Better Buy: Zoom Video Communications vs. Microsoft - Motley Fool

That growth attracted the attention of larger tech companies like Microsoft (NASDAQ:MSFT), which aggressively promoted Teams as an alternative to Zoom.

Microsoft also generated 230 times as much revenue and over 2,000 times as much generally accepted accounting principles (GAAP) profit as Zoom last year.

Zoom trades at 200 times forward earnings, while Microsoft has a more grounded forward price-to-earnings (P/E) ratio of 31.

Zoom trades at 40 times this year's sales, compared to Microsoft's cooler forward price-to-sales (P/S) ratio of 10.

In the first quarter, which bore the full impact of the COVID-19 shutdowns, Zoom's revenue rose 169% annually to $328.2 million, and its adjusted net income soared 555% to $58.3 million.

For the full year, Zoom expects its revenue to rise 185% to 189%, and for its adjusted earnings-per-share (EPS) to grow 246% to 269%.

But after that growth spurt, analysts expect Zoom's revenue and earnings to rise 25% and 19%, respectively, in fiscal 2022.

Analysts expect its revenue and earnings to rise 10% and 12%, respectively, as the growth of its cloud services and the upcoming launch of the Xbox Series X offset the softness of its macro-sensitive businesses.