Despite concerns, Zoom sales boom amid Covid-19 pandemic

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The company detailed that they now had 265,400 customers with more than 10 users on their account, a number Zoom said represented a 354% surge. Revenue was $328.2 million, up 169% year-over-year, and net income was $27 million, a massive increase from just $0.2 million a year ago.

"The Covid-19 crisis has driven higher demand for distributed, face-to-face interactions and collaboration using Zoom. use cases have grown rapidly as people integrated Zoom into their work, learning, and personal lives", said Mr Yuan.

Alex Stamos, who now works as a security advisor for the company, explained that Zoom is trying to discourage malicious parties from using throwaway emails and abusing the platform by making their conversations accessible to law enforcement officials.

On Tuesday, Zoom, which has been catapulted from a relatively unknown video service to a household name during the pandemic, reported first-quarter results that were impressive on nearly every measure. User numbers have surged from 10 million at the start of the year, with the app now hosting 300 million daily meeting participants. Analysts surveyed by FactSet had expected adjusted earnings of 9 cents a share on sales of $230.6 million.

Following the publication of his firm's quarterly report, Yuan explained the rationale behind withholding end-to-end encryption from non-paying users of the platform, which amounts to a need to cooperate with law enforcement investigations.

As long as you're a free user of Zoom, your calls won't be encrypted in the foreseeable future due to the company wanting to comply with law enforcement.

Zoom Video
Aden- Yasmin Abdel Azim- Image Credit Pexels

"Videoconferencing is going to become a mainstream service", predicted Zoom CEO Eric Yuan, who co-founded the company nine years ago.

In light of its impressive Q1 performance, Zoom also almost doubled its revenue projections for the year, from $905-$915 million to $1.78-$1.80 billion.

As a result the company has poured resources into privacy and security.

After a big run-up leading up to Tuesday's highly anticipated announcement, Zoom's stock initially rose even higher in extended trading. "They have this wonderful brand. now they have to leverage that brand and figure out which markets they're going to go after". Zoom doesn't record meetings silently. "But for now congrats to Zoom for being a critical if not essential tool during the Covid-19 pandemic".

This led to "more costs" but was crucial to meet the needs of users, said Kelly Steckelberg, Zoom's chief financial officer, in an earnings call on Tuesday.

The majority of the costs are used for data centers and bandwidth to host calls. "Our gross margin was further impacted by the elevated demand, especially higher levels of free meeting minutes, including those from K-12 schools in March and April".

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