An outbreak, many industries have been affected, but also a lot of emerging industries against the trend of growth. In many industries, Cloud Office has become a rising star, and Zoom is one of the biggest winners. On June 3, Beijing time, Zoom Video released its first-quarter report for fiscal year 2021, that is, business data for the period from February 1, 2020 to April 30, 2020, showing that Zoom’s revenue in the first quarter of fiscal 2021 was $328.2 million, 2.7 times the same period last year, after forecasting revenue of about $200 million and actual revenue growth.
Eye-popping financial results
The surge in revenue coincided with a significant increase in Zoom’s net profit. As of April 30, 2020, Zoom’s net profit attributable to the company’s common shareholders was $2.736 million, up 135-fold from $198,000 a year earlier.
As soon as the earnings report was released, Zoom’s share price rose. As of June 2, Zoom’s shares were up nearly 2 percent at $208.8. As a result of the outbreak, home office and telecommuting have led to a surge in Zoom utilization, pushing Zoom’s share price higher so far this year, and as of June 2, Zoom’s share price has risen about 200 percent.
Since 2019, Zoom’s quarterly revenue growth has begun to slow. From Q3 to Q1 in FY2019 to FY2020, Zoom revenue has maintained a YoY growth rate of more than 100%, and since FY2 Q2, Zoom revenue has declined significantly YoY, q2 to Q4 in FY2020, with revenue growth rates of 95.7%, 84.9% and 77.9%, respectively. The sudden outbreak of new crown pneumonia allowed Zoom to turn things around and achieve “overnight wealth”.
Can the myth of “rich” last?
Data show that in December 2019, Zoom had 10 million conference users a day, and by the end of April 2020 that number had grown to 300 million, a 30-fold increase in usage, and the annualised running rate of conference records had increased from 100 billion at the end of January 2020 to 200 million in April 2020, a nearly 20-fold increase.
It is clear that Zoom’s “rich” is motivated by the new coronapneumonia outbreak. Some analysts believe that as the outbreak is brought under control and more countries lift the “home order”, Zoom’s magic weapon will slip away.
However, Zoom CEO Yuan Zheng is convinced that the “ceiling” for revenue increases remains high and believes that current growth is sustainable. Virtual video conferencing is the future of communications, he said on a conference call after the results, and that the outbreak is not so much a “catalyst for change” as a “catalyst” for existing trends, which has only helped it accelerate, “and we continue to see an increase in participation despite the fact that governments around the world have begun to ease restrictions on those left behind.” “
Based on this, Zoom sharply revised its forecast for the next quarter and fiscal 2021, adjusted Q2 revenue of $495-50 million, about 3.4 times the same period last year, and its fiscal 2021 revenue forecast nearly tripled to $1.8 billion from no more than $915 million in early March.
But in terms of market analysis, most people don’t think Zoom will continue the myth of “rich.”
Analysis points out that the surge in users has forced Zoom to upgrade its expansion servers to ensure smooth operation, surging the cost of cloud computing expenses, and the next step is to realize the current free users.
Kelly Steckelberg, Zoom’s chief financial officer, admits that profit margins are likely to fall in the coming quarters as companies are forced to invest heavily to support their users’ index growth. Worst of all, no one knows whether such an investment will yield the desired results in the next few years, because free users have little value added to the company’s earnings.
In addition, at the beginning of the outbreak, cloud video conferencing office may still have a blue sea, with this trend of increasing attention, more industry giants began to enter the market, to join the “hybrid”, Zoom faced competitive pressure, especially from the internet giant’s competitive pressure also made it difficult to continue the “rich” road.
Cloud Office “Blue Sea Red”
In addition to Zoom, other cloud video conferencing platforms have also grown rapidly. Alphabet, Google’s parent company, says its Use of The Meets platform has increased 30-fold since January; Cisco System says Webex usage has reached a record 324 million people and more than doubled in the Americas; Microsoft Teams’ active users have surged 775 per cent in the hard-hit region of Italy, a 600 per cent jump in China, with more than 34m working group meetings in April alone.
In May, Facebook joined in the launch of Messenger Rooms, a video conferencing tool, and Google said it would extend the Free Hangouts Meet service until September and launch a new brand, Google Meet.
In China, Tencent video, nail office has a broad market penetration rate, and gradually expand internationally, nail edited by UNESCO, Tencent conference also launched a video conferencing strategy for the United Nations. Xinhua San, which specializes in hardware and provides servers, also released a corresponding cloud video solution. Polycom and Huawei are taking advantage of the accumulated advantages in the manufacture of communications equipment to quickly capture market share in government departments and large corporate customers.
On May 19, severalmedia reported that Zoom had stopped registering Chinese mainland individual users and banned individual accounts in the mainland from initiating/presiding over meetings, allowing only participation. Analysis, even if Zoom is still in the Chinese market, I am afraid it will be difficult to rival the fierce competition of China’s homegrown internet giants.
Prior to the outbreak, the video conferencing market was only involved by a group of professional video companies. After the outbreak, more demand for video conferencing, more users formed the habit of online conferencing, and business giants from more fields joined the fight for the market, and the future cloud video conferencing market may be re-integrated in the competition.