Zoom has posted its Q3 2020 earnings, while forecasting slowing growth for the coming quarter.
Zoom Video Communications, the tech company that took the world by storm earlier this year around the time the coronavirus was starting to make headlines and trigger lockdowns, has enjoyed success like few others this year. The company saw an exponential increase in user numbers at the time, climbing from 10 million users in December of 2019 to 200 million users in March 2020 - an increase of 1900% in a mere 4 months.
This success continued throughout the year, as businesses, schools and individuals came to rely more and more on the platform's video conferencing service.
After a few privacy and security hiccups in the months that followed, Zoom wasn't about to slow down anytime soon. By October, it announced it would finally introduce end-to-end encryption (E2EE) to finally quell the chatter of naysayers, while its daily meeting participants had swelled to 300 million.
In its financial results from Q2 2021, the quarter ending July 31, 2020, the company posted stellar figures. Its revenue for the quarter had grown a whopping 355%, up to $663.5 million, beating analyst estimates by over $160 million.
Now, with Zoom announcing its Q3 2020 earnings this week, for the quarter ending October 31st, the company is posting another quarter of solid growth.
Q3 2020 is another quarter of strength, though Q4 will herald a slowdown
The video conferencing company reported remarkable growth this previous quarter, with total revenue increasing 367% year-on-year to $777.2 million. This represents a notable 12% quarter-on-quarter growth.
According to CNBC, Kelly Steckelberg, chief financial officer at the company, said that more than 80% of the fiscal third-quarter revenue gain came from new customers’ subscriptions. Revenue in the Asia Pacific and Europe, Middle East and Africa grew 629%, compared with over 300% growth in the Americas.
Third Quarter Fiscal Year 2021 Financial Highlights:
Customer Metrics: Drivers of total revenue included acquiring new customers and expanding across existing customers. At the end of the third quarter of fiscal year 2021, Zoom had:
While Q3 results exceeded analysts' estimates, stock value still dropped nearly 14% on Tuesday, December 2nd, due to Zoom's expectations for Q4, which indicate a slowdown in growth.
"Zoom called for fiscal Q4 adjusted earnings in the range between 77 cents to 79 cents per share on $806 million to $811 million in revenue, implying 329% revenue growth at the middle of the range and therefore a slowdown that investors were not pleased with," MarketWatch writes. "Analysts polled by Refinitiv had been expecting Zoom to come out with a guidance of 66 cents in adjusted earnings per share and revenue of $730.1 million."
With the world slowly returning to a new semblance of normal, Zoom will be seeing less use than before. This doesn't mean the company will be hitting the red anytime soon - it's just that the honeymoon phase is slowly trailing away, and angsty investors are selling off for some quick bucks.