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

Zoom founder Eric Yuan © Kena Betancur/Getty Images
Zoom’s founder and CEO Eric Yuan sees more growth ahead
(Image credit: Zoom founder Eric Yuan © Kena Betancur/Getty Images)

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”.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

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

Sign up
Dr Matthew Partridge
Shares editor, MoneyWeek

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