Zoom Video Communication Inc. (NASDAQ:ZM) Sells $2 Billion Worth Of Its Shares To Raise Additional Capital

Zoom Video Communication Inc.’s (NASDAQ:ZM) CFO, Kelly Steckelberg opted for an equity raise instead of debt sales for additional cash to build the company’s operations. During the Pandemic, the company witnessed a surge and on Friday it announced the completion of a stock offering after selling its shares for $2 billion at $340 per share. 

Zoom sells equity to raise funds 

Ms. Steckelberg said that initially Zoom had planned to raise $1.75 billion to share sales but it raised more because of strong demand for its stock. She said that she wanted to preserve optimal flexibility for the company’s balance sheet. Notably, Zoom has not earmarked funds for specific investments and this is the motivation behind issuing equity rather than selling debt. 

This is the first fundraising for Zoom since it went public in 2019 and it almost doubled the amount of cash the company holds currently. Steckelberg indicated that the capital will be vital in the expansion of the sales team and marketing. Equally, the funds will be important in helping Zoom build data centers. In 2020, Zoom said that it will expand its R&D capabilities in Bangalore, India, and Singapore. The CFO confirmed that the company will put some of the cash into mergers and acquisitions. Zoom will offer more details regarding how it plans to spend the funds when it announces earnings on March 1. 

Zoom posted $777.2 in revenue recently 

In its most recent quarter, the company reported revenue of $777.2 million which is almost $600 million more compared to the same quarter last year. Equally, operations income was $192.2 million compared to a loss of $1.7 million in the previous year. At the end of October, Zoom had $70 million in debt.

Morningstar Research Services equity analyst, Dan Romanoff said that most software firms are currently raising capital with some selling debt which will convert into stock later. Zoom could be looking to make acquisitions and it will focus on firms selling collaboration tools that can help it match rivals such as Microsoft’s Teams or Cisco Systems’ Webex.