It is a reflection of just how well things have been going for Zoom of late that a mere 191% yearly increase in its revenue made its stock drop by 4%.

The 191% increase in Zoom's revenue in the three months ending April 30 was down from a 369% jump in the previous quarter, you see.To put it in perspective, Zoom's revenue in the last quarter still came to $956 million, 5% ahead of analysts' predictions.

Figure 1: Pandemic special: Can Zoom escape its close association with COVID-19 - or will the reason for its success be its undoing?
(Source: Chris Montgomery on Unsplash)

The big question hovering around the company is how well it will cope with the world after coronavirus. Still, 80% of US respondents agreed all interactions "will continue to have a virtual element post-pandemic," CEO Eric Yuan noted in a conference call yesterday, probably not without relief.

The conference call took place, naturally, on Zoom.

As parts of the world start to creak back open, but many employees remain at home, Zoom spies potential in "hybrid solutions," Yuan says.It is a niche the San Jose-based company is now attempting to fill with its new Smart Gallery, Virtual Reception, and especially, points out Yuan, its Zoom Phone.

"Phone and video, it's the same thing, the video and new voice. Why do they need to have another system? Why do they need to deploy the hardware for a phone, right?" Yuan said, responding to an analyst's question.

However, integration is also a case its competitor Microsoft is trying to make, by plugging Teams fully into Office365. Salesforce, purchasing Slack, is meanwhile aiming to park its tank down over collaboration in customer management. Cisco Webex and Google, as huge incumbents, will look to eat some of Zoom's lunch, too.

Room to Zoom?

The company's new developments include a new AI meeting feature to record highlights of a meeting, offering video clips. "A post-pandemic world will be good to Zoom," even with the company now past an "inflection point," argues analyst Daniel Newman from Futurum Research in a research note.

On the bright side, Zoom's profit margins are growing, with its gross margin now up to 73.9% from 69.4% last quarter. Largely this is from making better use of public cloud resources.

Zoom's also never missed a revenue estimate yet, though this quarter was the smallest beat since it went public in April 2019.

And the company in April started a $100 million venture fund, to spur development of apps to run on Zoom, and grow itself as a platform.Companies will receive between $250,000 and $2.5 million in initial investment to build Zoom Apps, which Yuan announced at the company's Zoomtopia in October 2020.

...or is it all doom?

On the other hand, Zoom has maybe not cracked the business and enterprise market quite as well as it could have hoped. It has 497,000 customers with more than 10 employees, only 6% more than three months ago. These bigger subscribers are different beasts: they tend to commit to longer contracts, instead of pay month-to-month like smaller businesses.

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Zoom's fortunes, for better or worse, still seem tied to lockdown. Its shares peaked in October days before the first COVID-19 vaccines were shown to be safe, and have since then fallen by more than 40%. And a challenge for the company is that for many, it will ineluctably represent a part of a year from which they are keen to move on."Stop with the video chats already. Just make a voice call," wrote one Wall Street Journal columnist last week.

It is an achievement all the same, for a company that has in a short time provided us with a verb, and then soon after, a new form of fatigue.

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— Pádraig Belton, contributing editor special to Light Reading