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Zoom Video Communications Files For IPO

Video conferencing unicorn Zoom Video Communications, Inc. has filed for an initial public offering of its common stock.

In a filing with the U.S. Securities and Exchange Commission on Friday, Zoom said it plans to raise $100 million in the offering. However, that number could be a placeholder amount that might be revised later.

Zoom has not yet determined the number of shares to be offered or the price range for the proposed offering. The company intends to list its Class A common stock on the Nasdaq Global Select Market under the ticker symbol "ZM".

Zoom said it intends to use the net proceeds from the IPO for general corporate purposes, including working capital, operating expenses and capital expenditures.

In addition,Zoom may use a portion of the net proceeds for acquisitions or strategic investments in complementary businesses, although the company said it does not currently have any plans or commitments for any acquisitions or investments.

Morgan Stanley, J.P. Morgan, Goldman Sachs & Co. LLC, and Credit Suisse will act as lead book-running managers for the proposed offering.

BofA Merrill Lynch, RBC Capital Markets, and Wells Fargo Securities will be book-running managers, and JMP Securities, KeyBanc Capital Markets, Piper Jaffray, Stifel, and William Blair will act as co-managers for the proposed offering.

San Jose, California-based Zoom, which provides video-conferencing software, was founded in 2011 and has more than 1,700 full-time employees. The company's biggest outside stakeholder is Emergence Capital Partners with a 12.5 percent stake, followed by Sequoia Capital with an 11.4 percent stake. Zoom Founder and CEO Eric Yuan owns a 22 percent stake.

For the fiscal year ended January 31, 2019, Zoom reported net income of $7.58 million, compared to net loss of $3.82 million in the prior year. Revenue for the year grew 118 percent to $330.52 million from $151.48 million a year ago.

According to Zoom, it primarily faces competition from legacy web-based meeting services providers, including Cisco Systems Inc.'s (CSCO) Webex and Microsoft Corp.'s (MSFT) Skype for Business, bundled productivity solutions providers with basic video functionality, including Google, and point solutions providers, including LogMeIn.

The company noted that its introduction of Zoom Phone, a cloud-based PBX system, may lead to competition with legacy PBX providers.

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