Zoom sees more growth after ‘unprecedented’ 2020
Zoom boss Eric Yuan, whose business exploded during the pandemic, says working from home is here to stay. The video conferencing company expects sales to rise more than 40% this year, reaching more than $3.7bn (£2.66bn).
The forecast pushed shares in the company up more than 6% in after-hours trade in New York. Investors have been watching for clues as to how the firm would fare as more people get vaccinated and social distancing restrictions lift.
Zoom said it did not expect growth to continue at the pace it enjoyed last year, but so far business remains strong. The firm’s sales in the last three months of 2020 were up 370% compared to the same period in 2019, hitting $882.5m.
“The fourth quarter marked a strong finish to an unprecedented year for Zoom,” company boss Eric Yuan said. “As the world emerges from the pandemic, our work has only begun.”
The pandemic, which prompted an abrupt shift to remote work for many businesses around the world, transformed Zoom into a household name practically overnight. The firm, which charges businesses for its remote meeting software in addition to more limited free use for the general public, saw sales soar 326% to $2.6bn in 2020. Profits jumped from just $21.7m in 2019 to $671.5m.
While some companies have started to ease staff back into the office, many others have said they expect that some of the increased flexibility introduced during the pandemic will linger. “The future is here with the rise of remote and work from anywhere trends,” Mr Yuan said in prepared remarks for investors. “We recognize this new reality and are helping to empower our own employees and those of our customers to work and thrive in a distributed manner.”
Susannah Streeter, analyst at Hargreaves Lansdown, said Zoom’s fate would depend on how it manages to compete against firms such as Microsoft and Google, which have introduced similar features.
“Although it stole an early march on other players in the first few months of the crisis, it does now have much stiffer competition from the likes of Microsoft and Google who have significantly upped their game,” she wrote in a research note.
“It may be that we have become so used to pandemic habits that we will stick with our virtual social lives, particularly for long distance friendships and work relationships. But just how large a slice of the live video pie Zoom manages to hang on to will depend on how it matches up to its powerful rivals.”