so what we're expecting is to see revenue of $230 million expected. That's up from $122 million in Q1 2020. It's their earnings calendar. It's all kind of messed up. But this is going to be Q1 2021, according to their calendar. Revenue per share, we're expecting one cent. And that's-- sorry, earnings per share is one cent, versus zero in the same quarter last year. And, really, this is a company that, I mean, if you can say benefited from the pandemic, I guess that's what you could say. It was really the reason why so many people were still able to connect, go to class, do their job.

Without services like Zoom, none of that would have happened. But it was also discovered after having so many people jump on the service, that it didn't have the best security features. And that was something that they had to deal with for a while. There was that idea of Zoom bombing, where people would jump in and say terrible things in people's chats. It happened in some classrooms. As a result, New York actually dropped it as an option for distance learning-- Zoom just canceled entirely.

Some people just didn't feel comfortable going back. There were also issues with calls being routed through mainland China and discussions on whether or not that opens you up to potential hacking and people's conversations being taken by the Chinese government. So they've addressed some of those issues. Now you can control where your chats are circuited through. And they did add improved security features. They still, however, don't have end-to-end encryption.

And that's something that allows for information just to leave your device, and then the only other device that can see it is the device that is meant to. So it's encrypted the entire way. They originally said they had that, but they didn't-- not a great way to go about running a company. They are going to be implementing that going forward, though. So it really came down to, you know, so many people were on the service. And then, oh, yeah-- they realized they had a bunch of security issues.

KRISTIN MYERS: Well, Zoom is really, honestly, been off to the races. I remember when we were chatting about their IPO, as I said, up over 13% just today, alone. So Dan Howley, thanks so much.

DAN HOWLEY: Thank you.