Zoom fails to impress. Again.Zoom holds an investor day releasing a bunch of new features, but apparently they aren't enough to eclipse its disappointing earnings last week and the stock slips just under 4%.
Zoom is still nursing its wounds after its disappointing Q2 earnings release at the end of August took 17% off prices, and the stock is trading at its lowest price since May. Monday’s investors day released a host of new products that the communications company hoped would calm fears that growth is slowing in the post-pandemic world.
Alas, the new features failed to sweep investors off their feet and prices lost just under 4% to close at $290.24.
Cathie Woods buys the dipZoom has sunk over 16% since its latest earnings release, but Ark’s Cathie Woods sees the silver lining and buys the dip.
Despite boasting its first billion dollar quarter, shares of video communication platform Zoom went spiralling down 17% on Tuesday following its Q2 earnings release, which fed fears that growth is slowing in the post-pandemic world. Not everyone was fazed by the results though, and star stock-picker Cathie Woods takes the opportunity to buy the dip and stock up on her reserves, seeing a promising future for the stock.
Zoom closed Wednesday at $290.86.
Is the Zoom boom finally coming to an end?Zoom leaves investors less than impressed with its second quarter earnings, with fears of slowing growth sending the stock down 12% in extended trading.
Shares of video communication platform Zoom went spiralling down 12% in after-hours trading on Monday following its Q2 earnings announcement, which fed fears that growth is slowing in the post-pandemic world. The company still beat on both the top and bottom lines, reporting earnings per share of $1.36 on revenue of $1.02 billion, compared to the $1.16 in earnings per share and $991 million in revenue that analysts were expecting.
Zoom actually saw its first billion dollar revenue quarter ever, up 54% from the same period the year before – which sounds impressive, but in the previous quarter revenue climbed a whopping 191% growth, so things still look to be slowing down after the pandemic-fuelled bull run of 2020. User growth boomed during the initial months of the Covid crisis, and the number of Zoom customers with more than 10 employees soared just under 460% in the second half of the year – taking the stock with it to a peak of $588.84 in October 2020.
For the latest full fiscal year, Zoom now expects revenue of up to $4.015 billion, compared to the $3.98 billion analysts were expecting. Zoom founder and CEO Eric Yuan said:
Prices ended Monday at $347.50.
Analysts agree on Zoom strengthZoom Communications wins a new Buy rating on Sunday, along with a target up nearly 13% from its current share price.
Zoom Communications may have lost a lot of its pandemic-fuelled gains in recent months, but Mizuho Securities analyst Siti Panigrahi has just reiterated a buy rating on the stock nonetheless, setting a price target of $400 on the cloud-based software – up just under 13% from Friday’s closing price of $355.24. Mizuho is even lower than broad analyst consensus, which is around $421.75, but it points to bullish sentiment either way. The company has a current market cap of $102.99 billion, and its stock closed Tuesday down at $348.41, down 41% from its November 2020 peak of $588.84.
Zoom CMO Janine Pelosi doesn't seem quite as bullish on the stock, having just dumped 4,000 shares on Friday – her fourth time selling that amount in the last three months.
Zooming into call centers with Five9Zoom closes the day in the green on Friday for the first time all week on the back of news that the video conferencing platform has acquired cloud call center company Five9 in a transaction worth almost $15 billion.
Shares of Zoom have seen a meteoric rise since COVID sent everyone to a digital office and made video meetings the new hot thing, and it’s taking advantage of the gains with its first major acquisition. The telecommunications software provider, which was valued at $9 billion at its IPO in 2019 and now has a market cap of over $106 billion, has agreed to buy cloud center service provider Five9 in an all-stock deal for around $14.7 billion. It’s the second-biggest U.S. tech deal of 2021, not far behind Microsoft's purchase of Nuance Communications for $16 billion.
Five9 has also seen some impressive growth since COVID hit, driving a surge in demand for its call center technology, which lets people do their jobs from home. The acquisition will help Zoom enter the $24 billion call center market, and is part of the company’s latest efforts to fend off the post-pandemic slowdown by expanding its offerings. Five9 will contribute its business customers, which include the likes of Lululemon (LULU and Under Armour (UA, and its cloud computing call center software will expand the Zoom Phone service.
said Eric S. Yuan, Zoom founder and CEO.
Q1 hike for Zoom even as Covid retreatsZoom reports knock-out Q1 earnings, along with an eye-watering revenue increase and a hefty outlook hike. Looks like the market was expecting it though, as prices barely move.
Investors approached this quarter’s earnings with cautious optimism, given that Zoom has been king of the earnings reports recently, crushing Wall Street estimates like a bug under the power of its COVID-driven foot. However, there’s been some concern about its ability to churn out a ninth expectations-beat in light of the restrictions easing and videoconferencing potentially taking a back seat.
No need to worry though, as it looks like earnings haven't yet seen any slowdown. The company reported earnings per share of $1.32 on revenues of $956.2 million, compared to estimates of $0.99 in earnings per share on $906 million in revenue. Its revenue and sales really got everyone’s attention after seeing an increase of 191% over the past quarter. It is worth remembering though, that this quarter only covers through the end of April, so earnings will only be a partial COVID-19 comparison, as stay-at-home orders only began to lift in mid-March.
said Eric Yuan, Zoom founder and CEO.
