Analyst Note
| Dan Romanoff |Narrow-moat Zoom reported strong fiscal first-quarter results ahead of our expectations on both the top and bottom lines, featuring revenue above the top end of guidance and non-GAAP profitability well ahead of the company’s outlook. Enterprise was solid but continues to decelerate, while the online business showed signs of life a couple quarters earlier than expected. Currency headwinds have eased even if the demand environment remains cautious based on uncertain macro conditions. Importantly, management disclosed that Zoom Phone revenue surpassed 10% of total, pointing to continued traction. Zoom lifted its outlook for the year, but mostly because of this first-quarter upside, so we are therefore holding our fair value estimate steady at $95 per share. Shares are undervalued, but we continue to prefer other wide-moat names across software.