Is Zoom's profit rise set to slow?
Zoom, the videoconferencing company, has produced an extraordinary surge in profits and sales. Can it keep up the momentum? Matthew Partridge reports


Thanks to “blowout earnings” – more than double the expected total – in its second quarter, Zoom’s shares have hit a record high, says Kari Paul in The Guardian. The company is now worth more than $100m. Sales rose by 355% year-on-year to $663.5m in the three months to 1 August, also eclipsing analysts’ estimates. Despite facing “intense criticism” over privacy, the videoconferencing company has benefited from a huge jump in users as countries have locked down. Zoom has become “nearly synonymous” with video hangouts. It is used for happy hours, teaching in schools and events.
Zoom may have surpassed expectations, but its management certainly doesn’t think that this is a one-off, says Nico Grant on Bloomberg. The company predicts that the “explosive growth” will continue, with overall sales of $2.4bn in the fiscal year that ends next January, implying that revenue “would almost quadruple in just one year”. It is also confident that this period of “hyper growth” will last beyond the peak of Covid-19, with any churn from users cancelling their accounts as restrictions ease “manageable”.
A tailwind for software
Zoom’s rise has also been powered by the boom in “software as service”, says James Titcomb in The Sunday Telegraph. This is where companies chose to invest heavily “in online business software’, which allows them to keep operating while workers are not in the office. The fact that such software is operated online means that it can “more quickly introduce the latest developments in machine learning and automation”. In a “landmark moment” for the sector, customer-relationship software maker Salesforce became the world’s first software-as-a-service company to enter America’s Dow Jones Industrial Average.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
What’s more, says Dan Gallagher in The Wall Street Journal, while subscription-based software business models are generally popular with investors because of the their “high growth potential” and their “predictability”, Zoom’s “user-friendly service” and “relatively modest” price of $15 a month has also impressed small businesses and consumers, with over a third of revenue now coming from either firms with fewer than ten employees or individuals. Nonetheless, while it’s clear that the service is not a fad, it “remains impossible to know just how many small Zoomers will stay on the service when they no longer have to”.
The firm’s assumption that all new users will stick with the service may prove optimistic, says Richard Waters in the Financial Times. Still, any churn may be balanced by the fact that many of its larger customers are “moving beyond immediate business needs” to make longer-term plans for operating with more remote workers. There are also hopes that it can exploit the fact that many big companies are now considering updating all their communications – including voice systems – to cross-sell other services, helping it become a “full-scale communications company”.
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.
He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.
Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.
As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.
Follow Matthew on Twitter: @DrMatthewPartri
-
8 of the best properties for sale with communal gardens
The best properties for sale with access to communal gardens – from an apartment in a listed building opposite London’s Hyde Park, to a wing of a mansion with access to 180 acres of parkland in Henley-upon-Thames
-
The five insurance policies you should have
Some insurance cover will be more important than others. We look at five insurance policies you may need to have to make sure you aren’t caught out in an emergency
-
The British railway industry is in rude health – here's why investors should jump aboard
The railway industry has bounced back from the devastating impact of the pandemic and is entering a new phase of development – and profitability
-
US and China reach a ceasefire in their trade war after talks in London
The US and China's trading relationship – the most important one in the global economy – is back on track. Will the truce last?
-
Infrastructure investing: a haven of stable growth amid market turmoil
From booming construction in emerging markets to digital and green transitions, the infrastructure sector offers security, returns and long-term opportunities
-
The costly myth of “sell in May”
Opinion May 2025's strong returns for US stocks have once again shown that putting too much weight on seasonal patterns will only make investors poorer, says Max King
-
Who’s driving Tesla?
As Elon Musk steps back from government with his eyes on the stars, investors ask if he’s still behind the wheel at his electric-car maker.
-
Investment opportunities in the world of Coca-Cola
There is far more to Coca-Cola than just one giant firm. The companies that bottle and distribute the ubiquitous soft drink are promising investments in their own right.
-
Streaming services are the new magic money tree for investors – but for how long?
Opinion Streaming services are in full bloom and laden with profits, but beware – winter is coming, warns Matthew Lynn
-
'Pension funds shouldn't be pushed into private equity sector'
Opinion The private-equity party is over, so don't push pension funds into the sector, says Merryn Somerset Webb.