The very different post-profit movements of Zoom and DocuSign are a sign of the times

Zoom Video Communications (ZM) is up more than 20% after publishing what was undoubtedly a report on the benefits of the eruptions. Revenues (up 103%) and billings (up nearly 90%) easily outperformed consensus analysts' estimates, and free cash flow of $ 15 million exceeded expectations of around 11 million USD.

The company's most recent performance obligation (RPO – other backlog maturity) increased 127% to $ 377 million. Its outlook for the quarter and fiscal year 2020 (ending in January 2020) was better than expected, with the mid-year being perhaps rather conservative. revenue prospects involving growth of 63%. It is clear that Zoom is seeing its collaboration and videoconferencing software take off, while the significant investments in sales and the viral nature of its offerings are strengthening adoption by large companies.

DocuSign (DOCU), on the other hand, is down more than 10% – it was over 20% in trade after hours yesterday before the colder heads won – after posting a mixed report of the quarter of April. Revenues and EPS exceeded expectations, but billings of $ 215 million (+ 27%) slightly missed a consensus of $ 216 million. In addition, as DocuSign increased its full-year revenue forecast by $ 7 million, it reiterated its billing forecast of $ 1.01 to $ 1.03 billion (consensus was $ 1.22 billion). dollars), while asserting that business contract sales cycles were longer. that he sold to existing buyers his main electronic signature software on value-added offers.

Following a post-profit hike that should probably be offset by a short hedge, Zoom accounts for nearly $ 28 billion and is trading 34 times more than a $ 815-million consensus on billing the company. Exercise 2021. Even though this consensus turns out conservative (which is quite possible) and that Zoom generates about $ 900 million in tax billing for the fiscal year 2021, its assessment seems rather frothy (I am Had said well, even after Zoom began trading in the '60s after its IPO).

DocuSign, for its part, now accounts for about $ 8.4 billion and is trading 8.2 times the middle of its indicative billing range for fiscal year 2020. It's not really cheap, but it's nor does a flowing nose assessment for a company that is still experiencing strong revenue growth, remains the leader in a market that has only two major companies (Adobe (ADBE) is the other) and which still has a lot of long-term growth potential.

In some ways, the post-profit movements of Zoom and DocuSign are a sign of the times. After experiencing almost all launches during the first few months of the year for names of high-growth enterprise software, Wall Street is still very excited by the companies in the industry that meet or surpass its expectations. In addition to Zoom, companies such as Salesforce.com (CRM), ServiceNow (NOW), Anaplan (PLAN) and Coupa Software (COUP) have pulled themselves together (despite their rich multiples) over the past six weeks guidance.

On the other hand, the markets have generally been ruthless for a large number of software companies that have not responded to at least some of their expectations. In addition to DocuSign, this list includes companies such as VMware, PVTL, Zuora (ZUO) and Cloudera (CLDR).

Add to the fact that the number of software companies that publish disappointing results has clearly increased compared to the end of 2018 or early 2019, and that many of the companies that have produced strong reports have now risen by more than 50% this year, and the risk factor has increased due to the continuation of high-growth cloud / SaaS software trading at near-high levels.

On the other hand, although it naturally depends on a company's history, some names of the space on which markets have suddenly deteriorated are worth the look once the dust settles. .