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Enterprise Communication Boom to Drive These 4 Stocks Beyond 2020

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Radhika Pujara
·6 min read
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Accelerated digitalization has transformed workspace beyond imagination. Team meetings, conferences, and social interactions have taken to web-based video communication mode courtesy of the coronavirus crisis induced work-from-home, stay-at-home, online learning and telehealth care wave.

Innovation in work communications involving video conferencing, file synchronization, file sharing, e-signature portals, unified communications, encryption and security has facilitated the work-from-home trend.

Recent surge in coronavirus cases are likely to encourage people worldwide to opt for work from home, until and unless it is necessary to do otherwise. People are expected to follow social distancing norms, wear masks and limit travel for the foreseeable future.

Thereby, the growing preference for online-mode conferences positions companies like Zoom Video ZM, Microsoft MSFT, Cisco CSCO and Dropbox DBX well to capitalize on digitally transforming enterprise communication space.

Notably, per Mordor Intelligence data, enterprise communication infrastructure market is anticipated to see a CAGR of 17.5% between 2020 and 2025.

Year-to-Date Performance





The companies in this booming space are striving to enhance their video conferencing platforms to capitalize on work-from-home push and strengthen competitive prowess in video conferencing vertical. Per a report from Grand View Research, the video conferencing market is expected to hit $8.56 billion by 2027 at a CAGR of 9.9% between 2020 and 2027.

Let us take a look at the recent efforts in enterprise communication and workspace collaboration arena as the work-from-home trend is here to stay.

Microsoft Strengthens Teams With New Features

Microsoft recently introduced a slew of various free conversation features to Teams desktop and web apps. The new functionalities will aid users to start a personal chat or begin a group chat with up to 250 people. Users will be allowed to sync existing chats from phone to computer and carry-forward conversations on the device as per choice.

Moreover, the addition of Together mode feature to Teams in a bid to make video meetings lively and dynamic while enhancing user experience is a masterstroke. Instead of focusing on individuals in neat squares in different backgrounds, the Together mode removes the backgrounds and condenses all the participants into a shared space resembling an auditorium.

Notably, integration of Teams with Microsoft’s various inhouse offerings including PowerPoint presentations, SharePoint, Stream, Dynamics 365 makes it a winner as it makes collaboration easy and engaging, while simultaneously driving outcomes and saving time.

In fact, the tech giant, currently carrying a Zacks Rank #2 (Buy), stated that Teams has daily active user base of 115 million in its first-quarter fiscal 2021 earnings conference. The momentum can be attributed to coronavirus-led work-from-home, stay-at-home, telehealth and online learning wave. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Uptick in HelloSign & Paying User Growth Aid Dropbox

Solid momentum of Dropbox’s new Desktop App amid evolving workspace demand for seamless enterprise communication tools is a key catalyst.

The company is striving to enhance its platform to aid users to access, store, synchronize and share files, photos, videos, songs and spreadsheets. Solid demand for cloud storage, triggered by coronavirus crisis led work-from-home wave, has been acting as a tailwind for this Zacks Rank #2 company.

Surge in user base of Plus subscription plan for individuals, driven by strength in Smart Sync, Dropbox Rewind, and Dropbox Transfer features, is noteworthy.

Propensity toward web-based learning has led to higher utilization of Dropbox Paper among higher-education institutions and universities. Professors are finding it convenient to use Dropbox Paper to enhance educational content by making it more engaging, collaborative and accessible for students.

In medical field, robust uptake of HelloWorks — a fully customizable document workflow solution — in processing patient intake forms for instance is likely to be a game changer.

Moreover, strong strategic focus on product innovation and introduction of new features including Dropbox Passwords, Dropbox Spaces, and integration of HelloSign functionality is anticipated to bolster growth in paying users. In third-quarter 2020, Paying users came in at 15.25 million, up 8.9% on a year-over-year basis.

In fact, HelloSign witnessed strong traction in third-quarter 2020. HelloSign now boasts of 21 additional languages and management expects the product to gain a solid footing in international markets, courtesy of the extensive awareness campaign. Notably, HelloSign is an e-signature vendor that was acquired by Dropbox for $230 million in 2019.

Strength in User Base to Drive Zoom Video

Videoconferencing titan, Zoom Video is riding on momentum in number of subscribers and expanding enterprise customer base amid the coronavirus-induced remote-working and online-learning wave.

Moreover, the company is leaving no stone unturned to enhance video conferencing experience as evident from the development of hardware-as-a-service model, which will enable users to access Zoom-branded equipment like video cameras, conferencing telephones, and large-screen monitors.

Besides, efforts to eliminate the security and privacy loopholes, and Zoom From Home solution’s launch are expected to help maintain its existing enterprise user base and attract more customers. As of Jul 31, 2020, Zoom Video, currently carrying a Zacks Rank #3 (Hold), had roughly 370,200 customers (with more than 10 employees), which soared 458% year over year. The stock has become an investor favorite and witnessed a surge of 532.4% on a year-to-date basis.

Moreover, the company had 988 customers (with more than $100,000 in trailing 12-month revenues), up 112% year over year. The company’s growing enterprise customer list includes ExxonMobil and Activision Blizzard.

Cisco’s Monthly Updates to Webex to Boost Adoption

Cisco updates its Webex portfolio on a monthly basis to aid users enhance productivity with advancements in video conferencing. Per the latest updates, the company announced background noise removal settings, dark theme feature, and enhancements to mute and unmute functionality in Webex to provide a seamless interactive meeting experience.

Moreover, the company has integrated Cisco Spark with Webex Platform, which enhanced Webex Meeting and enabled it to introduce Webex Teams, thereby strengthening its enterprise collaboration portfolio.

The company is also well poised to enrich Webex Assistant service with AI-based voice-recognition and transcription capabilities from the Voicea acquisition.

Further, integration of AI and ML capabilities into enterprise collaboration solutions is anticipated to increase productivity of users and improve engagement. This, in turn, is expected to bolster adoption of Webex Meetings, Webex Devices and Webex Teams, which is a tailwind for this Zacks Rank #3 stock.

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Microsoft Corporation (MSFT) : Free Stock Analysis Report
 
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