Zoom’s Impressive Revenue in Q2 and Record Surge of Share
Zoom Video Communications Inc. (Zoom) witnessed a record surge of its share price, gaining nearly 30% on Tuesday, September 1, 2020, after the company reported its impressive performance in the fiscal second-quarter (Q2) earnings the day before.
The company’s earnings for Q2 has easily surpassed the analysts’ expectation, which already estimates an optimistic growth. In light of this new development, Zoom has re-evaluated and raised its annual revenue target for fiscal year 2021 from its earlier estimation of $1.78 billion-$1.80 billion to $2.37 billion and $2.39 billion.
Experts explain that the explosive growth of the company for the fiscal 2020 was fueled by the rapid adoption of the work-from-home (WFH) methods during the COVID-19 pandemic, which increased the global demand for video-conferencing platform. With this sharp rise in revenue, the market cap of Zoom is now larger than IBM and AMD as it has crossed its value more than $120 billion, up from $25 billion a year ago.
According to a company statement, it has witnessed a revenue growth of 355% on an annualized basis in the fiscal second quarter (Q2), which ended on July 31, 2020 as compared to 169% in the previous quarter. As per Refinitiv, the company reported adjusted earnings of $0.92 per share, which is more than twice the early analysts’ prediction of $0.45 per share. Above analysts’ average projection of $500.5 million, the company revenue rose to $663.5 million. In short, the revenue generated in the past three months was nearly the total revenue earned by the company in the fiscal year 2019.
Zoom’s Finance Chief, Kelly Steckelberg told in a statement, the contribution from new customers’ subscriptions accounted 81% of the total revenue growth. As partly because of expanding the capacity of its own data center equipment during the quarter, Zoom’s income is now close to $186 million, up from just $5.5 million in the year-ago quarter.
As reported by Reuters, Zoom witnessed an averaged 148.4 million monthly active users in the quarter, rising 4,700% year over year. The report added that Zoom has seen an increase in paying customers this quarter, with approximately 370,200 customers of businesses with more than 10 employees, up approximately 458% from the same quarter last fiscal year.
Rising Demand during Pandemic
The widespread lockdown of offices, shops, and schools due to the coronavirus pandemic have brought major impact that propel the significant expansion of Zoom. Adoption of WFH policies by business organizations and companies have to rely on Zoom’s video-calling software to connect with their employees or discuss the work-in-progress of their employees. Moreover, the demand for Zoom has increased considerably as the platform is widely needed for educational and personal use during pandemic.
Zoom, founded and headed by former Cisco manager Eric Yuan, however, has come under scrutiny from government agencies especially in the United States concerning issues related to security and privacy rights, for which some companies banned their employees to use the platform.
Reflecting the good fortune of the company, Eric Yuan said in a statement on Monday that Zoom has taken on a number of large businesses as customers, including oil and gas firm ExxonMobil and software firm ServiceNow in quarter two (Q2). Following the news, shares of the company witnessed a record high in regular trading on Tuesday.