Guidance-wise, Zoom is expecting $1.14 to $1.15 in adjusted earnings per share on $985 million to $990 million in revenue in Q2, compared to expectations of adjusted earnings of 94 cents per share and $931.8 million in revenue. It’ll be interesting to see how the guidance hike plays out in light of the growing move towards normality.
Zooming into other appsDespite Zoom’s impressive brand reputation, it’s now looking to un-brand itself by licensing its video conferencing tech to other companies and apps. Prices lift 3.43%.
Zoom announced that it would sell its videoconferencing technology for others to embed in their own products; meaning the calls would run over Zoom but not carry any branding, with companies can pay for the calls on a per-minute basis. The move could be partly in response to Amazon doing something similar by offering its own video conferencing tools, even getting Slack on board to use its tech for all its video calls.
Need to escape? Now's your chanceAre you getting bored of Zoom calls yet? Artist Sam Levigne has got your back, with a new Zoom widget offering a whole bunch of fake noises to help you escape your boring work meeting.
Zoom Escaper uses a handy piece of software called VB Audio to set up effects like crying babies, construction noises, barking dogs, sobbing partners, or even sneakier excuses like echoes, static, and call interruptions to help you abruptly end a call without looking like a bad person.
And if you get really bored of Zoom, Levigne also has another trick up his sleeve – the Zoom Deleter, which just deletes the Zoom software every time it finds it on your computer. Might not be the most conducive aid to productivity, but man that sounds satisfying.
The Zoom Escaper got a lot of headlines, and people generally found it pretty funny – probably a sign of the times, with everyone going stircrazy after a year trapped at home. But investors, unsurprisingly, weren't keen. A tool to screw up video calls is never really gonna be market positive for the video call provider, and Zoom stock sank by 4.26% the day after the news broke, landing at $335.08 on March 16.
Zoom pushes 'Everywhere Workforce'As the world starts to imagine slowly getting back to normal after the Covid pandemic, Zoom is looking for ways to remain relevant. One of its flagship focal points is 'Zoom Rooms' and today, it launched a new set of innovations to promote its concept of an 'Everywhere Workforce' and help employees to "safely re-enter the office."
Data from Envyo.com has identified three top concerns for people returning to work: others coming to work sick, an overcrowded workplace, and proper ventilation. Zoom (unsurprisingly and probably not entirely altruistically) wants to help.
“Clearly, the office workspace continues to change. In fact, more than 80 percent of employees working remote say they’d like to continue to work remotely at least 50% or more once they do return to the office,” said Craig Durr, Senior Analyst with Wainhouse Research. “But, to accomplish this, employees have to have a healthy, safe and secure conference room experience that meets the needs of today’s emerging hybrid workforce. Zoom is well positioned to provide this.”
The new upgrades allow employees to pair a Zoom Room with a mobile device, view real-time people count data, offer a virtual receptionist, control shared desktops, and send a Zoom Rooms for Touch whiteboard to Zoom Chat or email. In a nifty new addition, you can also now monitor a room's environment and air quality with Neat Bar, a Zoom Rooms Appliance, which includes an advanced set of capabilities called Neat Sense, letting you monitor your meeting rooms for things like air quality, humidity, CO₂, and volatile organic compounds to keep occupants safe and healthy. Seems sensible, what with a global killer virus going round and everything.
Zoom hasn't had a great year so far, with the price struggling to regain its previous heights after the drop in October/November 2020 following vaccination news and hovering around $350 for most of January, but it showed a small rally in the week following the Zoom Rooms announcement, squeaking up to $420 by February 5.
New trust center. Also, goats.Zoom's had some well-documented mishaps around privacy, so it's good to see that the firm is putting the spotlight on security with the launch of its new Trust Center.
It's a one stop shop for info on Zoom compliance, privacy, safety, and security: including compliance and corporate governance resources, a detailed privacy overview, privacy resources, security resources and certifications, a detailed trust and safety overview, trust and safety policies, and more. So plenty of nice bedtime reading for you there.
In other news, Zoom's diversification plans seem to be ticking along nicely. Its business phone system, Zoom Phone, just hit a million phone seat sales, way ahead of expectations, and the company is feeling pretty smug about it. “We are excited to see this level of uptake in such a short timeframe,” said Graeme Geddes, Head of Zoom Phone.
And finally, a farm in the UK has made £50,000 by selling Zoom calls with its goats at £5 a pop. Yep, for the price of a McDonalds (MCD) Extra Value Meal you can completely confuse your friends, family and work colleagues by inviting a goat onto your next Zoom call. Just don't expect the goat to talk back.
Roll up, roll up: shares for sale!Zoom decides to launch a stock offering to raise $1.5 billion to boost its cash reserves – possibly a wise move, as its share price dwindles amid expectations of an eventual end to lockdown. And it did even better than expected, raising about $2 billion.
It was the first stock issuance for the firm since going public back in 2019, and on balance, looks like it worked out. The deal closed on January 15, selling $2 billion in shares priced at $340 each – a bigger sale than expected, because of strong demand from investors (according to CFO Kelly Steckelberg). “I wanted to preserve optimal flexibility for our balance sheet,” she said in, yep, you've guessed it, a Zoom presentation.
