Zoom has more than $4 billion in cash — here's how they may spend it

Brian Sozzi
·Editor-at-Large
·2 min read

After a year in which Zoom became a verb (and the Yahoo Finance Company of 2020) thanks to the COVID-19 pandemic and saw a subsequent financial jolt, the tech player is sitting on a mountain of cash to the tune of $4.2 billion.

Investors shouldn't expect Zoom to sit on all of it for too long in the red-hot work from anywhere environment.

"We're really focused on continuing to build out our data center infrastructure for capacity needs as well as gaining efficiencies. We are also focused on R&D hiring, specifically on a global basis," Zoom CFO Kelly Steckleberg told Yahoo Finance Live.

Steckleberg added, "And then yes, we are looking at opportunities for acquisitions to augment our talent and our technology. We continue to look at many companies. There are a lot of innovative companies out there that might be the right match for us. We haven't found the right one."

To be sure, Zoom has been doing just fine without having to integrate a splashy acquisition.

Zoom said after the close of trading on Monday that its fourth quarter sales surged 369% year-over-year to $882.5 million. Non-GAAP operating profits exploded 839% from a year ago to $360.9 million. The company had 467,000 customers with 10 or more employees, up 470% from last year.

UKRAINE - 2021/03/02: In this photo illustration a Zoom logo of a company that provides video communications and online chat services is seen on a smartphone screen. (Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)
UKRAINE - 2021/03/02: In this photo illustration a Zoom logo of a company that provides video communications and online chat services is seen on a smartphone screen. (Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)

Zoom's full-year sales clocked in at $2.7 billion compared to $622.7 million in 2019.

Despite the impressive end to the year, Zoom's shares fell 2% in Tuesday trading. Some analysts voiced concern on the stock price in light of Zoom outlining 41% to 42% sales growth in 2021, sharply slower than the blistering pace of 2020, as the company cycles tough comparisons and people likely return to the office post-vaccination.

"While we acknowledge upside to FY22 estimates given management’s typical conservatism, we note the pace of new business deceleration highlighted by F4Q +3% q/q DR/cRPO growth limits the potential for meaningful upside to estimates," said Credit Suisse analyst Brad Zelnick in a note, who reiterated his Underperform rating on the stock and issued a $375 price target.

Zoom shares currently trade at about $400 a piece.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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