NEW DELHI: Video-chat service Zoom beat its own revenue guidance as well as analysts’ forecasts, reporting a 169% year-on-year growth in its April quarter (Q1) revenues to $328.2 million from $122 million in the year-ago period. Both estimates were pegged at around $200 million.
The company, a big beneficiary of the covid-19 pandemic fallout, almost doubled its revenue guidance for the fiscal year. It now expects it to come between $1.7 billion and $1.8 billion.
Video conferencing, webinars and collaboration tools are at the core of Zoom’s business. The company gained hundreds of millions of new users almost overnight as countries worldwide went into lockdown to tackle the spread of covid-19, forcing companies and people to look for video chat services like Zoom and Microsoft Teams for work purposes. In the process, the company also gained customerusing it for personal communication.
Net profit came at $27 million, compared with $200,000 in the year ago quarter. New customers accounted for approximately 71% of the increase in revenues, according to Zoom.
According to the company, there was 354% y-o-y growth in the number of Zoom customers who had more than 10 employees. The number of daily meeting participants on Zoom peaked at 300 million in April 2020, as compared to 10 million in December 2019. The addition of new users, most of them non-paying, also narrowed Zoom’s gross margin from 82.7% in the previous quarter to 68.4% in this quarter. It was 80.2% in the same quarter last year.
While the Americas accounted for 74.9% of Zoom’s revenues in this quarter, the Europe Middle East and Africa (EMEA) region accounted for 15.6% of the revenues and the Asia Pacific (APAC) region made up 9.5% of the amount.
The company’s growth overnight had exposed many security gaps in its software, prompting Zoom to announce a 90-day security plan and putting off all other product updates. The company also acquired encryption startup Keybase and has announced that it will offer better encryption for paid customers. During the earnings call, Zoom chief executive officer, Eric Yuan, indicated that the company doesn’t want to charge extra for end-to-end encryption in future but it will likely not make it part of the free software.
While big companies like Google and governments, including India’s, have advised against using Zoom for official purposes, the company has continued to grow during the pandemic. The company said chip giant ARM and international law firm Baker Mackenzie entered its customer base during the pandemic. The company has not only beat analyst expectations on revenues but also answered critics who had wondered whether the company will be able to sustain its valuation going into the earnings report.