The stock did pretty well in 2020, gaining over 400% and with a market cap averaging an impressive $100 billion. But it started to slide towards the end of 2020 as plans for vaccination programs got properly underway: and from a high of almost $600 in mid-October it had lost almost 50% by mid-January, closing January 11 at $337.71. The stock sale brought a nice little boost though. It slid around 6% in pre-market trading following the announcement, but closed January 12 up 5.66% on the previous day. When the deal closed on January 15 it hit a high of $404, and closed out at $384.53, up 14% since the announcement.
Zoom to add calendar and email servicesZoom had a pretty great year in 2020, with the share price rising over 400% (despite a bit of a dip in December). And things end on a high note, with reports that it's about to introduce email and calendar services in a major platform expansion.
The word on the street is that Zoom could begin testing a new web email service in 2021, while a calendar app is also on the cards. Makes sense, given that the stock took a pretty big hit once the Covid vaccines started rolling out and people started to think about returning to work in the new year. Videoconferencing apps aren't quite so vital when you can chat face to face over the watercooler again.
It didn't do a lot for the share price though, which still lost over 17% in the last 10 days of the year to close 2020 at $337.32 on December 31. And people are still concerned about contracting margins, with uncertainty about how long the pandemic will last into 2021 casting doubt over how robust the company's earnings might be.
Zoom expands into SingaporeIt's time to let the lion roar - Zoom looks to Asia with a new R&D Center for Singapore. In other news, Christmas cheer is on the way, and the firm lifts call limits for the festive season.
Zoom decided to expand its presence in Singapore by opening a new Research and Development Center, and promised to hire hundreds of new engineers. The firm also confirmed plans to expand its co-located data center in the country, where it has had a presence for two years.
“Singapore is pro-business, ranks as one of the friendliest countries to set up a company, and continues to be a favorite for regional headquarters as it boasts exceptional talent, strong infrastructure, and is a perfect gateway for engaging the wider APAC region,” said Velchamy Sankarlingam, President of Product and Engineering for Zoom. “We plan to immediately hire employees, leveraging Singapore’s highly-educated engineering talent pool. Our new R&D center and data center will play a critical role in Zoom’s continued international growth.”
And as much of the world prepared for a virtual festive season, with Covid-19 putting the kibosh on big family gatherings, Zoom also extended its former Thanksgiving generosity globally, lifting the 40 minute call limit on December 17-19 for Hanukkah, December 23-26 for Christmas, and December 30-January 2 for New Year's.
It's not all good news though. The Facebook-owned messaging app Whatsapp started testing a new voice and video calling feature for its Mac desktop client, which could represent some major competition for Zoom.
None of this did much to the share price though, which stayed robust at around $400 for most of early December.
Weaker Q3 resultsDon’t get us wrong, Zoom is still doing great. Q3 results come out and it’s all rosy – total revenue are up 367% year-on-year to $777.2m, while GAAP income from operations is $192.2m, a heck of a lot better than the $1.7m loss it posted in the third quarter of 2019. CEO Eric Yuan puts it down to “strong demand and execution,” which sounds about right. But although Zoom still beat analyst expectations for its Q3 earnings (99 cents per share versus 76), there are fears that its breakneck growth could finally be slowing down.
The firm said that it expected 329% in revenue growth for Q1 2020, a slight slowdown compared with previous quarters. And it didn’t help that CEO Yuan didn’t actually join the earnings webcast, saying that he had “a personal conflict arise.”
It translated into the share price, which dropped about 5% in after hours trading on the day of the results, and a further 15% by the close of December 1. According to Forbes, that hit Eric Yuan’s personal fortune to the tune of about $2.8 billion. Ouch, that’s gonna sting. But don’t worry, he’s still got about 18 billion left, so we think he’ll be OK.
Happy Thanksgiving, ZoomersAw, they’re such nice guys over at Zoom. After such a stormy year, those nice people decide that the world (or at least, Americans) could do with a break. So on November 10 they promise to lift the 40-minute time limit on all meetings for Thanksgiving on November 26, so that families can be with each other remotely even if they can’t meet up in person.
The news met with a positive reaction – stock went up almost 10% the following day to close at $413.34.
Free encryption, anyone?Zoom launches free end-to-end encryption for everyone, both free and paid accounts, for all meetings up to 200 people. That’s a pretty big deal, and it all comes from the Keybase acquisition back in May. Smart move, guys.
“We’re very proud to bring Zoom’s new end-to-end encryption to Zoom users globally today,” said Zoom CISO Jason Lee. “This has been a highly requested feature from our customers, and we’re excited to make this a reality. Kudos to our encryption team who joined us from Keybase in May and developed this impressive security feature within just six months.”
It didn’t do much to the share price though, which lost some ground over October amid excitement around new Covid vaccines and optimism that the pandemic could be slowing and people might be able to get back to work. It doesn’t bode well for Zoom’s 2021 performance once the worst of the crisis has passed, and investors agree – the stock lost almost 20% in the last 10 days of October.
