Zoom Reports Record Quarter Despite Its Recent Vaccine Setback

Zoom Video Communications is one of several companies to have experienced a massive increase in users — and consequently revenue — as a result of the ongoing pandemic. Continuing its streak this year, Zoom released its fiscal third quarter earnings on Monday, revealing total revenues of $777.20 million — an increase of 367 percent year-over-year.

These earnings far exceeded the company’s expected Q3 revenue of between $685.0 million to $690.0 million and highlight the continued popularity of the tool, despite the slew of new virtual event offerings that have come to market over the last few months.

Zoom also announced that it now has 433,700 customers with more than 10 employees, which represents a 485 percent increase from the same quarter last year, and is 65,500 more than it had at the end of last quarter.

In addition, this report has allowed the company to raise its annual revenue outlook for fiscal year 2021 from a range of $2.37 billion to $2.39 billion to approximately $2.575 billion to $2.580 billion, which would be an increase of 314 percent from last year.

Video Conferencing Faces an Uncertain Future

Although Zoom is poised to finish out 2020 with a bang, next year’s performance remains a bit more unclear. Its stock recently dropped following the news that an effective vaccine may soon be available, leaving investors to wonder whether the surge in remote work and study arrangements that have fuelled Zoom’s success this year will continue into the second half of 2021.

Companies like Zoom are experiencing an inverse trend when compared to live event-focused companies such as Eventbrite, and will likely end up taking a hit once it’s safe for in-person gatherings to resume. Zoom’s share price was back up to $478.36 when the markets closed today, but it still hasn’t completely recovered.

Furthermore, Zoom’s adjusted revenue target “assumes increased churn in the fourth quarter when compared to historic churn levels due to a higher percentage of customers who purchased monthly subscriptions,” which seems to indicate that many users are waiting out the storm but don’t intend to commit long-term.

In the meantime, Zoom is doing everything it can to ensure that its tool remains as relevant and useful as possible. Founder and CEO Eric S. Yuan said that the company aspires “to provide the most innovative, secure, reliable, and high-quality communications platform to help people connect, collaborate, build and learn on Zoom.”

The software company has indeed been working on improving its security following a recent FTC settlement and expanding its offerings in response to growing demand, which include the implementation of free end-to-end encryption for all users and the launch of its new online event platform OnZoom.

There’s no question that Zoom remains a major player in the video conferencing space, even among competitors such as Microsoft. However, the next few quarters may look very different as it strives to meet expectations amid a slow return to normalcy.