Zoom zooms, but this health tech stock does it even better

The stock market managed to register some gains to start the new week, although major market benchmarks ended well after the day’s highs. The Nasdaq Composite (^IXIC) led the way higher with gains of more than half a percent, but S&P 500 (^GSPC 0.31%) and Dow Jones Industrial Average (^DJI 0.22%) had to make do with smaller increases on Monday.


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Data source: Yahoo! Finance.

After the closing bell, however, positive financial results lifted some stocks. Especially shares of Zoom video communication (ZM -0.28%) were particularly strong performers, showing solid gains as investors look for the video conferencing specialist to bounce back. And an even greater increase in shares of health technology companies Offspring (PGNY 1.70%) increased awareness of a company many have not followed closely.

The show goes on for Zoom

Shares in Zoom Video Communications rose 8% in after-hours trading on Monday. The pandemic mainstay of communications stocks reported fourth-quarter financial results for the period ended Jan. 31 that gave investors more confidence in their ability to continue going forward.

Zoom’s numbers showed solid growth, albeit at rates that weren’t even close to what the video communications specialist has achieved in recent years. Total revenue rose 4% year over year to $1.12 billion, ending a year with 7% sales growth.

Adjusted net income was 7% lower than a year earlier at $367 million, but a decline in the number of shares limited the decline in adjusted earnings per share, which came in at $1.22. Full-year fiscal 2023 adjusted earnings of $4.37 per share were down approximately 14% from fiscal 2022’s final bottom-line number.

Zoom saw more strength in the enterprise segment, which has proved crucial as casual users have not been as loyal to remain with the service as various businesses and social venues have reopened. Zoom earned 213,000 enterprise customers, up 12% from 12 months ago, and those customers had a net expansion rate of 115% in dollar terms.

Zoom has 3,471 customers who contribute at least $100,000 annually to its revenue, up 27% from the same period a year ago. Enterprise segment revenue rose 18% for the quarter and 24% for the full year, showing that Zoom’s overall strategy still makes sense.

Investors appeared to like Zoom’s outlook for fiscal 2024, though they projected revenue growth of just 1% and a drop in adjusted earnings to between $4.11 and $4.18 per share. However, with the stock having plummeted from its highs, much of the decline is already reflected in its share price, and that may justify greater optimism about Zoom’s long-term prospects.

Offspring look healthy

Meanwhile, shares of Progyny rose 14% in after-hours trading. The fertility and family-related benefits solutions provider had massive revenue growth during 2022, and investors enjoyed those gains as well as its bottom line performance.

Progyny’s numbers were generally good. The turnover of 214 million dollars was higher by 68% from the level of the previous year. Although net income fell sharply, adjusted pretax operating income of $33 million was more than double what Progyny posted in the fourth quarter of 2021.

Both Progyny’s fertility benefits and pharmacy benefits services showed impressive growth rates, with customer numbers rising by more than half in the last 12 months as the company served nearly 4.56 million members by the end of 2022.

Progyny believes that macroeconomic trends will continue to support growth into 2023. For the full year, the company hopes to break the $1 billion mark in revenue, with earnings of $0.26 to $0.32 per share and a significant jump in adjusted operating income before tax. Margin expansion also looks promising.

Last year was not kind to Progyny’s shares, but investors hope that the trend is about to turn around for the company. Based on its recent performance and outlook, it may finally give shareholders the results they’ve been looking for.

Dan Caplinger holds positions at Zoom Video Communications. The Motley Fool has positions in and recommends Progyny and Zoom Video Communications. The Motley Fool has a disclosure policy.

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