Zoom Targets $28 to $32 Per Share In IPO

Zoom, a business-focused video conferencing company, priced its initial shares for its upcoming IPO at $28 to $32 per share, according to its S-1/A filing. 1

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Using a simple count of Class A and B shares outstanding after the IPO, Zoom would be worth $8.25 billion at $32 per share. More than 3 million shares are being offered to underwriters, putting the non-diluted valuation of Zoom, inclusive of the underwriter option, at $32 per share at $8.35 billion. According to Renaissance Capital, at the midpoint of its range, the company would sport “a fully diluted market value of $8.7 billion.”

Zoom is not going public on the strength of sheer growth, like Lyft. Instead, it’s going public on the back of profitable growth, which, this pricing shows us, is in demand. As such, Zoom is selling its shares at a valuation much higher than its private market worth, which was last known to be at a pre-money valuation of $900 million as part of its $115M Series D announced on January 2017. Unlike Pinterest, which recently set terms for its IPO to come in under its final private valuation, Zoom is posting material gains from its final private price.

As Crunchbase News noted at the time of Zoom’s first S-1 filing, the company doubled its revenue in its fiscal year ending January 31, 2018, with $330.5 million. It more than doubled its revenue from the year prior.

It generated nearly $270 million in gross profit, which is a gross margin of about 81.6 percent, an impressive figure for a company of Zoom’s size.

The Others

Other recent or upcoming IPOs like Lyft, Uber and Pinterest lack the one thing Zoom has: profit. Its revenue grew 118 percent in the last fiscal year.

It means investors made the right bet on the conference tool—the company is leaving the private market with $160.5 million in funding, with investors like Sequoia Capital, Emergence Capital, and Horizon Ventures.

Its proposed ticker symbol is “ZM,” and it is expected to start trading on Nasdaq next week, around the same time that Pinterest is rumored to list. As we reported this morning, Pinterest priced under its valuation, which could mean a slew of things, but mostly that the path toward profitability is hard. Still, as both companies tumble toward the finish line, we’ll see a textbook type of experiment on how the market reacts to two types of unicorns: the profitable and the not-so-much. Stay tuned.