COVID-19 and aftermath has made Zoom a staple, leading the company to raise its forecast.
Given the volume of Zoom meetings during the last quarter, revenue forecasts of $500 million were already high. But Zoom’s final tally of $664 million blew past those top-end estimates, stunning Wall Street with nearly quadruple year-on-year growth.
Zoom, which released its 2Q21 report Monday, also raised its already bullish outlook for the rest of the year. Spectacular by any measure, Zoom is among the most prominent beneficiaries of the COVID-19 pandemic. Since the outset early this year, Zoom meetings have become the staple of enabling work and education from home.
Compared with the same period last year when Zoom took in $146 million, Zoom’s take amounts to a 355% surge. Revenue during the quarter exceeded sales for the entire previous year. Based on its raised estimate, Zoom projects revenue could top $690 million this quarter. The revised forecast for the fiscal year, which ends Jan. 31, pegs revenue at approximately $2.37 billion. Considering Zoom had originally forecast under $1 billion for the year, that’s an extraordinary surge.
The company’s stock price jumped a whopping 41% on Tuesday, now up close to 700% on the year. That’s not a typo.
“We continued to see meaningful adoption of Zoom’s video-first unified communications platform across industries and geographies,” president and CEO Eric Yuan said during Monday evening’s earnings call.
Zoom meetings and webinars have become a sanctuary during the pandemic for hundreds of thousands of organizations and individuals. Demand is high for competitive offerings as well, including Microsoft Teams and Google Meet. But early into the pandemic, Zoom’s has become a platform of choice, especially for those with limited tech skills. Zoom was also the first reach out to the mass market with free services for schools and businesses. Inertia continues to drive demand for Zoom as remote work and learning are poised to continue indefinitely in some form. Zoom saw growth across small businesses and large enterprises alike.
Among some notable figures last quarter:
- 372,000 customers with 10 or more employees, up from 66,300 during the same period last year, a 458% increase.
- 988 customers that generated more than $100,000 in revenue, compared to 466, a rise of 112%.
- Thirty-six percent of revenue was from customers with 10 or fewer employees, compared to 30% in the prior quarter.
- Five hundred employees hired, representing the company’s largest growth in staffing to date.
- Free cash flow grew 2,000%.
- 7% operating margins.
Asked how Zoom will use its increased cash flow, CFO Kelly Steckelberg told CNBC the company will invest in continued expansion.
“We’re focused on investing in more salespeople to meet the demand,” Steckelberg said. “And of course, more engineers to continue to innovate and build our platform. And then we will always look if there are opportunities for M&A technology and/or teams that can really augment our platform or our team to continue to drive that top line growth as well.”
Steckelberg didn’t indicate Zoom has major plans to invest in broadening its channel reach. During Monday’s earnings, Rosenblatt Securities managing director Ryan Koontz asked if Zoom plans to expand its channel partner efforts. Steckelberg pointed to Zoom’s new referral program. Launched in March, Zoom tapped Avant, Intelisys, Pax8 and Telarus as master agents for its burgeoning Zoom Phone offering.
“We are really excited about that program and expect it to continue to contribute more significantly as we move through the year,” she said. However, for Zoom meetings, the company will continue to focus primarily on direct sales “which has been very successful for us today.”
Zoom did extend its outreach to …