The future of telecommunications?Zoom knows when it’s onto a good thing, and at the annual Zoomtopia conference in October it rolls out a whole bunch of cool new concepts and upgrades to make remote working even more snazzy.
Top of the list are Zapps, which let developers create apps that power workflows before, during, and after the meeting. Zoom says they will remove the need for users to switch between multiple applications on their desktop, allowing them to quickly streamline permissions, grant document accessibility, and collaborate on screen. They’re coming out by the end of 2020, and they’ll be available for both paid and free accounts.
Onzoom is another big deal: a one-of-a-kind online events platform for Zoom users to create and host free, paid, and fundraising events. Hosts can grow their businesses, expand their reach into new audiences, and give back through native donation integration. Zoom users can discover these events and sign up for new experiences with additional functionality like gifting tickets and an attendee dashboard to keep tabs on favorite events and brands. Fun all the way.
The market liked it too - stock jumped 5.33% the following day.
Zoom buddies up with LumenZoom partners up with communications giant Lumen Technologies (LUMN, formerly CenturyLink) to extend its platform to all of Lumen’s millions of customers across the US and internationally. It’s a big deal, and one that both companies are delighted about.
“Partnering with Zoom means we can offer our worldwide customers an industry leading edge enterprise video communications platform, and also provide Lumen’s highly connected global network infrastructure and white glove global service wrappers. This is a terrific addition to our Unified Communications portfolio that squarely addresses a growing demand in the Unified Communications space,” said Craig Richter, senior director of product management at Lumen.
Zoom also recently partnered up with Oracle (ORCL) to integrate video into its workflow to enhance interactions with customers. Make friends, make friends never never break friends.
The next big price jumpSeptember sees the start of Zoom’s second massive bull run. The second quarter results make a lot of people very happy, and very rich – the price jumps 41% in a single day to reach an all-time high of $478, and continues to climb.
Year to date the share price was up 595%, lifting the market cap to around $130 billion and making a whole bunch of Zoom millionaires (who, we presume, celebrated with a Zoom party).
That’s a 1,228% gain since the firm went public at $36 back in April 2019.
Fun Fact: Although Zoom isn’t actually included in the S&P 500 (yet), as of September 2020 it was bigger than around 85% of the firms included in the index. It’s only a matter of time...
Problematic power outagesZoom is struggling to keep up with demand, and the second half of August sees widespread outages across the network, starting on August 13 and picking up towards the end of the month across North America and Europe.
According to Down Detector, 19 outages were reported over the month, although the firm got things up and running again pretty quickly each time. It didn’t stop the share price from climbing by around 27%, either. Zoom zoom zoom.
You win some, you lose someZoom loses -5.61% in a single day, falling back below $100 to close at $96.47 on July 29. No real reason, and it doesn’t impact the overall performance of the share price, which has jumped around a bit but still closes July 12.2% up on the beginning of the month.
It mirrored a wider growth trend for Software-as-a-Service stocks, which were reaching record highs, according to the BVP Nasdaq Emerging Cloud Index.
Virtual trial by juryCole, Scott & Kissane (CSK), the largest law firm in Florida, standardizes on Zoom to hold the first ever virtual trial by jury.
CSK attributed its ability to weather the COVID-19 pandemic without layoffs or pay cuts to its use of Zoom — some seriously good PR for the firm.
“Zoom has been an essential part of keeping our business running,” said Jason Thomas, Chief Information Officer at CSK. “We needed to quickly pivot and change the way we work and Zoom fit our need for an intuitive and secure solution that our attorneys could start using right away. Zoom has the most robust security features out of any platform that we’ve used, and our users found it much easier than our legacy system — adoption and usage just skyrocketed.”
Zoom Home launchedIn July Zoom takes a zig zag into Amazon territory with a hardware power play: launching Zoom for Home, a line of physical products for home use.
The first product, launched in August 2020 with software by Zoom and hardware by DTEN, was called Zoom for Home - DTEN ME (catchy, right?) and consisted of a 27-inch screen with three wide-angle cameras and eight microphones, with Zoom software preloaded on the device.
Other offerings include Zoom Rooms (combining a Zoom Cloud subscription, Zoom Room Licences, and meeting room hardware so that users can join Zoom meetings from actual meeting rooms, if some of them have ended up back at work). Its cloud phone system, Zoom Phone, also got a revamp. First launched in the US and Canada back in January 2019, it spread to the UK and Australia and as of August, covers over 40 countries with service starting at $8 per user per month. Think like Skype – it’s Zoom, but on demand, and people are excited. With a market of $43 billion by 2022, the Unified Communications as a Service (UCaaS) is big business, and Zoom wants to dominate 📱
The news went down well. By 20 July, the share price had hit a high of $271.35. But the best was yet to come.
New Chief Security OfficerZoom is taking its security issues seriously, and on June 29 it hires Jason Lee as Chief Information Security Officer. Lee is a big hitter, formerly the Senior Vice President of Security Operations at Salesforce, and before that, Principal Director of Security Engineering at Microsoft.
Zoom Phone gets US government approvalIt’s another win for Team Zoom, as its cloud phone system Zoom Phone gets US Federal Government approval.
