Videoconferencing upstart Zoom zipped past even the most optimistic projections for its fiscal quarter, thanks to the ongoing coronavirus pandemic forcing millions to stay at home.
The company rode the teleconferencing wave to more than double its revenue haul from this time last year, and average upwards of $100m per month. For the first quarter of Zoom's fiscal 2021, ending April 30:
- Revenue was $328m, up 169 per cent from $122m in Q1 FY 2020 and blowing away the $202m analyst estimates. It even topped Zoom's own forecast of $200m.
- Net income was $27m, compared to a net income of $200K a year ago.
- Non-GAAP EPS was $0.20, compared to last year's $0.03 and topping the $0.09 analyst estimate.
- Previously an enterprise focus, Zoom saw much of its pandemic growth in small businesses. Its base of customers with a modest workforce grew 354 per cent from the year-ago quarter.
- With more people opting for personal use and taking advantage of the free service minutes, Zoom did see its margins fall by more than 10 percentage points, from 80 to 69.4 per cent. Expenses also went up as Zoom saw its business expand rapidly.
- Peak usage of the service was in April, when Zoom says it hit a daily high of 300 million users. By comparison, December logged around 10 million daily users.
- Among the largest companies to hop on board was an unspecified US bank that paid up for 175,000 enterprise user licenses.
"Navigating this process has been a humbling, learning experience, giving us appreciation for what it means to be a video conferencing provider," CEO and founder Eric Yuan told analysts on a conference call on Tuesday after announcing the numbers. "We have seen many use cases, not only from enterprises, but also from first-time consumer users for personal and social use to connect with friends and families."
The quarter wasn't however, without its headaches. Yuan claimed the upstart's struggled with privacy and security, saying the failings were in part due to Zoom's history as an enterprise-focused company whose customers handled safeguards on their end.
"As A CEO I think I should have done a better job," he admitted. "We should have played the role of IT for those first-time users."
Free users, for sure, we don’t want to give that because we also want to work together with FBI, with local law enforcement in case some people use Zoom for a bad purpose
The Zoom founder also highlighted the cash and resources Zoom has pumped into the area with the acquisition of Keybase and the ongoing efforts to put together an end-to-end encryption option for paying customers. It also shored up some of its security in a version 5 software update.
Yuan said that, for the foreseeable future, security will continue to be one of the business's primary focuses.
"I truly believe video is the new voice, video is the new form of communication," he boasted. "But for now, our top priority is to make sure we keep ourselves up, our top priority is to keep the service up and double down and triple down on privacy and security."
Yet, despite that pledge from Zoom's chief exec, we will reiterate: the end-to-end encryption isn't coming to the free version of Zoom, partly to help the Feds intercept people's calls.
"Free users, for sure, we don’t want to give that because we also want to work together with FBI, with local law enforcement in case some people use Zoom for a bad purpose," Yuan told analysts on the conference call.
You can find more context on the end-to-end encryption issue and limitations here, from Zoom's security adviser Alex Stamos, the former Facebook and Yahoo! executive.
Zoom shares cooled in after-hours trading to $198 apiece, down four per cent, at time of writing. ®