Zoom Video Communications Inc. (ZM) provides a video-first communication platform used by millions of people worldwide for both business and personal purposes. The platform connects people via video, phone, chat, and content sharing and can be integrated across a variety of devices. Meetings on the platform can accommodate up to 1,000 participants, while webinars can scale up to 50,000. Zoom generates revenue by selling subscriptions.
The market in which Zoom operates includes legacy web-based meeting service providers such as Cisco Systems Inc. (CSCO) GoToMeeting from WebEx and LogMeIn Inc. Zoom faces a long list of other rivals. These include bundled productivity solution providers with video functionality such as Alphabet Inc. (GoogL) Google G Suite and Microsoft Inc. (MSFT) Microsoft Teams. Other competitors are Unified Communications as a Service (UCaaS) and legacy PBX providers such as 8×8 Inc. (EGHT), Avaya Holdings Corp. (AVYA) and RingCentral Inc. (RNG).
The central theses
- Zoom sells subscriptions to its video-first communication platform.
- The vast majority of the company’s customers are based in America, but the Asia-Pacific region is growing rapidly.
- Focused on growing the number of customers who have annual sales in excess of $ 100,000, Zoom provides a more stable source of income for the company by attracting larger organizations.
- In July, the company agreed to acquire cloud contact center software provider Five9 for approximately $ 14.7 billion.
Finance from Zoom
Zoom released financial results for late August. known Q2 of 2022 Fiscal year (For your information), the three-month period ended July 31, 2021. The company reported net income attributable to common stockholders of 316.9 million. Revenue increased 54.0% year over year (YOY) to $ 1.0 billion.
Use of Zoom’s video-first communication platform skyrocketed during the pandemic as more people began to work and study from home and needed a reliable way to connect with colleagues or online To attend lectures. The company said the second quarter was the first quarter that had sales of $ 1 billion.
Zoom is particularly focused on growing the number of customers who have contributed more than $ 100,000 in the past 12 months (TTM) Revenue. The size of this customer base is important for two main reasons: it illustrates Zoom’s ability to tailor its offerings to the needs of its users, and it demonstrates the company’s ability to attract larger organizations to its platform. The number of these customers rose in the 2nd quarter of FY 2022 by 130.6% to 2,278.
Zoom’s business areas
Zoom acts as a single business unit. However, it divides its sales into three major geographic regions: America; Asia Pacific; and Europe, Middle East and Africa. The allocation of sales to a specific region depends on the customer’s billing address. Zoom does not outsource the profits generated by each region. While America is Zoom’s largest region by revenue, the Asia-Pacific region is growing faster, as is Zoom’s Europe, Middle East, and Africa region.
America generated revenue of $ 681.4 million in the second quarter of FY 2022, an increase of 50.0% compared to the same quarter of the previous year. The region accounts for about 67% of company-wide sales.
The Asia-Pacific region generated revenue of $ 135.3 million in the second quarter of FY 2022, up 66.3% year over year. The region accounts for about 13% of Zoom’s total sales.
Europe, Middle East and Africa
Revenue from Europe, the Middle East, and Africa increased 60.0% to $ 204.8 million in the second quarter of FY 2022. These three regions together account for 20% of total sales.
The latest developments from Zoom
Zoom announced in mid-July that it had agreed to sell Five9 Inc. (FIVN), a provider of cloud contact center software, for approximately $ 14.7 billion. The company expects the acquisition to strengthen its presence with corporate customers and accelerate its long-term growth potential. The transaction is expected to close in the first half of the calendar year 2022.