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Zoom Video Communications ROIC %

: 59.75% (As of Jul. 2021)
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ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Zoom Video Communications's annualized return on invested capital (ROIC %) for the quarter that ended in Jul. 2021 was 59.75%.

As of today (2021-10-16), Zoom Video Communications's WACC % is 7.51%. Zoom Video Communications's ROIC % is 55.31% (calculated using TTM income statement data). Zoom Video Communications generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.


Zoom Video Communications ROIC % Historical Data

The historical data trend for Zoom Video Communications's ROIC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Zoom Video Communications Annual Data
Trend Jan17 Jan18 Jan19 Jan20 Jan21
ROIC %
- -5.63 3.69 3.41 63.00

Zoom Video Communications Quarterly Data
Jan17 Jan18 Apr18 Jul18 Oct18 Jan19 Apr19 Jul19 Oct19 Jan20 Apr20 Jul20 Oct20 Jan21 Apr21 Jul21
ROIC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 53.04 48.25 61.55 53.13 59.75

Competitive Comparison

For the Software - Application subindustry, Zoom Video Communications's ROIC %, along with its competitors' market caps and ROIC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

   

Zoom Video Communications ROIC % Distribution

For the Software industry and Technology sector, Zoom Video Communications's ROIC % distribution charts can be found below:

* The bar in red indicates where Zoom Video Communications's ROIC % falls into.



Zoom Video Communications ROIC % Calculation

Zoom Video Communications's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Jan. 2021 is calculated as:

ROIC % (A: Jan. 2021 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (A: Jan. 2020 ) + Invested Capital (A: Jan. 2021 ))/ count )
=659.848 * ( 1 - 0.84% )/( (505.308 + 1571.81)/ 2 )
=654.3052768/1038.559
=63.00 %

where

Invested Capital(A: Jan. 2020 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash, Cash Equivalents, Marketable Securities - max(0, Total Current Liabilities - Total Current Assets+Cash, Cash Equivalents, Marketable Securities))
=1289.845 - 22.845 - ( 855.194 - max(0, 333.83 - 1095.522+855.194))
=505.308

Invested Capital(A: Jan. 2021 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash, Cash Equivalents, Marketable Securities - max(0, Total Current Liabilities - Total Current Assets+Cash, Cash Equivalents, Marketable Securities))
=5297.993 - 193.284 - ( 4244.713 - max(0, 1259.966 - 4792.865+4244.713))
=1571.81

Zoom Video Communications's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Jul. 2021 is calculated as:

ROIC % (Q: Jul. 2021 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (Q: Apr. 2021 ) + Invested Capital (Q: Jul. 2021 ))/ count )
=1178.412 * ( 1 - 2.1% )/( (1814.94 + 2046.822)/ 2 )
=1153.665348/1930.881
=59.75 %

where

Invested Capital(Q: Apr. 2021 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash, Cash Equivalents, Marketable Securities - max(0, Total Current Liabilities - Total Current Assets+Cash, Cash Equivalents, Marketable Securities))
=5888.611 - 261.111 - ( 4689.579 - max(0, 1528.336 - 5340.896+4689.579))
=1814.94

Invested Capital(Q: Jul. 2021 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash, Cash Equivalents, Marketable Securities - max(0, Total Current Liabilities - Total Current Assets+Cash, Cash Equivalents, Marketable Securities))
=6508.593 - 313.065 - ( 5105.399 - max(0, 1686.373 - 5835.079+5105.399))
=2046.822

Note: The Operating Income data used here is four times the quarterly (Jul. 2021) data.

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Zoom Video Communications  (NAS:ZM) ROIC % Explanation

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.

There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.

Why is ROIC % important?

Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Zoom Video Communications's WACC % is 7.51%. Zoom Video Communications's ROIC % is 55.31% (calculated using TTM income statement data). Zoom Video Communications generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases. Zoom Video Communications earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Be Aware

Like ROE % and ROA %, ROIC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.


Zoom Video Communications ROIC % Related Terms

Thank you for viewing the detailed overview of Zoom Video Communications's ROIC % provided by GuruFocus.com. Please click on the following links to see related term pages.


Zoom Video Communications Business Description

Zoom Video Communications logo
Industry
Technology » Software NAICS : 511210 SIC : 7372
Traded in Other Exchanges
Address
55 Almaden Boulevard, 6th Floor, San Jose, CA, USA, 95113
Zoom Video Communications provides a communications platform that connects people through video, voice, chat, and content sharing. The company's cloud-native platform enables face-to-face video and connects users across various devices and locations in a single meeting. Zoom, which was founded in 2011 and is headquartered in San Jose, California, serves companies of all sizes from all industries around the world.
Executives
Bawa Aparna officer: Chief Operating Officer C/O ZOOM VIDEO COMMUNICATIONS, INC. 55 ALMADEN BOULEVARD, 6TH FLOOR SAN JOSE CA 95113
Pelosi Janine officer: Chief Marketing Officer C/O ZOOM VIDEO COMMUNICATIONS, INC. 55 ALMADEN BOULEVARD, 6TH FLOOR SAN JOSE CA 95113
Hammonds Kimberly director 100 EAST DAVIE STREET RALEIGH NC 27601
Crehan Shane officer: Chief Accounting Officer C/O EVENTBRITE, INC. 155 5TH STREET, 7TH FLOOR SAN FRANCISCO CA 94103
Yuan Eric S. director, 10 percent owner, officer: Chief Executive Officer C/O ZOOM VIDEO COMMUNICATIONS, INC. 55 ALMADEN BOULEVARD, 6TH FLOOR SAN JOSE CA 95113
Mcmaster Herbert Raymond director C/O ZOOM VIDEO COMMUNICATIONS, INC. 55 ALMADEN BOULEVARD, 6TH FLOOR SAN JOSE CA 95113
Steckelberg Kelly officer: Chief Financial Officer C/O ZOOM VIDEO COMMUNICATIONS, INC. 55 ALMADEN BOULEVARD, 6TH FLOOR SAN JOSE CA 95113
Gassner Peter P director C/O VEEVA SYSTEMS INC. 4280 HACIENDA DRIVE PLEASANTON CA 94588
Chadwick Jonathan director 3401 HILLVIEW AVENUE PALO ALTO CA 94304
Azus Ryan officer: Chief Revenue Officer C/O ZOOM VIDEO COMMUNICATIONS, INC. 55 ALMADEN BOULEVARD, 6TH FLOOR SAN JOSE CA 95113
Swanson Bart director C/O ZOOM VIDEO COMMUNICATIONS, INC. 55 ALMADEN BOULEVARD, 6TH FLOOR SAN JOSE CA 95113
Benhorin Roy officer: Chief Accounting Officer C/O ZOOM VIDEO COMMUNICATIONS, INC. 55 ALMADEN BOULEVARD, 6TH FLOOR SAN JOSE CA 95113
Sankarlingam Velchamy officer: Pres. of Engineering & Product C/O ZOOM VIDEO COMMUNICATIONS, INC. 55 ALMADEN BOULEVARD, 6TH FLOOR SAN JOSE CA 95113
Subotovsky Santiago director C/O EMERGENCE CAPITAL PARTNERS 160 BOVENT ROAD SUITE 300 SAN MATEO CA 94402
Emergence Equity Partners Iii, L.p. 10 percent owner 160 BOVET ROAD, SUITE 300 SAN MATEO CA 94402

Zoom Video Communications Headlines

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