Late on Aug 31, the video-conferencing company posted strong July-quarter sales results that handily beat Wall Street estimates. — AFP
Sometimes the little guy with the better mousetrap can beat the tech Goliaths. That is certainly the case with upstart Zoom Video Communications Inc this year.
Late on Aug 31, the video-conferencing company posted strong July-quarter sales results that handily beat Wall Street estimates. Zoom reported second-quarter revenue of US$663.5mil (RM2.75bil), up 355% from a year earlier, versus the US$500mil (RM2.07bil) Bloomberg consensus. It also projected a sales range of US$685mil (RM2.84bil) to US$690mil (RM2.86bil) for the current quarter, which is higher than the US$493mil (RM2.04bil) average analyst estimate. Zoom shares rose in after-hours trading, adding to their more than fourfold gains year to date.
Zoom got a big boost this year as the Covid-19 pandemic forced governments to institute lockdown orders, which in turn attracted customers from corporations to schools and other organisations to sign on to its easy-to-use and reliable video-conferencing service as a way to stay connected and productive. Even as restrictions have loosened, these stay-at-home behaviours have taken hold and may become more ingrained in professional life and elsewhere.
Many companies are planning to permanently embrace the new paradigm. For example, Pinterest Inc revealed last week it will pay US$89.5mil (RM370.93mil) to cancel an office lease it signed in 2019. Chief Financial Officer Todd Morgenfeld said the company is "rethinking” its workforce strategy and will move toward a more distributed model in the post-Covid-19 world. If more companies do likewise, it will obviously benefit remote-working cloud-software leaders such as Zoom.
And there are other signals that show how important Zoom’s service has become. Earlier this month, the company announced both Facebook Inc and Alphabet Inc’s Google will add Zoom support on their respective hardware devices – Portal from Facebook and Google Nest Hub Max. These tech giants have their own video-conferencing offerings, and yet still felt compelled to add Zoom capability to their products, a sign of the company’s strong market position.
Zoom’s shares have soared this year. Its impressive performance and outlook for growth shows the company could be worth it. By all measures, the Zoom boom has a lot further to go.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Tae Kim is a Bloomberg Opinion columnist covering technology. He previously covered technology for Barron's, following an earlier career as an equity analyst. – Bloomberg
