The COVID-19 pandemic brought the world to a halt, pausing official and school work at campuses. This brought the greatest opportunity for Video conferencing platforms to capitalize on the changing scenario of the world, something Zoom has clearly succeeded at as it reports a lofty surge in its quarterly sales, beating its own estimates.
The company reports $663.5 million in revenues in Q2 2020, up 355% year-over-year and higher than its annual revenue of $623 million in 2019. Even the most optimistic experts had projected a revenue of $500 million for the company in this time period, which means that it has managed to grow beyond anyone’s wildest imagination. This led to Zoom recording the second largest surge among the NASDAQ 100 companies in the second fiscal quarter.
This current boom is the result of Zoom Video Communication’s efforts to convert its free user base to paid subscription base, something that was necessary to cover the company’s increasing server costs. The company says that in Q2 2020, Zoom had approximately 370,200 customers with more than 10 employees, up approximately 458% from the same quarter last fiscal year. From this, 988 customers contributed more than $100,000 in trailing 12 months revenue, up approximately 112% from the same quarter last fiscal year.
This exceptional performance has led to the company projecting an unprecedented, continuing growth of its sales and revenue, projecting $2.39 billion in sales by the end of this fiscal year in January 2021. This beats their own and most analysts’ expectation of $1.8 billion revenue this fiscal year. The company also adds that non-GAAP income from operations is expected to be between $730.0 million and $750.0 million, which just goes to show how good of an year 2020 is supposed to be for Zoom.
The Wall Street witnessed an upsurge in Zoom’s share price after the numbers were made public. Shares of the virtual-meeting company surged as much as 26% to $410 in extended trading, valuing the company $114billion at the stock market. This marks a four times increase in the company’s shares since it went public in April 2019. The company says it will gain $2.40 to $2.47 a share in profits in the current financial year.
Video conferencing has become very common these days as other platforms such as Microsoft Teams, Cisco Webex and Google Meets have also reported an upsurge in their user base and sales. However, Zoom has managed to beat all of its competitors, managing to evade a disaster when questions were raised at its security levels.
The company was quick to react as it launched a 90 day plan to resolve these issues. It tested end-to-end encryption on its platform, but has not yet implemented it for all its users.
In a meeting with its investor’s, Zoom’s CFO Kelly Steckelberg said Zoom’s gross profits will continue to be the same as reported in the second quarter for the rest of the year.
Zoom founder and CEO, Eric Yuan on a call with analysts said the company is facing a lot of challenges from the recent growths. But he also said that the company has fulfilled the the emergency fixes it had promised after privacy and security lapses earlier this year.