Zoom Q1 2021 Earnings See Covid-19 Rise, But What’s Next?

Zoom, the seemingly de facto video-conferencing option, just had a bumper quarter thanks to Covid-19. First-quarter FY 2021 earnings are out, and total revenue was $328.2 million, up 169% year-over-year.

Some nuggets from the Earnings statement:

• Revenue = $328.2 million, up 169% year-over-year.
• Projections = Total revenue for 2021 expected around $1.8b.
• GAAP = 20x previous quarter ($23.4m vs $1.6m)
• Big Users: +265,400 customers with +10 employees (up +354% yoy)
• Big Spenders: 796 customers spend more than $100k in 12 months is up 90% yoy.

Covid-19 has added more opportunities to use Zoom according to Eric S. Yuan, Founder and Chief Executive Officer of Zoom; “We were humbled by the accelerated adoption of the Zoom platform around the globe in Q1. The Covid-19 crisis has driven higher demand for distributed, face-to-face interactions and collaboration using Zoom. Use cases have grown rapidly as people integrated Zoom into their work, learning, and personal lives.” No surprise there. What is surprising is possibly where they go next or rather where Zoom isn’t going.

Speaking with Phil Perry, Head of UK & Ireland, the future - and more interestingly the intent - of Zoom is unclear. Popular now and the foreseeable future but big competitors (Facebook and Google) are coming for its lunch and fast. So, what’s the plan?

PP: “Things are changing daily. For now, we’re focused on helping as many people and businesses as we can stay connected – whether they’re hospitals, schools, financial institutions, governments or users looking to stay in touch with colleagues, friends and family. Ultimately, we are entering a new era for every element of our life and work and we are committed to doing our part to help during this challenging time. When employees are not able to get to the office and when teams cannot travel to see customers, we want to provide a platform for businesses to continue to be productive. We also believe it is important to provide support and resources for anyone to utilise.”

While millions of people are creating Zoom backgrounds (including Zoom themselves with charities), Zoom is leaving money opportunities on the table. Custom backgrounds are just one. The ‘launching’ screen for one. Rich real estate that could be used as a huge revenue stream, mini news portal or CSR project that is being ignored.

Another is Zoom creating content and having people tune in - a flip on the model. Are broadcast plans afoot at Zoom? Perry isn’t giving much away about that but does note that lots of TV projects are using Zoom to create content but not stream it. Could Zoom offer first-looks? Sneak peeks? Viewer panels? Yes to all of the above. Zoom could even offer eye-tracking. Perry isn’t saying much about the future feature set; “Whilst fundamentally Zoom is a video communications platform, we are increasingly seeing our technology and capabilities play a significant role as a tool for broadcasters.”

Zoom can stay as a video conferencing tool that got popular during the Covid-19 pandemic but there are bigger options available to it if the company has the chops for it. Perry believes Zoom is breaking down geographic channels and forging 21st-century organisations, which is laudable, but with increasing competition, Zoom’s next trick must be to keep people hooked and that takes more than backgrounds. Growth will be hard to keep going as Google, and Facebook’s ad machines start pulling people to their platforms.