During the pandemic, video conferencing became an integral part of everyday work for many – Zoom benefited enormously from this. Now growth is slowing down significantly. Investors don’t like that.
The video conferencing service Zoom has achieved quarterly sales of more than one billion dollars for the first time, but expects less growth in the future.
After the corona pandemic accelerated the change in the world of work and triggered a strong trend towards home offices, more and more employees are now returning to the offices. This clouded the business outlook for Zoom significantly, as the company admitted in its quarterly report published on the Monday after the US market closed.
“We reached our first quarter with sales of more than one billion dollars and delivered strong profitability,” announced Zoom CEO Eric Yuan. But investors were less interested in the figures for the past quarter, which were more than expected by experts, than in the forecast for the current quarter. Here Zoom was cautious and prepared its investors for significantly weaker business growth than during the boom at the beginning of the pandemic. That didn’t go down well on the market.
After the trading hours, the share fell at around twelve percent in the red. Business was still running smoothly: In the three months to the end of July, Zoom claims that the bottom line is $ 316.9 million (EUR 268.6 million), which is over 70 percent more than in the same period of the previous year. Revenues grew 54 percent to $ 1.02 billion. But while most other companies can only dream of such strong growth rates, Zoom had grown much more strongly in the previous quarters.
In addition, the company assumes that the number of customers will continue to decline. For the current quarter, Zoom “only” promised a roughly 30 percent increase in revenues compared to the same period in the previous year – here some analysts had calculated more. In the most recent quarter, there were already weak points in business development and signs that the zoom boom after the Corona crisis could fade permanently. For example, the company gained fewer lucrative major customers than assumed.
Zoom is also facing increasing competition, rivals such as Slack, but also large corporations such as Microsoft or Cisco are also vying intensely for home office users. However, Zoom has long been preparing for the time after the pandemic, when the importance of video conferencing in everyday work could decrease significantly. To broaden the business, the company made its largest takeover to date in July with the nearly $ 15 billion acquisition of call center specialist Five9.
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