Profitable Tech Unicorn Zoom Launches IPO .

Zoom rings Nasdaq’s Opening Bell for its IPO.

Profitable Tech Unicorn Zoom Launches IPO

Zoom IPO

Zoom Video Communications Inc. (ZM), a video-first unified communications platform provider, launched its initial public offering (IPO) on Nasdaq on Thursday, April 18, making it one of a handful of high-growth tech companies to be profitable when going public this year.

Zoom, which was founded by Chief Executive Officer Eric Yuan in 2011, connects people through video, voice, chat and content sharing across all devices and workspaces through its platform. The San Jose, Calif.-based company has more than 1700 employees worldwide, with customers ranging from individuals to large-cap multinational corporations, such as Oracle and Workday.

"Zoom offer cloud-based video conferencing services, and our mission is to make communications frictionless," Yuan said at Nasdaq's Opening Bell Ceremony. "We truly believe that video is the future of communications, and someday online video conferencing will deliver a much better experience than face-to-face meetings."  

Zoom priced its IPO at $36 on Wednesday night, putting its value at about $9.2 billion. Earlier in the week, the company revised its deal price range to $33 to $35 a share, an increase from an initial targeted range of $28 to $32 a share, as investor demand intensified. It listed under a dual-class structure, offering 9.9 million shares of Class A Common Stock. 

Investors are zooming to the stock because of the company’s impressive revenue and profit as well as its rapid growth. The company reported 118% revenue growth from $151.5 million to $330.5 million between fiscal years 2018 and 2019 and has been free cash flow positive since 2017. 

Zoom shareholders expect continued growth thanks to favorable industry trends. Communication is at the core of every organization, but mobile and cloud technologies have enabled companies to be increasingly distributed across regions, creating the need for effective ways to communicate beyond in-person meetings. Furthermore, legacy approaches to workplace communication have largely been ineffective due to complicated interfaces and aging, proprietary architectures, prompting demand for a comprehensive platform such as Zoom.

Zoom is one of the latest companies to go public in a hot IPO market, which had stalled at the beginning of the year due to the government shutdown. As evident with Lyft’s IPO, investors appear captivated by what is coming to market, with several prominent start-ups and technology companies in the IPO pipeline.

"I think there is a lot of pent-up demand still in terms of companies wanting to come out this year," Adena Friedman, president and CEO of Nasdaq, said on CNBC. "It's been a very strong environment for IPOs right now, and, obviously, today is a great day for the markets in general, but I think it's also reflective of the story of Zoom and the strength of their business." 

The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular security or an overall investment strategy. Neither Nasdaq nor any of its affiliates makes any recommendation to buy or sell any security or any representation about the financial condition of any company. Statements regarding sector and strategy performance are not guarantees of future performance. Actual results may differ materially from those expressed or implied. Past performance is not indicative of future results. Investors should undertake their own due diligence and carefully evaluate companies before investing. ADVICE FROM A SECURITIES PROFESSIONAL IS STRONGLY ADVISED.

TAGS: IPO Listings
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