Zoom may be booming as the global coronavirus lockdown moves work and social life to cyberspace but deep-pocketed rivals including Microsoft, Google and Facebook are taking aim as video conferencing becomes a staple of daily life.
On Tuesday, Zoom, which has been catapulted from a relatively unknown video service to a household name during the pandemic, reported first-quarter results that were impressive on almost every measure.
Revenue surged by 169% to $328m (£261m) in the three months to the end of April, prompting the company to double revenue guidance for this year. The number of people attending meetings and gatherings on any one day peaked at 300 million in April. In December it was 10 million a day.
The company’s share price is up 152% over the past year and its market value has risen from $19bn to $58bn since the start of 2020.
Zoom’s founder, Eric Yuan, who owns 20% of the company, is estimated to be the world’s 146th richest person and worth $10.8bn, according to the Bloomberg Billionaires Index.
One analyst called Zoom’s results “one of, if not the greatest quarter in enterprise software history” and its share price enjoyed an initial bounce. However, Zoom’s stock dropped in after-hours trading on Tuesday as investors and analysts began to worry about its ability to cope with competitors aiming to muscle in on the video-conferencing boom.
In March, Microsoft, an aggressive competitor against Zoom for paying business customers with Microsoft Teams, announced it would launch a version of its video-conferencing service for consumers.
The following month, Facebook, the world’s biggest social-networking site, introduced a group video-calling feature called Messenger Rooms that prompted a dip in Zoom’s share price. In April, Google announced it was to make Meet, another Zoom competitor in the business video market, available for consumer use.
With the surge in remote networking services such as Zoom, Teams and Slack expected to continue post-pandemic as businesses adapt to a new more physically distanced “normal”, there is likely to be an increase in takeover activity. In April, the US telecoms giant Verizon paid $400m for BlueJeans, a smaller competitor in the video-conferencing market with about 15,000 customers.
Zoom was not prepared for its dramatic surge in popularity and is struggling to rebuild its reputation after coming in for criticism for a string of security and privacy failings. These have included sending user data to Facebook and allowing “Zoombombing”, when uninvited guests join video calls, usually with offensive results.
A number of companies have ordered workers not to use Zoom, including Elon Musk’s SpaceX and Standard Chartered bank. In the UK, the publisher of the Independent and the Evening Standard accused a journalist at a rival newspaper of snooping on a Zoom conference with staff.
In April, Yuan apologised for “falling short” on security, including the company’s approach to data and privacy. Zoom said it would spend the next three months finding and fixing problems.