“This addition of Zoom Phone to Zoom for Government will enable federal agencies to consolidate their costly and outdated legacy telephony systems onto a single modern cloud solution once the agencies individually authorize its use,” said Zoom.
Zoom boomSecurity issues aside, Zoom had a seriously good year in 2020, and the first quarter results confirm what everyone already knew – the company is on a roll.
Revenue was up 169% year-on-year at $328.2 million for the quarter, and as of June Zoom was worth well over $67 billion. Reassuringly, paid subscriptions were on the increase as were corporate clients – Zoom customers with over 10 employees working for them grew by 354% to 265,400. "We peaked at over 300 million daily participants, free and paid, joining Zoom meetings in April 2020, up from 10 million in December 2019,” said the company on its earnings call.
The results pushed the price up faster than a rat up a drainpipe, and the stock soared by almost 14% on 1 June 2020 to break the $200 barrier for the first time, hitting a high of $205.87 and up 199% since the start of the year.
Keybase joins the partyHurrying to fix all its security issues, Zoom takes the sensible decision to just throw money at the problem. In May it buys end-to-end encryption start-up Keybase, its first ever acquisition, as part of its promised 90-day plan to improve privacy.
CEO Eric Yan called the 25-person New York-based start-up “the best tech and the best team” in video encryption. As face-to-face meetings were off the table due to Covid-19, the deal negotiations were conducted entirely through Microsoft Teams. Just kidding.
The Keybase function allows Zoom users to choose an end-to-end encryption option for their meeting, which stops anyone from calling in by phone, and disables cloud-based recording of the chat.
Other new security features rolled out in the 90-day plan included turning on meeting passwords by default, giving users the ability to choose which data centers calls are routed from, rolling out an improved bug bounty program, and doing more third-party security tests. Go Keybase team.
Zoom weddings are now legalYou can now get married on Zoom. On April 30, 2020 California’s Governor issues an order allowing people to obtain marriage licenses by videoconference, and (more importantly) to officially marry via videoconference "as long as both parties are present, and have at least one witness who can join the live video."
Zoom weddings were also made legal in New York, Colorado and Ohio, and fancy magazines like Town & Country began to run features with titles like ‘How to Plan the Most Elegant Wedding on Zoom: A Step by Step Guide’. The publicity did the share price no harm at all, and it rose to a high of $141.63 on 1 May.
Zoom 101 – Please wear pantsFor real. Earlier in the year, ABC reporter Will Reeve (incidentally, the son of Superman Christopher Reeve) is hilariously outed wearing a formal suit jacket and tie but NO PANTS while video-conferencing into Good Morning America, the Number 1 morning newscast in the US watched by over 3 million viewers. A few days later, Good Morning America bring him back for his very own segment… on how to behave during a videoconference.
Yep, Zoom etiquette is now a thing – although perhaps Reeve isn’t quite the guy to be lecturing us on it. (We told you Zoom had a lot to answer for in the pants department.)
In other news, Zoom reported a stratospheric jump in monthly meeting minutes: from 100 billion in January 2020 to 2 trillion in April. That’s a lot of talking.
Can foreign spies hijack Zoom?On April 9, TIME Magazine breaks a story claiming that spies from China, Russia, Iran, and North Korea are attempting to spy on Americans’ video chats. According to US intelligence officials, China is the biggest threat and the fastest mover, and Zoom is one of the most vulnerable platforms they were keeping an eye on.
The article cited a recent report from The Citizen Lab, a research organization at the University of Toronto, which had highlighted several key security issues on the Zoom platform, including some that made it particularly vulnerable to China. These included “significant weaknesses” in its encryption scheme, which actually routed some encryption keys through Chinese servers. The report also warned that the firm’s ownership structure and reliance on Chinese labor (Zoom owns three companies in China, with around 700 software developers) could “make Zoom responsive to pressure from Chinese authorities.”
The story was picked up by newspapers across the world, splashing headlines of potential corporate espionage via Zoom, and several US lawmakers called for investigations into its security protocols. The story didn’t do much to the share price though, possibly because traders had already priced in the security risks. The stock opened at $117.80 on April 9 and actually rose by 8% over the weekend: opening on April 13 at a strong $127 and gaining a further 9.16% during the day to hit $141 by April 14.
Daily users top 200 millionDaily meeting participants top 200 million by the end of March, up from just 10 million at the start of the year, says CEO Eric Yuan in a letter on April 2. Education is becoming a major revenue stream, with 90,000 schools across 20 countries using Zoom to conduct classes remotely.
But Zoom had competition. Microsoft Teams had 44 million daily active users as of March 19, while Cisco’s WebEx (remember Cisco, the company Yuan abandoned to start Zoom?) held over 50 million online meetings throughout the month of March as well. But there’s plenty to go round – according to Stanford University, about 42% of the US labor force are now working from home full-time. That’s 67.3 million people. It’s a lot of Zoom meetings.
Zoombomb explodesIt was always a ticking time bomb, and in March it finally explodes. Zoombombing hits the headlines after a bunch of school Zoom meetings get hijacked by trolls shouting hate speech, streaming porn and just generally being idiots.
