The Zoom boom
Video conferencing giant nobody had heard of is now worth more than world’s five biggest airlines
MANY of us had barely heard of Zoom before the coronavirus crisis. Now it seems we cannot get enough of the video conferencing app.
And the company has now revealed just how valuable that boom in usage has been, doubling its 2020 revenue forecast from about £720m to £1.4bn.
It comes after Zoom has become an essential tool used by families and companies around the world to stay in touch during lockdown.
The New York-listed firm’s latest quarterly results show it has 265,400 business customers with at least ten employees, nearly four times the number it had one year ago.
It does not disclose overall usage numbers but experts think mobile users alone reached 173m last month. Its stock price has risen by more than 200pc so far this year.
That has left the company with a market capitalisation of nearly £47bn – more than the world’s top five airlines, which have been hammered by the virus, combined.
Its success has boosted the fortune of Chinese-American founder Eric Yuan, from around £3.1bn to £8.6bn, according to Bloomberg. The 50-yearold, formerly a top executive at US computing giant Cisco, owns 19pc through various types of shares.
Li Ka-Shing, 91, the Hong Kong billionaire behind the CK Hutchison empire, was also an early investor and reportedly owns about 8.6pc of Zoom. His stake is worth about £2.4bn.
First-quarter revenue at Zoom more than doubled from the same time last year to about £216m, resulting in a profit of £21.5m – up from just £157,000 a year ago.
Richard Valera, an analyst at New York bank Needham, said the results were ‘incredible’, adding: ‘Never have I seen something of that magnitude in my 20 years of covering technology.’
Yuan, who co-founded the business nine years ago, said: ‘We were humbled by the accelerated adoption of the Zoom platform around the globe.’
Zoom has forecast revenue of £400m for the current quarter ending on June 30 – more than four times the same period last year but the rise in Silicon Valley-based firm’s popularity has not been without controversy.
Its links to China, where it employs large numbers of software engineers, have sparked fears, with the FBI advising US government bodies not to use it.
UK intelligence agencies warned the Government not to use Zoom amid fears it would be vulnerable to Chinese surveillance.
There have also been complaints about privacy issues that enabled outsiders to make uninvited appearances during other people’s video conferences.
It prompted some schools to stop using the service for online classes, although efforts to introduce more protections have brought some back some users.
More than 100,000 schools worldwide currently use Zoom for online classes.
David Madden, analyst at CMC Markets, predicted the share price was set to rise further, saying traders were ‘extremely bullish’ about it. He said: ‘The pandemic has put Zoom in focus and the brand has become extremely well known, in a professional and a personal capacity.
‘At some stage, the lockdown restrictions will be loosened to a point, so the group might see a dip in demand, but it has built up a great reputation.’
However, in the long-term it faces questions on how it will fend off rivals including Microsoft’s Teams app, Google, Facebook and Verizon. When Facebook added a video-calling feature, Zoom shares fell 5pc.