Zoom generated $328.2 million in the first quarter of 2020 compared to $122 million in the first quarter of 2019. Its performance beat analysts’ projections who expected $202.48 million in revenue.
Changes caused by the pandemic, such as working from home, have seen a sharp increase in zoom subscriptions. The growth in revenue emanates from new customer acquisitions and conversion of free users to premium users. Zoom customers have increased by 354% in less than a year.
“The COVID-19 crisis has driven higher demand for distributed, face-to-face interactions and collaboration using Zoom. Use cases have multiplied as people integrated Zoom into their work, learning, and personal lives,” confirmed its Founder and CEO Eric Yuan.
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The company is optimistic about its performance in the next quarter. The video conferencing app expects its second-quarter revenues to grow by 50.8% to $495m. Furthermore, the company expects to grow its annual revenues to almost $1.8 billion due to increased demand for the service.
“Total revenue is expected to be between $1.775 billion and $1.800 billion, [taking into] consideration the demand for remote work solutions for businesses, [and the] increased churn in the second half of the fiscal year…” read a Zoom press release.
Nevertheless, the company still faces the challenge of increased cost from the high number of free users. Techcrunch revealed that its gross margins fell from 80% in the last quarter to 68%, showing that the company still shoulders increasing free usage costs.
