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Zoom Hits First $1bn Quarter

Zoom has hit $1bn sales in a quarter for the first time but warned of a slowdown in growth ahead.

Revenue during the quarter ending 31 July 2021 rocketed 54 percent to $1.02bn, while operating income rose 56 percent to $294.6m.

Zoom however said that its pandemic-driven boom may be slowing, largely due to tough comparison quarters last year when people and businesses were turning to video conferencing.

Kelly Steckelberg, Chief Financial Officer at Zoom, said on an earnings call with investors: “It is important to note that as we’ve just lapped our first full quarter year-over-year compare since the start of the pandemic, we have seen customers return to more thoughtful, measured buying patterns.

“While revenue, profitability, and cash flow were strong in the second quarter and the first half, other metrics have begun to normalise, especially when compared to the unprecedented year-over-year comps”

The quarter saw Zoom continue to grow in the enterprise space, with the number of customers spending $1m in annualised recurring revenue (ARR) climbing 77 percent.

Zoom also secured its new biggest customer – a tech firm with 95,000 meeting licences and 63,000 Zoom Phone licences. Other large customer wins included NEC and Seagate, who have deployed 110,000 and 14,000 Zoom meeting licences respectively. Seagate also took on 17,000 Zoom Phone licences.

Zoom Phone continued to grow and has now hit the two million seat milestone, after hitting 1.5 million earlier this year. Some 26 customers now have over 10,000 seats.

The number of customers spending more than $100,000 in ARR on Zoom Phone rising 241 percent year on year.

Zoom said that a chunk of the slowdown in growth is coming from its online business, with some SMBs and consumers not using video technology as much as they were last year. The firm added that it expects its direct and channel businesses to continue seeing “robust” growth.

The planned acquisition of Five9 was briefly mentioned a couple of times on the earnings call, with Zoom CEO, Eric Yuan, saying he expects the addition of the contact centre technology to also boost sales of Zoom’s voice and video technology through cross-selling.

Zoom’s share price fell 12 percent after announcing the results, driven largely by the expected slowing of growth.

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