Zoom video ser­vice booms dur­ing virus shut­down


Zoom Video Com­mu­ni­ca­tions is rapidly 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.

The re­lease of the on­ceob­scure 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 in 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 so far this year while the bench­mark Stan­dard & Poor’s 500 in­dex has fallen 5%.

After a big run-up lead­ing to a June 2 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 novel coror­navirus dis­si­pate.

The stock is still hov­er­ing at about $200 — more than five 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 — 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,” Zoom CEO Eric Yuan said, 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 in­tense in­ter­est in the com­pany and its hot 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, which 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 an ef­fort to re­duce the spread of the coro­n­avirus that causes COVID-19.

Zoom also of­fers a free ver­sion of its ser­vice, an­other fac­tor in its pop­u­lar­ity at a time when about 40 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, Calif.based com­pany has al­ways made most of its money from com­pa­nies that sub­scribe to a more so­phis­ti­cated ver­sion of its ser­vice, which tra­di­tion­ally has been used for busi­ness meet­ings among em­ploy­ees work­ing in of­fices far apart from each other.

But the pan­demic­driven shut­down turned Zoom into a tool for em­ploy­ees who once worked along­side each other, but have been do­ing their jobs from home dur­ing the past few months.

Zoom ended April with 265,400 cor­po­rate cus­tomers with at least 10 em­ploy­ees, more than qua­dru­pling from the same time last year. About 30% of the com­pany’s rev­enue in the most re­cent quar­ter came from users with fewer than 10 em­ploy­ees, up from 20% in the Novem­ber-Jan­uary pe­riod.

Al­though Zoom re­mains fo­cused on ser­vic­ing its cor­po­rate cus­tomers,

Yuan is hop­ing to fig­ure out ways to make money from all the so­cial­iz­ing and learn­ing that is hap­pen­ing on the ser­vice, too.

Some an­a­lysts have spec­u­lated that even­tu­ally it might in­volve show­ing ads on the free ver­sion of Zoom, al­though the com­pany hasn’t given any in­di­ca­tion it will do that. “There are a lot of op­por­tu­ni­ties ahead of us,” Yuan said in Tues­day’s video con­fer­ence, with­out elab­o­rat­ing.

If it hopes to con­tinue to ex­pand, Zoom also will likely have to do a bet­ter job of pro­tect­ing the pri­vacy of its video con­fer­ences.

To help achieve that goal, Yuan has been con­sult­ing since April with Alex Sta­mos, a highly re­spected on­line se­cu­rity ex­pert who pre­vi­ously worked at Ya­hoo and Face­book. Both those com­pa­nies en­coun­tered their own se­cu­rity and pri­vacy prob­lems, too.

Zoom’s suc­cess is also draw­ing stiffer com­pe­ti­tion from much larger com­pa­nies, in­clud­ing Mi­crosoft, Google and Face­book.

Mem­bers of the Ver­mont House of Rep­re­sen­ta­tives con­vened in a Zoom video con­fer­ence in April for its first full par­lia­men­tary on­line ses­sion. Zoom Video Com­mu­ni­ca­tions is rapidly emerg­ing as the lat­est in­ter­net gold mine.

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