Zoom had a booming quarter after its app was the pandemic’s fastest videoconferencing device. Zoom reported in an earnings report today that it made revenue of $328 million during its quarter of February – April. That’s far more than double last year’s time when it made $122 million, and it comes well above the $200 million that Zoom expected it would make when it issued the guidance just a couple of months ago.
Zoom doesn’t say exactly how many people have been using its software over the past few months, but the company claims it’s added an “unprecedented number of free participants,” including over 100,000 K-12 schools. Zoom now has around 265,400 customers with over 10 employees, a number that has grown 354 percent, the company says and adding 175,000 new customer licenses. The substantial rise in use has resulted in a considerable cost increase, though — expenses doubled to $201 million year-over-year.
The earnings report, Zoom’s first since the pandemic was announced, provides a more in-depth look at how the business worked when its video chat app is the de facto resource for work meetings and keeping in contact with family and friends while most of the world is trapped at home. Zoom said previously that use has grown to 300 million participants every day, up from just 10 million in December. That figure has since fallen from its peak in April, Zoom CFO Kelly Steckelberg said on a call with investors, but “we expect it to grow beyond 300 million number, certainly over the long term.”
Around the same time, Zoom has faced intense criticism of its security activities. The organization has been widely criticized for suggesting complete encryption of its video chats when they were not. For convenience, features also allowed harassment through Zoom bombing, while the Mac installer of the app was caught using a “malware-like” approach to speed things up.
Zoom responded by setting up a 90-day freeze of the functionality while overhauling the security policies of the app. Several of the most egregious issues — such as the questionable installer features and convenience that enabled people to drop in on uninvited calls — have been fixed or improved.
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These improvements are intended to ensure that Zoom is not losing users over security issues as its use bubbles. And so far it seems as if Zoom is planning to continue its success. Zoom predicts that the next quarter will be huge, more than tripling its previous revenues. The organization plans to produce sales north of $1.8 billion for the year. Nevertheless, Zoom expects to see increased customer losses in the second half of the year simply because of how many new users it has collected.
While Zoom is increasingly being used by consumers and not just the business and business customers for whom it was built, Zoom CEO Eric Yuan suggested that the company has no plans to start building a consumer-specific product beyond the free calling experience it already provides. Zoom will have the “same feeling” no matter how much you use it, Yuan said on the investor call. “Our strategy is to offer one service regardless of what you do, no matter which device you do.”
Zoom’s top priority, for now, is just holding its servers running, Yuan said, “Because too many people rely on Zoom to stay linked.”
Conclusion:
Many apps are being worked on, such as a real end to end encryption. Zoom acquired the Key base identity service startup in May and directed its engineers to work on an end-to-end encryption solution.
