If you think Covid-19 has provided Zoom with an opportunity to reach its break even and get its balance sheet in green, you’re mistaken. 10 years ago, in 2011, Zoom entered a saturated market. Video conferencing was already swarmed with Microsoft’s Skype, Cisco’s Webex and Apple’s FaceTime. So how did Zoom take off? What made it different? How is zoom winning the cloud video conferencing war?
In contrast to its rivals, Zoom was the only video first company. Zoom’s CEO, Eric Yuan, made it clear that they believed in a simple yet compatible with latest technology model. Apart from company culture among employees and the ecosystem along with their marketing tactics, Zoom provided a user friendly interface to its users at a time when technology was booming. Zoom’s portfolio of cloud services integrates video conferencing, online meetings, messaging, digital signage and a software-based conference room solution into one platform.
We see these ostentatious growth rates, and we know Zoom didn’t achieve its break even due to pandemic, it was much before. About a year ago, in April 2019, it went public. Zoom raised $356.8 million after selling 9.91 million shares. The company joined the NYSE at $65.00 and entered an immediate uptrend that topped out at $106 in June. This is a company worth over $1 billion, and yet they actually posted some profits. Not just operating profits, real, true profits, for their most recent fiscal year. That has got people pretty excited. Zoom was well established; Covid-19 only gave it a boom.
Since the 2008-2009 financial crash, fintech has been filling the gap left between financial services offered by traditional companies and expectations of clients, especially in terms of customer experience. Corona virus-triggered social distancing, isolation and lockdowns have driven-up the use of such apps.
From high school-college classes to boardroom meetings and even cabinet meetings of countries facilitated by their honorable PM or President, a socially distanced world is reconvening in cyberspace with the assistance of Silicon Valley Video Conferencing app Zoom.
The company does not provide daily download figures, but app tracking firm Apptopia said Zoom was downloaded 2.13m times around the world on 23 March, up from 56,000 a day two months earlier. Zoom’s daily active user base also grew by 67 per cent in the first three months of this year, and the company now has a market value of $42bn.
Yet we cannot overlook that the company reported an 88.39% increase in revenue to $622.6 million for the year 2020. For the fiscal year ending 2019, Zoom had revenue of $330.5 million, up 118 percent from $151.5 million 2018. That itself was up 149 percent from $60.8 million in 2017. In just two years Zoom has seen revenue grow by over 5x. On top of that, the company is now seeing a profit; after having a net income of negative $8.2 million in the fiscal year ending in 2018, it had a net income of $21.75 million for 2020.
The app has been used to host virtual classrooms, church services and even blind dates and stag dos. It offers a free version for calls of less than 40 minutes. But if your teacher can reconnect after every 40 minutes, how exactly does Zoom make money?
It is the universe of big business, for which Zoom was intended, that brings in most of the revenue. The company makes its money from sales of subscriptions to its platform, of which there are four tiers it currently offers.
The first is its free tier, which it calls Basic; that one comes with the ability to host up to 100 participants, an unlimited number of meetings and 40-minute limit on group meetings. the next level is the Pro plan, which costs $14.99 a month per host, also includes user management, admin feature controls, custom personal meeting IDs and 1GB of MP4 or M4A cloud recording.
The third plan is called Business and it costs $19.99 a month per host, with a minimum of 10 hosts. It includes dedicated phone support, an admin dashboard, a vanity URL, the option for on-premise deployment, managed domains, company branding and custom emails.
The most expensive plan is Enterprise, which costs $19.99 a month per host, with a minimum of 50 hosts. Features unlimited cloud storage, a dedicated customer success manager, executive business reviews and bundle discounts on Webinars and Zoom Rooms. These corporate licenses generate the most revenue for Zoom.
It isn’t just Zoom Communications gaining from Covid-19. If you ask me the real winner, it would be China based mobile phone components manufacturer Zoom technologies whose shares have doubled due to the confusion caused by similarity in their names. Well, Zoom has really been zooming.
Nevertheless, Zoom Communications doesn’t have a big technical backing yet their simple and user friendly model has gained a lot of attention. Zoom makes it very clear to the entrepreneurs that in this time of growing technology, anything that sells itself sustains.