It exposed some major cybersecurity flaws in the Zoom protocol, especially the absence of a required password. In a disastrous move for the company, on March 30 the FBI issued a formal warning, warning all Zoom users not to make meetings public or share links. “As individuals continue the transition to online lessons and meetings, the FBI recommends exercising due diligence and caution in your cybersecurity efforts,” it posted.
Things escalated pretty quickly. The day after the FBI warning, Elon Musk’s rocket company SpaceX banned all its employees from using Zoom over security concerns. Google (GOOGL) followed a few days later, telling all its staff to use its own video chat app, Duo, instead. That was just the start. NASA banned it, the US Senate asked its members to choose other video platforms, the German Foreign Ministry restricted access to Zoom, Taiwan banned it altogether for government use, and the Australian army banned it for all of its members. Tough times.
But the company swung into action, and pushed back with a strong response. On April 2, Zoom announced a 90-day feature freeze to fix privacy and security issues, and promised that passwords and waiting rooms would be turned on by default. It also admitted the issue and was vocal in outlining its plans to improve – a stance that reassured the market and met with widespread approval. “We recognize that we have fallen short of the community’s – and our own – privacy and security expectations,” said Yuan. “For that, I am deeply sorry.” Zoom also hired former Facebook security chief Alex Stamos as a consultant in April to help bump up its protection efforts.
The price did what you’d expect though, and the stock lost a third of its value, falling from a high of $161.69 on 30 March to a low of $108.53 a week later.
It didn’t take long to rebound though.
Fun Fact: On March 31 the UK Prime Minister hosted his first ever digital cabinet meeting. On Zoom. That’s some pretty serious kudos right there.
Zoom Technologies identity crisisRemember Zoom Technologies, that company that got investors all confused back when Zoom Video went public? Well, its troubles aren’t over. On March 26 the Financial Industry Regulatory Authority halts trading of its shares, saying that its symbol (ZOOM, compared to ZM for Zoom Video) was confusing too many people.
Poor old Zoom Technologies was forced to change its symbol to ZTNO instead. But don’t feel too bad – since the Zoom Video IPO back in April, Zoom Technologies’ share price had risen by more than 240%, despite not making any public disclosures. That’s a lot of people making a lot of mistakes.
Lockdown bonanzaIn the US, California issues the first state-wide Stay-at-Home Order on March 19, with 41 other states following suit. Europe is already pretty much closed, as is most of Asia and the Middle East. Sucks for business, great for Zoom. On March 23, Zoom is downloaded 2.13 million times in a single day – up from just 56,000 downloads a month earlier – and daily users are up 380% on 2019.
The share price reflected the gains, up 140% since the start of the year to hit a March high of $164.94. That was a major buck in the wider market, with both the S&P 500 and Nasdaq losing around 30% over the same timeframe, ending the longest bull run on record. The unicorn had grown wings. It’s basically Pegasus. But is it sustainable? “The real question will be how much of this activity will convert to paid users over the short and long term,” warned JP Morgan (JPM) in a client note.
And it wasn’t all plain sailing, either. Zoom got a bit of bad press in March when a bunch of its senior execs (including CEO Eric Yuan) offloaded a ton of shares in the open market and made millions off the company’s meteoric 2020 rise. Eric Yuan personally sold $10.5 million in January (and a further $12.5 million in February, and $15.5 million in March) while director Santiago Subotovsky sold stock worth $16.8 million in March, and CFO Kelly Steckelberg unloaded almost $3.4 million in the first quarter. CMO Janine Pelosi led the pack, selling a bunch of Zoom shares every fortnight since the end of October 2019 and making around $1 million each time. Between February and March she sold almost 130,000 shares, making a cool $12.9 million in a single month. That’s $430,000 per day.
Zoom said that the sales were made as part of pre-arranged trading plans. “Each of these individuals still own a significant amount of Zoom’s stock and are extremely optimistic about the company’s future.” Looks like not everyone believed them though – the share price dropped by over 15% on March 24, to $135.18.
Zoom tops app chartsThe ZOOM Cloud Meetings app tops the free charts in both Apple and Google mobile app stores in the US this week. In the Apple store, it’s up from number 11 the previous week, and just 87th place the week before that. But the firm is scrambling to build up its infrastructure as demand skyrockets, and the pressure is on.
“We are really focused on ensuring we continue to deliver a reliable, high-quality experience for all of our customers, prospects, schools — everybody that’s relying on us. That’s what we talked about all morning long in his staff meeting,” said CFO Kelly Steckelberg.
Zoom added servers and other equipment to all of its 17 data center locations in March, with two more data centers also coming online that month. It also increased its capacity with cloud providers Amazon Web Services and Microsoft Azure, just to be on the safe side.
A privacy disaster waiting to happen?It’s not all sunshine and rainbows. The writing is already on the wall when it comes to privacy problems, and Mashable is one of the first (but definitely not the last) to warn about that particular can of worms.
On March 13 it published an article calling Zoom a “working-from-home privacy disaster waiting to happen,” pointing out a whole bunch of potential flaws in the system. In response, the price fell 1.83% to $107.47. It was the first rumbling of an issue that was gonna come back and bite Zoom firmly in the butt. Watch this space.
