As more and more people across the world find themselves confined to their homes, the need for human connection has never been greater. But messaging and voice calls only get you so far – there’s a certain draw with seeing the person you’re conversing with, where little facial ticks and gestures can go a very long way in ensuring nothing is ‘lost in transmission.’
Enter US firm Zoom Video Communications (not to be confused with Zoom Technologies), a previously small competitor in the video conferencing field that is giving giants like Microsoft, Google and Cisco a run for their money. The recently-turned public company has seen an exponential increase in user numbers, 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.
Still, Zoom hasn’t exactly broken new ground here. Video conferencing has existed for decades, and Zoom was never truly among the household names we’ve come to associate with the sector – names like Skype, Cisco and Google Hangouts.
Regardless, Zoom today finds itself as the world’s 2nd most dowloaded mobile app, behind TikTok, according to app-analytics firm Sensor Tower, and is showing no signs of stopping.
More often than not, it’s always an omen for success for business products to find mainstream popularity. Smartphone maker Blackberry’s breakout into the market in the late 2000s is evidence of this, when their smartphones which were aimed at businessmen and CEOs exploded into the mainstream with their then-attractive keyboards as the demand for instant messaging services was growing. Originally more of a niche company, soon everyone had a Blackberry.
With Zoom, we are seeing a similar case. The company has existed since 2011, and was primarily used by businessmen and university students for productivity purposes rather than entertainment. Now, Zoom is being used by the general public for everything from birthday and dance parties to even weddings.
With this transition to becoming an entertainment product in addition to a productivity tool, we are seeing Zoom fully enter the zeitgeist, effectively sealing its success – at least for the duration of the pandemic and global quarantine. There’s a reason the 18-to-34 age group (and often those younger than 18) has been coveted by advertisers for decades after all. With so many school and university students stuck at home with little to no responsibilities of their own and a lot of spare time, Zoom is proving to be the perfect outlet for socializing with classmates, friends and loved ones while social distancing. Add it to the massive number of distance learning students on Zoom, and it becomes clear where those new 190 million users have come from.
Additionally, Zoom allows for up to 100 participants with a free account subscription to share a call together, for up to 40 minutes. Paid subscriptions allow for extended call durations and other features.
Zoom’s platform is also very easy to use, with the use of meeting IDs that allow almost anyone to join in the conversation with minimal form-filling involved.
And there you have it: a surprising recipe for success, though the company has had a hand in its own success as well.
A “true unicorn”
Zoom’s success, has hinged on more than just word of mouth and a timely pandemic. From a financial standpoint, the company has proven that you don’t need to be losing money to make it in the big leagues of the SaaS (Software as a Service) industry, as has become the custom in Silicon Valley.
In April of 2019, the company went public, its stock surging 72% on its first day of trading. After just three days of trading, Zoom had already surpassed Lyft to become the most valuable of all the tech companies to go public that year, at the time. By the end of 2019, Zoom officially had the second best performing tech IPO in 2019, eclipsing major names like Uber, Lyft and Slack.
It was a recurring theme that year, where many of the more low-profile, more risk-averse firms with sound financials where the ones that had the most success with their first foray at the stock market. Zoom was among those companies, and their meticulous management of company funds was a draw for panicking investors in 2020, when most other stocks were falling.
“In its fiscal year ending January 31, 2017, Zoom posted $60.8 million in revenue, breaking effectively even in the process,” Crunchbase highlights. “The company grew more than 100 percent the following year, wrapping January 31, 2018, with $151.5 million in revenue, and a slimmer $3.8 million in net losses.”
In its next fiscal year concluding January 31, 2019, “Zoom more than doubled again to $330.5 million,”
In its most recent fiscal year, revenue reached $622.6 million, nearly doubling from 2019, and exceeding four times the figure of 2018. The latest recorded net income was $25.3 million.
“So Zoom is a fast-growing company that loses very little money,” Crunchcase commented last year. “In 2019, that makes it a true unicorn: something rare and valuable. Strip out share-based compensation costs and the company looks even healthier.”
If Zoom was a true unicorn in 2019, then we dare venture this particular creature of myth is about to transition into a full-blown pegasus by the end of 2020, if this year’s rising numbers carry on after the pandemic passes.