Is there a path ahead for Zoom (ZM +2.74%) to grow its revenue over the next five years? In this clip from "Ask Us Anything" on Motley Fool Live, recorded on May 4, Motley Fool contributor Jon Quast makes the case for why investors shouldn't give up on Zoom.
Jon Quast: I basically increased my position here by 30%, something like that. We all know what Zoom is. I want to point out that it came out of nowhere and there was already video conferencing tools out on the market from the big players. You know what I'm saying? This is not like this was a blank market that it came into and just took over. No. There were already options here. The problem with many of those, in my opinion, I'm not just being an apologist here for Zoom, but many of the options were just glitchy. I was an early Skype adopter, actually a paying user of [Microsoft's (MSFT 0.50%)] Skype, and found that it frequently did not meet my needs. When Zoom came onto the scene and it just worked, that's their mantra, but I believe it's true. I've not had any problems with Zoom. I think that that is why this company was able to take so much market share in an established market so quickly. If you look at their business, their profitability is off the charts, their free cash flow, their cash position, and they got more optionality that I really don't think the market is appreciating. They traded something like 20 times their cash flow right now, which is astonishing for a company that is expected to grow another 10% here in the coming year at the top-line revenue. But then you look at some of the other products that they are working on, they've already launched, but they are starting to really push them was Zoom Phone, Zoom Rooms, Zoom Apps. These are things that tend to not only increase existing customer spend. It increases to the magnitude of 2-3 times what they are spending when they just have Zoom meetings. When you think about that and only somewhere in the ballpark of 5% of customers have all of these products, you can see a path where they can really grow revenue a whole lot over the next five years, in my opinion. I think this is a company that people are wrongly leaving for dead. Just adding to my position here.