Covid19 hits. Earth runs on ZoomThe world is on fire. Coronavirus has swept the globe, and whole countries are shutting down. The stock market is slumping, economies are tanking, and everyone’s locked indoors going slowly crazy.
Before, your biggest fear at a company meeting might be bad biscuits, or cheap coffee. Now, meeting in person might actually kill you, so everyone is working from home and no one wears pants anymore. Why bother, when Zoom can only see your top half? (Seriously – it’s a real thing. According to Adobe Analytics, between March and April 2020, pants sales in the US fell by 13%, while pajama sales rose by 143%. Zoom has a LOT to answer for.)
Zoom benefitted. "We have never witnessed this level of continued operating leverage expansion and that is driving significant upside in cash flow," said JPMorgan, which on 10 March boosted its price target on Zoom to $150 from $125. That’s a 38% upside on the closing price of $108.39. One small step for Zoom, one giant leap for the continued running of Planet Earth.
User numbers explodeZoom has added more users so far in 2020 than throughout the whole of 2019, estimates Bernstein Research.
Active monthly users were up at 2.22m, compared to 1.99m for the previous year. And it’s going down well with the market – Zoom’s share price went up by 35% between February 1-28.
Early riserEveryone thinks that it was coronavirus that catapulted Zoom into the stratosphere but actually, the share price started creeping up even before the pandemic hit. Between December 31 2019 and January 31 2020 the share price sneaks up by 12% to reach $76.30 – its highest point in three months.
But it was only the beginning…
Props to immigrationZoom CEO Eric Yuan is featured on Fox Business, promoting the importance of immigration for tech innovation.
He pointed to examples such as Microsoft CEO Satya Narayana Nadella, who is originally from India, and urged the US to “double down” on improving immigration law. Don’t forget, this guy applied for a US visa NINE times before he was finally accepted. Imagine where we’d be now if he hadn’t kept trying. We’d have to wear pants to all our meetings.
Ending the year on a highZoom romps home with third quarter total revenue of $166.6 million, up by 85% year-on-year.
The market wasn’t keen though, mainly due to continued concerns around over-valuation, and the stock lost almost 10% of its value between the release of its earnings report on December 5 and market close on December 6. But Forbes called it the highest-performing tech IPO of 2019... and the next year was about to change EVERYTHING.
Slightly short-sighted short-sellersThe share price keeps bouncing around – possibly because of the high volume of short-sellers, many of whom are betting the stock falls over the next year. As of November 15, 41% of Zoom stock was sold short. Yeah, good move guys. That stock’s definitely gonna fall in 2020. Oh, wait…
October, what a shi*tty monthThe party’s over and the hangover’s kicking in – in October Zoom drops to $60.97, its lowest point since first going public.
It’s still not entirely clear why, because things were actually going pretty well. The firm released a whole new program of hardware and software features at Zoomtopia (its annual event and possibly the coolest name in conferencing) taking in artificial intelligence (AI), machine learning, proximity and location-based services, face detection, an interactive white board for meetings, and personalized company logos.
Excitingly, CEO Eric Yuan made a rare appearance at the 2019 event – sounds normal, but actually stranger than snow in the desert. The Zoom CEO is legendary for his absence – on Zoom’s pre-launch roadshow he only showed up to one single investor lunch, and his trip to New York for the IPO was just his eighth work trip in five years. That’s not to say the man doesn’t have a crazy work ethic though, and it’s shaped the way that Zoom operates. After moving to the US in the early 90s he could barely speak English, could only write software code – and it took him nine tries to get a visa so that he could stay in the US. But he didn’t give up – in fact, he later said he was willing to apply 20-30 times if he had to. He got game.
Eric’s most famous quirk however is to conduct almost every meeting on Zoom. He says he always offers to meet in person later, but asks for a Zoom meeting first – and usually that’s all that’s needed. That’s a strong sales technique, right there. But apparently it actually all started because of his basketball obsession – he only insisted on taking virtual meetings so that he didn’t have to miss any of his kids’ games 🏀
📚 Fun Fact: Did you know that Zoom employees get reimbursed for any book they purchase for themselves, their families, or their kids? “We want to hire people who are self-learners,” says Yuan 🤓. The perks seem to work – in 2018 he was named CEO of the Year by Glassdoor, with a 99% employee approval rating.
Stormy weather as investors look elsewhereOverall the stock loses about 17% during the month of September, despite another strong Q2 earnings report posted on September 5. Why? Mainly because of ongoing concerns around overvaluation.
It followed a wider decline in cloud stocks, which Nasdaq put down to investors turning away from high-growth holdings towards value stocks like energy and retail.
Zoomtopia looking hotZoomtopia is a massive deal for Zoom Video. It brings together all the firm’s biggest fans and favorite clients each October for a big customer love-in celebration where a bunch of cool stuff is always revealed, and a bunch of cool people usually attend. This year is no different, and the line-up (announced in September) includes Sir Richard Branson of Virgin fame, NASA astronaut Mike Massimino, and the Zoom Innovation Awards recognizing “unique, innovative, and impactful uses” of the Zoom platform.
