Zoom booms as pandemic drives millions to its video service

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Free cash flow was $251.7 million, compared to $15.3 million in the first quarter of fiscal year 2020.

Zoom has transformed from a business-oriented teleconferencing tool into a global video chatting venue for a much greater number of participants.

This is as more and more people have adopted the videoconferencing platform while at home during the COVID-19 pandemic.

Chief Executive Officer Eric Yuan has tried to ensure that his virtual-meeting platform can cope with a swell of demand from people staying home to curtail the spread of Covid-19.

In the first quarter previous year, Zoom reported zero dollars per share in net income for stockholders. The company issued second-quarter guidance above-consensus view.

"Non-GAAP gross margin for the first quarter was 69.4% compared to 80.9% in Q1 past year and 84.2% last quarter", Steckelberg said.

According to Yuan, "Scaling capacity to meet this incredible increase in traffic and use cases while providing uninterrupted, reliable and high-quality services to our customers have been a tremendous undertaking for our team".

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Zoom Video shares have more than tripled since the beginning of the year. Zoom has more than 2.65 lakh customers/companies that have more than 10 employees.

But the pandemic is likely to create more challenges for Zoom in that market, as increased demand for remote work prompts competitors such as Microsoft and Cisco to pour resources into the field. New customers accounted for approximately 71% of the increase in revenues, according to Zoom.

In April, the company garnered ire for offering up misleading figures claiming the service had 300 million daily active users. However, it did say that an "unprecedented number of free participants" used the app. This bonus was about two weeks of salary and was given to pay for any additional costs that may have to be incurred to avoid any interruption in their work during the pandemic.

The video communications platform has been adopted by businesses, schools, universities and by individuals for social purposes, as well as for entertainment and fitness classes. When people disrupt meetings (sometimes with hate speech, CSAM, exposure to children and other illegal behaviors) that can be reported by the host.

Steckelberg said that the company is planning to expand its data centers to become more efficient and boost margins to the mid-70% range soon.

A host of security issues emerged in early March, including controversies over the level of encryption it provides and the practice of "Zoombombing" - where trolls interrupt meetings to share profanity or pornography - prompting scrutiny from United States authorities and temporary bans from schools in New York City and Singapore. However, all these aside, the expenses of Zoom also come to double this time at $201 million.

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