Zoom Is Soaring – But For How Long?

Zoom Is Soaring – But For How Long?

As social distancing becomes the order of the day as part of efforts to minimize the spread of coronavirus pandemic, people are seeking ways to keep their businesses, friendship and family life intact. Online tools have offered platforms of interactions that guarantee wide distances between people and yet fulfilling meetings, bonding and association.

Among all the apps offering teleconference related services, Zoom has become a popular choice. As more people seek virtual alternatives to their deprived freedom to meet and interact, Zoom has become a darling option because it gives users better choices than other apps offering virtual conferencing services.

Though Apple’s Facetime is popular, Zoom is currently ranking above it in the iOS store, according to the data from analytic company App Annie. It has been gaining more users at the wake of the outbreak of coronavirus and that has shot its market value up. The stock sells for 58 times revenue, compared to a price-to-sales ratio of 8 for Microsoft, and has been gaining since February while other stocks are plummeting.

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In 2020, Zoom Video Communication has soared over 85%, and has become a top choice for investors who are looking for a safe haven from the coronavirus storm. In February, the teleconference company’s stock upped 45% to maintain stable growth while other stocks plunged. On Thursday last week, the ZM stock went up another 7% to close regular trading at $125.00 a share.

The company’s Q4 revenue jumped 78% with 2019 sales up 88% to $622.7 million. According to data published by Nasdaq, Zoom’s adjusted quarterly earnings of $0.15 a share trampled the $0.08 estimated by the market, and has now blown away Nasdaq projection by an average of 340% in the trailing four quarters.

Also, its full fiscal year operating cash flow skyrocketed close to 200% to $151.9 million, as its client base expands. Zoom ended the year 2019, with about 82,000 clients and with more than 10 employees, a 61% increase from 2018. The company said 641 customers contributed more than $100,000 in trailing 12 months revenue which marked an 86% surge.

The unprecedented growth has come as a result of many using Zoom for weddings, bar mitzvahs and mediation sessions. As schools closed, teachers and students turned to Zoom for classes and so did many others who needed to stay in business. Many others use it to make parties and virtually stay in touch with family and friends.

But Zoom won people’s hearts for some peculiar reasons that many other players in the teleconference business can’t give.

“The usability and the reliability of Zoom is what has led to this incredible adoption, combined with honesty, the generosity of Eric and his willingness to open it up especially to schools,” Zoom CFO Kelly Steckelberg told CNBC.

Zoom founder and CEO Eric Yuan received a lot of applause for altering the original design that gives free service only to 100 participants for 40 minutes. Schools and organizations have cashed in on the adjustment that has allowed thousands of people to hook into conferences running far beyond 40 minutes free of charge. The gesture was seen as part of efforts by the company to help people in the face of COVID-19, pandemic, and has spurred thousands of users to download the app. Over 90% downloads between February and March.

Moreover, Zoom is available for Android and laptops, unlike its rival, Facetime that is exclusive to iOS and available only to iPhone users. Zoom has other features that include the ability to upload pictures or videos to create a virtual background. That feature has been notably fun and enticing that other companies like Microsoft said they are going to copy it in its Teams service.

However, as Zoom keeps soaring even in the face of fierce competition with popular names like GoToMeeting and Skype as well as Google Hangouts and Microsoft Teams, many are still worried that its pace may be forced to slow down at the end of the coronavirus pandemic.

But Nasdaq estimated that Zoom’s 2021 full-year fiscal revenue will hit between $905 million to $915.o million, which overrides the pre-earning estimate of $854.6 million. The high-end would represent 47% growth from 2020.

Zoom’s video is also expected to crush the current estimate of $0.27 per share to hit between $0.42 and $0.45 per share, and would mark a 29% jump from 2020, on the high side.

Stifel analysts told clients: “The global coronavirus epidemic will undoubtedly drive awareness and adoption of the company’s video conferencing platform, and we expect this environment to further enable the company to post industry-leading growth rates.”

Before now, climate advocates and those who see automobile emission as an environmental threat and have tried to cut their movement by holding meetings and conferences online, have been instrumental to Zoom’s market performance, as the company has established an edge over others and manages to keep all those who get on board. It is believed that post-coronavirus will yield the same result; Zoom is likely going to introduce more enticements to help its lovers to stay in love.

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