It’s a weird month for the share price though, which goes a bit kooky over the next few days, losing -7.85% on September 6 and another -7.91% the next day to fall back below $80, starting it on a steady decline for about the next month that bottoms out on October 23 at a record low of $60.97, its lowest point since going public.
New Chief Revenue OfficerZoom appoints Ryan Azus as Chief Revenue Officer. Doesn’t do much to the share price, but it’s a smart move – Azus is a Cisco WebEx veteran, former VP of sales at RingCentral (a Zoom partner company), and he’s super excited about the role.
“What a thrill to come on board team Zoom!” said Azus. “Zoom’s vision for the future of communication and collaboration, customer-focused culture, distinct brand, and world-class team have come together to create an incredible company. It’s an exciting opportunity to use my expertise in building enterprise go-to-market programs to help Zoom continue to grow rapidly at scale.”
Maybe a little louder, Ryan, they might not have heard you at the back.
Sachs sell-offAt the start of July Goldman Sachs (GS) issues a sell warning on Zoom – with a market cap in excess of $25 billion based on expected 2019 revenues of around $540 million, people are starting to worry it might be a bit overvalued.
But the price recovered quickly and by July 15 was heading strongly back up towards the $100 mark, climbing 7% to $99.80. In other good news, early July saw Zoom fix a major security flaw for Mac users that could expose them to potential attack – a bit of a U-turn for the firm, which had previously categorized the issue as “low-risk.” Security is gonna become a bit of a hotspot for Zoom in the future, so watch this space.
First big dropZoom loses 11% in a single day, dropping from $100.85 to close at $85.41. No real reason other than market jitters around other high-profile IPOs, and it regains the ground quickly.
Almost every other emerging tech stock also crashed, including Lyft (LYFT), Uber (UBER), PagerDuty (PD), CrowdStrike (CRWD), Fastly (FSLY), Pinterest (PINS), and Slack (WORK). Like the morning after a bad party.
Profits pull in the publicOn June 10, Zoom tops $100 for the first time: starting the day at $98.51 and hitting a high of $105.99 before closing out at $102. Investors are keen on the company not just because of the hype but because – unusually for a tech IPO – it was already profitable before going public, and its financials for 2018 were on fire 🔥
The company posted $330 million in revenue in the year ending January 31 2019, with a net profit of $7.6 million (compared with a 2018 loss of $3.8 million on revenues of $151 million).
That made it a rare breed – a Wall Street Journal investigation that year found that over 80% of tech IPOs that year were unprofitable: including big splashes like EventBrite (EV), SurveyMonkey (SVMK), and Lyft (LYFT). Its Q1 2019 earnings report released on June 6 gave it another big boost, showing revenues surging 103% to $122 million, way above expectations.
Importantly, the report also showed sales to customers spending above $100,000 jumping by 120% – a seriously good sign, as it demonstrated that Zoom was making headway in the corporate space (as in, the people who actually pay money for their accounts.)
Zoom gains 10%Nothing much happens in May, but Zoom gains 10% over the month anyway, as investors continue to pile into one of the few profitable tech unicorns out there.
It’s a bit volatile over the month – losing over 8% in a single day on May 13, and shooting back up 9.05% to reach $79.76 just two days later before entering a bit of a trough in the last week. It still closes the month at $79.73, a gain of 9.6% over the month.
Zoom wins Fed statusZoom gets approved for use by US Federal Government agencies and contractors. It’s a big win, but doesn’t translate to the share price, which loses -6.28% over the day to close at $73.33, only a fraction above its closing IPO day price.
Why? Your guess is as good as ours. Maybe the investors were Democrats.
“A new game starts today”So says CEO Eric Yuan as he rings the opening bell at Nasdaq New York to launch Zoom Video onto the open market. The IPO prices at $36 per share, valuing the company at a whopping $9.2 billion – the biggest IPO of the year to date.
But it didn’t end there. The stock jumped 72% on its first day of trading to end the day at $62 – boosting its market cap to $16 billion and making CEO Eric Yuan (who owns 20%) a billionaire several times over.
And you? Well, if you’d bought $100 of Zoom shares at launch, a year later you’d have a respectable $1,271.36. That’s just about enough to buy a Montblanc Meisterstuck Geometry Solitaire Champagne Gold LeGrand Fountain Pen (to sign all your fancy checks with, obviously).
It’s not all happy endings though. Some people got a bit confused, and bought stock in mobile communications company Zoom Technologies by mistake. Back then, Zoom Technologies (which had a market cap of about $13.5m and was traded over the counter) had a symbol of ZOOM, compared to ZM for Zoom Video Communications. It worked out well for the smaller firm – shares bounced from almost zero to well over $5 the day after Zoom Video filed its IPO paperwork. Didn’t work out so well for the folks who missed out on the tech IPO of the year though. Bummer. Always read the label.
Fun Fact: Zoom is all about happiness 🎉. In its S-1 filing for the IPO, “happy” appears 17 times and “happiness” 34 times. On the other hand, “unhappy” only occurs twice (both in relation to Cisco). “Delivering happiness is what we do at Zoom,” said the filing. “Delivering happiness” became Zoom’s motto. Do you feel all warm and fuzzy yet?