In our blog we have repeatedly wrote about companies that have benefited from the global coronavirus pandemic. One of the main beneficiaries of this situation is undoubtedly Zoom Video Communications, which develops video conferencing services.
According to her published reporting for the second quarter, three months of global quarantine allowed her to receive annual revenue. Zoom shares immediately soared in price by 25%. Details are in our new article.
Zoom and the pandemic: some numbers
Zoom’s revenue grew 355% yoy over a three-month period. In total, it amounted to $ 633.5 million, which is 35% higher than analysts’ expectations. Full year 2019 sales were “only” $ 622.7 million.
The forced transition to a remote work format stimulated interest in video conferencing. As a result, the number of Zoom corporate clients with more than 10 people increased by 458% over the year. The number of clients who spent $ 100 thousand or more on the service increased to a thousand.
The company has raised its revenue guidance for the current fiscal year, according to the report. If earlier it was planned to gain $ 1.78-1.8 billion, now Zoom plans to make sales of $ 2.37-2.39 billion.
The popularity of cloud services will remain high even after the end of the global quarantine. However, there are factors that can limit Zoom’s growth.
Firstly, the bulk of the revenue comes from transactions with corporate clients, while the overwhelming majority of individual users work with the free version of the system. In addition, some analysts thinkthat among the limiting factors there are such:
The company has already been overvalued – the P / E ratio (the ratio of the market value of a share to the annual earnings per share) in the case of Zoom already exceeded 6,000 at the beginning of the summer, which is a lot.
Competition is fundamental, Zoom does not offer anything technologically unique. Google Hangouts is a similar product, and Facebook rolled out Messenger Rooms with video calling. Competition from Facebook and Google is a factor that should not be ignored.
However, these risks are rather long-term. In the nearest future, it is unlikely that something will prevent Zoom from showing very good results.
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