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Omar Venerio
Omar Venerio
Articles (1720) 

Tuesday Morning Market Highlights

Markets in the green, Zoom beats Wall Street estimates

US Markets

U.S. stocks were in the green on Tuesday morning after closing with the best August returns in more than three decades. The Dow gained 55 points to 28,486, the S&P 500 index gained 0.32% to 3,511 and the Nasdaq Composite Index was up 1.00% to 11,893.


• Paycom Software Inc (NYSE:PAYC) +2.7%

• Walmart Inc (NYSE:WMT) +5.7%

• Westrock Co (NYSE:WRK) +3.4%

• FedEx Corp (NYSE:FDX) +1.5%

• ServiceNow Inc (NYSE:NOW) +1.9%

• Best Buy Co Inc (NYSE:BBY) +1.95%


• Kellogg Co (NYSE:K) -2.3%

• Cabot Oil & Gas Corp (NYSE:COG) -2.2%

• Baker Hughes Co (NYSE:BKR) -2.1%

• Juniper Networks Inc (NYSE:JNPR) -2.1%

• Campbell Soup Co (NYSE:CPB) -1.6%

Global Markets

The main European stock markets traded mostly in the green. The UK's FTSE 100 lost 1.66%, France's CAC 40 jumped 0.02%, Germany's Dax was up 0.24% and Spain's Ibex 35 gained 0.05%.

In Asia, Japan's Nikkei 225 fell 0.01%, India's BSE Sensex advanced 0.71%, Hong Kong's Hang Seng gained 0.03% and China's Shanghai Composite was up 0.44%.

Zoom releases earnings report

Shares of Zoom Video Communications, Inc. (NASDAQ:ZM) jumped more than 35% on Tuesday morning after the company announced its second-quarter results for fiscal 2021 the previous day. The company posted earnings per share of 92 cents, beating analysts' estimates by 47 cents. Revenue of $663.5 million grew 355% year-over-year and also beat expectations by $163.13 million.

CEO Eric S. Yuan had the following to say:

"Organizations are shifting from addressing their immediate business continuity needs to supporting a future of working anywhere, learning anywhere, and connecting anywhere on Zoom's video-first platform. At Zoom, we strive to deliver a world-class, frictionless, and secure communication experience for our customers across locations, devices, and use cases…Our ability to keep people around the world connected, coupled with our strong execution, led to revenue growth of 355% year-over-year in second quarter and enabled us to increase our revenue outlook to approximately $2.37 billion to $2.39 billion for FY21, or 281% to 284% increase year-over-year."

In the second quarter, the GAAP income from operations was $188.1 million, compared to $2.3 million in the second quarter of fiscal year 2020. Non-GAAP income from operations for the second quarter was $277.0 million, up from $20.7 million in the same quarter a year earlier. For the second quarter, GAAP operating margin reached 28.3% and non-GAAP operating margin was 41.7%.

The net cash provided by operating activities was $401.3 million for the quarter, compared to $31.2 million in the second quarter of fiscal year 2020. Free cash flow was $373.4 million, compared to $17.1 million in the comparable period of 2020.

Looking ahead to the third quarter of fiscal 2021, the company expects total revenue to be in the range of $685.0 million to $690.0 million and non-GAAP income from operations is expected to be between $225.0 million and $230.0 million. Further, non-GAAP diluted earnings per share are expected to be between 73 and 74 cents.

Joel Greenblatt (Trades, Portfolio) initiated a new position of 3,511 shares in the company during the quarter, as did Steve Mandel (Trades, Portfolio) with 1,687,453 shares. Ron Baron (Trades, Portfolio) cut his investment in the stock by 17.6% to 18,461 shares.

Disclosure: The author holds no positions in any stocks mentioned.

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About the author:

Omar Venerio
Omar Venerio is a capital markets, derivatives, corporate finance and financial management professor and Area Head of Finance. He is passionate about the stock market and providing independent fundamental research and hedge fund and insider trading-focused investigation.

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