Zoom booms as virus drives millions to its online service
SAN RAMON, Calif. — Zoom Video Communications is emerging as the latest internet gold mine as millions of people flock to its conferencing service to see colleagues, friends and family while tethered to their homes during the pandemic.
This week’s release of the once-obscure company’s financial results for the February-April period provided a window into the astronomical growth that has turned it into a Wall Street star.
Zoom’s revenue for its fiscal first-quarter more than doubled from the same time last year to $328 million, resulting a profit of $27 million — up from $198,000 a year ago.
The numbers exceeded analysts’ already heightened expectations, providing another lift to a rocketing stock that has more than tripled in price this year while the benchmark Standard & Poor’s 500 index has fallen 5%.
After a run-up to Tuesday’s anticipated announcement, Zoom’s stock initially rose even higher in extended trading.
But it abruptly reversed course and fell more than 3% after company executives acknowledged during a video discussion that some of its newfound users might depart during the second half of the year if health worries caused by the corornavirus dissipate.
The stock hovered around $225 this week — more than six times the company’s initial public offering price of $36 less than 14 months ago.
The surge left Zoom with a market value of about $59 billion through Tuesday — greater than the combined market values of the four largest U.S. airlines, which have seen their businesses hammered by the coronavirus outbreak that has dramatically curtailed travel.
“Videoconferencing is going to become a mainstream service,” predicted Zoom CEO Eric Yuan, who co-founded the company nine years ago.
He made the remarks during the video conference that at one point attracted more than 3,000 participants, a reflection of the interest in the company and its stock.
In a sign that the company still expects phenomenal growth in the months ahead, Zoom forecast revenue of roughly $500 million for its current quarter ending in July, more than quadrupling from the same time last year. For its full fiscal year, Zoom expects revenue of about $1.8 billion, nearly tripling in a year.
Zoom’s boom has come despite privacy and security problems that enabled outsiders to make uninvited — and sometimes crude — appearances during other people’s video conferences.
The concerns prompted some schools to stop using Zoom for online classes that have become widespread since February, although the company’s efforts to introduce more security protection has brought some back to the service. More than 100,000 schools worldwide are using Zoom for online classes, according to the company.
Overall, Zoom has more than 300 million daily participants attending a meeting held on its service, up from 10 million five months ago. Those numbers include people who join multiple Zoom meetings during the same day, something that has been happening more recently in recent months.
But the once-weak privacy controls also helped make Zoom extremely easy to use, one of the reasons it became such a popular way to hold online classes, business meetings and virtual cocktail hours after most of the U.S. began ordering people to stay at home in effort to reduce the spread of the coronavirus.
Zoom also offers a free version of its service, another factor in its popularity at a time when more than 42 million people in the U.S. have lost their jobs since mid-March, raising the specter of the worst economic downturn since the Great Depression of the 1930s.
The San Jose, California, company’s success is also drawing competition from much larger companies, including Microsoft, Google and Facebook.