SAN RAMON, California (AP) – Zoom Video communications are rapidly emerging as the newest Internet gold mine, as millions of people flock to the conference service to see colleagues, friends, and family attached to their homes during the pandemic.
Tuesday’s publication of the company’s once-dark financial results for the February-April period offered a window into the astronomical growth that has made it a Wall Street star.
Zoom’s fiscal first quarter earnings more than doubled from the same time last year to $ 328 million, making a profit of $ 27 million – up from just $ 198,000 a year ago.
The numbers surpassed analysts’ already elevated expectations, giving an additional boost to a rapidly rising share that has more than tripled in price this year as the benchmark Standard & Poor’s 500 index has fallen by 5%.
After a major build-up leading up to Tuesday’s long-awaited announcement, Zoom’s share initially rose even higher in the expanded trade. But it changed course abruptly, dropping by more than 3% after company executives during a video discussion acknowledged that some of the new users would leave in the second half of the year if health concerns caused by the new corornavirus disappear .
Even if the stock trades the same way during Wednesday’s regular session, the stock will still hover around $ 200 – more than five times the company’s original stock price of $ 36 less than 14 months ago.
The wave caused Zoom to have a market value of about $ 59 billion through Tuesday – more than the combined market values of the four largest U.S. airlines, which have seen their company hammered by the corona virus outbreak that has dramatically limited travel.
“Video conferencing is becoming a mainstream service,” said Zoom CEO Eric Yuan, who co-founded the company nine years ago. He made comments during the video conference that at one point more than 3,000 participants were attracted, reflecting the intense interest in the company and its warm inventory.
As a sign that the company is still expecting phenomenal growth in the coming months, Zoom forecast sales of approximately $ 500 million for the current quarter ending in July, more than fourfold from the same time last year. For the full fiscal year, Zoom now expects revenues of approximately $ 1.8 billion, nearly tripling in a year.
Zoom’s explosion came about despite privacy and security concerns that allowed outsiders to perform uninvited – and sometimes gross – performances during video conferences of others.
The concern caused some schools to stop using Zoom for online classes that have become widespread since February, although the company’s efforts to introduce more security have brought some back to service. According to the company, more than 100,000 schools worldwide are now using Zoom for online classes.
In total, Zoom now has more than 300 million daily attendees in a meeting held on its shift, compared to 10 million five months ago. Those numbers include people attending multiple Zoom meetings on the same day, which has happened 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 host online classes, business meetings and virtual cocktail hours after most of the U.S. started ordering people to come home continue to attempt 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 around 40 million people in the US have lost their jobs since mid-March, spooking the worst economic downturn since the Great Depression of the years thirty calls. .
The San Jose, California-based company has always made the most of its money from companies that endorse a more advanced version of its service traditionally used for business meetings between employees who work far from each other in offices.
However, the pandemic shutdown has made Zoom a resource for workers who once worked side by side, but have been working from home in recent months.
Zoom ended April with 265,400 corporate customers with at least 10 employees, more than quadruple from the same time last year. About 30% of the company’s sales in the most recent quarter came from users with fewer than 10 employees, an increase of 20% in the November-January period.
While Zoom remains focused on serving its corporate clients, Yuan hopes to find ways to make money from all the socializing and learning that happens on the service as well. Some analysts have speculated that it may ultimately be about showing ads on the free version of Zoom, although the company has given no indication that it will. “There are many opportunities ahead of us,” Yuan said at the video conference on Tuesday without elaborating further.
If Zoom hopes to continue expanding, Zoom will likely also need to better protect the privacy of its video conferencing. To help achieve that goal, Yuan has been consulting with Alex Stamos, a highly respected online security expert who previously worked at Yahoo and Facebook, since April. Both companies also experienced their only security and privacy concerns.
Zoom’s success also attracts more competition from much larger companies, including Microsoft, Google and Facebook.
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