Zoom: More than a Videoconferencing App

Zoom: More than a Videoconferencing App
A Brief about the Company 

Zoom is an American videotelephony and online chat provider, with headquarters in San Jose, California. It was founded by Eric Yuan in 2011 and now has become one of the leading communications technology companies around the world.

Zoom completed its initial public offering (IPO) in 2019, in parallel with the spread of COVID-19, reaching USD 16 million in value on the first day of trading. At the time, the company was the second-biggest technology IPO. In April 2020, Zoom joined the NASDAQ 100 stock index because of its extremely high performance during the pandemic, which was driven by the intense demand caused by the passing of social distancing laws, mass lockdowns, and curfews.

Zoom’s Services and Offerings 

The company offers the following:
  • Video conferencing services.
  • Video chat rooms and virtual workspaces.
  • A phone calls system. 
  • A video webinar system.
  • An app marketplace. 

Fundamental Analysis 

  • Zoom stocks rose since the beginning of 2021 by 11.28%, from USD 340 to USD 378 per share. In February 2021, the company’s stock hit its highest price at USD 451, still down from its historical peak at USD 568 achieved in late October 2020.
  • On 11 June, 2021, the Royal Bank of Canada (RBC) named Zoom Video Communications one of the software industry picks considering that its products are "a critical component of the coming hybrid work norm". 
  • One of RBC analysts believes that the company will remain integral to businesses in a post-pandemic world, for people are used to it now and because it deploys differentiated technology.
  • In June 2021, the company introduced its new Zoom Phone Application, which is “an all-in-one desk phone solution for HD video meetings, phone calls, and interactive whiteboarding”.
  • It is also buying “Five9”, the cloud contact center provider, for USD 14.7 billion in stock. According to FactSet, this is the second biggest U.S. tech deal this year, after Microsoft buying Nuance Communications for USD 16 billion.
  • In August 2021, the company announced that it will release its financial results for fiscal Q2 2022 on Monday 30 August, 2021, after the market close.
  • According to Zoom’s annual financial statement, the company’s growth strategy is to focus on the following elements: 

  • Driving new customer acquisition 
  • Expanding within existing customers 
  • Innovating in Zoom’s platform 
  • Accelerating international expansion 
  • Growing partnership ecosystem
  • Expanding the platform continuously 

  • Zoom reported better-than-expected results for Q1, with sales growth of 191%. It expects Earnings Per Share (EPS) to increase from USD 1.14 to USD 1.15 and a rise in revenue from USD 985 million to USD 990 million in the fiscal second quarter. While for fiscal 2022, Zoom expects its EPS to change from USD 4.56 to USD 4.61 and its revenues to shift from USD 3.98 billion to 3.99 billion.

The Outlook 

Zoom is considered a market leader in the communications services industry by many analysts around the world. When talking about the future of technology, Zoom is always mentioned in the conversation. While the world might never go back to the same condition it was before the pandemic, the way was paved for technology companies, such as Zoom, to take the lead. 

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