Hopes may be rising we’ve finally reached the beginning of the end of the coronavirus crisis that has upended our lifestyles and worse over the past 12 months but one of the ‘pandemic stocks’ to benefit from lockdown restrictions is going from strength to strength. The share price of Zoom Video Communications yesterday rose by almost 10% (9.65%) after the video conferencing app company revealed an tripling of revenues over the last quarter.
With hundreds of millions of colleagues, friends and families around the world left with little option other than to communicate remotely, often via video chat, Zoom’s business has soared. There had been fears that the surge in demand for the app’s premium, paid version might be short-lived, with gains made slowing or receding as the pandemic rolled on and eventually ran out of steam.
But at least for now that hasn’t proven to be the case. Year-on-year, the company’s revenues over the 3 months to the end of January more than tripled to $882.5 million. In fact, a growth rate of 369% was closer to quadrupling of income compared to the same three-month period a year earlier.
The final quarter of Zoom’s financial year saw it reach a total of 467,100 business customers with more than 10 employees. That represents 470% growth on the same total a year earlier. Net income for the quarter reached $260.4 million, compared to just $15.3 million in the same period the year before.
San Jose, California-based Zoom, founded 10 years ago by Eric Yuan, went public in 2019. At the time of its IPO Zoom employed 1700 staff. That number has now more than doubled to 3800. Yuan remains as the company’s chief executive and still holds an ownership stake of around 15%. That’s grown in value significantly over the past 12 months, despite Zoom’s current share price of $409.66 a significant slide on its October peak when the tech company’s stock traded at almost $570.
The slide in Zoom’s share price between mid-October and the end of the year reflected a combination of a valuation that had overheated and investor concerns around how the company would fare in the post-coronavirus world. But momentum has held up better than most would have expected a few months ago. Yuan puts Zoom’s pandemic success down to “our ability to rapidly respond and execute”.
Even as we start to see an end to pandemic conditions somewhere on the horizon, Yuan is convinced Zoom’s success over the past year means it is still “well positioned for strong growth”.
The post-pandemic strategy that has been put in place to avoid the risk of an exodus of paying business users has focused on the launch of new features tailored to a newly calibrated workforce operating on a hybrid WFH-office footing. Zoom’s chief information officer Harry Moseley believes post-pandemic patterns of work will not fully return to those leading up to the onset of the pandemic. He last month told The Times newspaper:
“Everybody agrees that these things have changed for ever”.
“Everybody” is perhaps over-egging the pudding. This week Goldman Sachs chief executive David Solomon call WFH “an aberration that we are going to correct as quickly as possible”.
Zoom investors will hope enough business owners and senior management agree with Moseley to keep the company’s revenues ticking upwards even after we come out of the other side of this pandemic.