The Massive Growth Of Zoom During COVID-19

📖 Learning

Devashish Shrivastava

Aug 1, 2020 — 4 min read

Zoom is a cloud-based video conferencing service you can use to interact with others—either video, audio, or both—with the facility to chat as well. Zoom lets you record sessions so that you can watch it later. Several organizations use Zoom and the adoption of the video conferencing app has increased manifold.

When people talk about Zoom, it's common to hear phrases like Zoom cloud meetings and Zoom rooms. Zoom cloud meeting refers to a video conferencing session hosted on the service. You can attend these meetings via a laptop, tablet, or a phone. A Zoom room is a physical hardware setup that lets companies schedule and launch Zoom cloud meetings from their conference rooms.

Zoom's Explosive Growth
Services Provided By Zoom
Revenue Generated By Zoom

Zoom Logo

Zoom's Explosive Growth

Zoom beat its own revenue estimates as well as analysts' forecasts, recording a 169% increase in its first quarter earnings of 2020. $122 million in revenue jumped to $ 328.2 million.

The company, a major beneficiary of the Covid-19 epidemic with almost no other competitor, nearly doubled its revenue guidance for the fiscal year. It now expects to fetch between $ 1.7 billion to $ 1.8 billion.

Services Provided By Zoom

The core of Zoom's business is video conferencing, webinars, and collaboration tools. To deal with the proliferation of Covid-19 in countries across the globe that brought in millions of new users overnight, Zoom had to scale its infrastructure considerably. With customers and organizations also looking to alternatives like Microsoft Teams, Zoom now had intense competition.

Net profit came in at $27 million, compared with $200,000 in the same quarter a year ago. According to Zoom, the revenue from new customers increased by about 71%. There was a 354% year on year increase in the number of zoom customers (organizations with more than 10 employees). The number of daily meeting participants on Zoom was 300 million in April 2020, compared to 10 million in December 2019. The gross margin of Zoom came down from 82.7% in the previous quarter to 68.4% in this quarter. It was 80.2% in the same quarter last year.

Zoom Cloud Meeting Tips

Revenue Generated By Zoom

The United States accounted for 74.9% of Zoom's revenue in the quarter, while Europe accounted for 15.6% of revenue. 9.5% was from the Asia Pacific region and the remaining from Middle East and Africa. The company's rapid growth exposed several security gaps in its software, prompting Zoom In to announce a 90-day security plan and discontinue all product updates.

The company also acquired encryption startup Keybase and announced that it will offer improved encryption for paid customers. During the earnings call, Eric Yuan, Zoom's chief executive, indicated that the company won't charge additional fees for end-to-end encryption in the future but won't make it part of the free software.

While large companies such as Google and governments, including the Indian government, have advised against using Zoom for official purposes, the company continues to expand. The company said chip giant ARM and international law firm Baker McKenzie entered its client base during the epidemic. The company has not just beat analyst expectations on revenue; it has also responded to critics who wondered whether the company would be able to maintain its valuation in terms of earnings.