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Zoom Sees 169% Year-On-Year Growth In Revenue Amid Pandemic

Pritish raj by Pritish raj
June 3, 2020
in News, Startup, Tech
3 min read
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  • Zoom has surpassed its revenue guidance as well as analysts’ forecasts, reporting year-on-year growth of 169 percent in its April quarter (Q1) revenue to $328.2 million

Zoom has surpassed its revenue guidance as well as analysts’ forecasts, reporting year-on-year growth of 169 percent in its April quarter (Q1) revenue to $328.2 million from $122 million in the year-ago. Both estimates had been pegged at about $200 million.

The firm, a large beneficiary of the COVID-19 pandemic fallout, nearly doubled its fiscal year revenue guidance. It now expects between $1.7 billion and $1.8 billion to come from it.

At the core of Zoom ‘s business are video conferencing, webinars, and collaboration tools. The company nearly gained hundreds of millions of new users overnight as countries around the world went into lockdown to tackle the spread of COVID-19, forcing companies and people to look for video chat services such as Zoom and Microsoft Teams for work. The company even gained from customers using it for personal contact in the process.

Net profit stood at $27 million, compared to $200,000 a quarter ago. According to Zoom, new customers accounted for around 71 percent of the growth in revenues.

According to the company, the number of Zoom customers who had more than 10 employees had a 354 percent y-o-y rise. As of April 2020, the number of average Zoom meeting participants peaked at 300 million, compared to 10 million in December 2019. The addition of new users, most of them non-paying, also narrowed the gross margin of Zoom in this quarter from 82.7 percent in the previous quarter to 68.4 percent. It was 80.2 percent last year in the same quarter.

Although the Americas accounted for 74.9 percent of Zoom ‘s revenue this year, the Europe Middle East and Africa (EMEA) region accounted for 15.6 percent of the revenue and the Asia Pacific ( APAC) region accounted for 9.5 percent of the revenue.

Growth overnight in the company had exposed several security gaps in its software, prompting Zoom to announce a 90-day security plan and postpone all other product updates. The company has also acquired an encryption startup Keybase and announced it will offer better encryption for paid clients. During the call for earnings, Zoom chief executive Eric Yuan indicated that the company would not want to charge extra for end-to-end encryption in the future but would probably not make it part of the free software.

While big companies like Google and governments, including India, have advised against using Zoom for official purposes, during the pandemic the company continued to grow. During the pandemic, the company said chip giant ARM and international law firm Baker Mackenzie entered their customer base. In addition to beating analyst expectations on revenues, the company also responded to critics who had wondered if the company would be able to sustain its valuation going into the earnings report.

Zoom said it had 769 customers paying more than $100,000 in the 12-month trial at the end of the first quarter of the fiscal year, up 90 percent on an annualized basis compared to 86 percent in the previous quarter. By the end of the quarter, the company had 265,400 customers and over 10 employees, up 354 percent. The growth rate was 61 percent in the previous quarter.

Facebook launched a video calling function called Messenger Rooms which could act as an alternative to Zoom’s free edition, sending down Zoom shares, and Verizon announced the purchase of Blue Jeans, a smaller competitor.

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Pritish raj

Pritish raj

Pritish Raj is a content writer at Next Big Brand. Hailing from the diversified state of Bihar, he is an engineer by education who chooses the way of poetry, photography, and writing to kick off his career. Highly enthusiastic about brands and startups, he aims to be a travel content creator.

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