Zoom is one of the fastest-growing video conferencing platforms globally. Since it was founded in 2011 in California US and has reached an average of 300 million users daily in recent days.
The large demand for its video conferencing and meeting products is largely driven by the work-from-home situation caused due to the global Covid 19 crises.
The company also witnessed a steady growth in its customer base before the pandemic drove a surge in its product demands by crossing the 10 million daily user mark in 2019.
Zoom listed its incorporation with NASDAQ in April 2019 and operates under the trading symbol of ZM. Its current share price is highly fluctuating and is placed at $ 429.68 as of the time of this writing. The current company valuation supposedly values at $ 117.53 billion.
It reported annual revenue of $ 622 million for the fiscal year ended 31 January 2020. Its total market valuation under current circumstances is highly volatile and fluctuating with swinging share prices in recent months.
Zoom Revenue Stream
Zoom’s basic revenue generation stream is its subscription plan sales to its individual and corporate clients. Zoom offers a free limited video conferencing pricing plan for all users too.
Let’s briefly take a look at the pricing plans offer by Zoom.
Zoom’s other featured product Zoom “Rooms” offers price plans for its customers as:
- A Free Trial for up to 30 days
- $ 499 / year /room where customers can purchase up to 49 Zoom Room licenses
- $ 499 / year /room where customers can purchase more than 49 Zoom Room licenses. The price will increase with increased Zoom room licenses.
The video-conferencing firms didn’t limit their product range to video and chat products only. It recently launched a phone service for its corporate clients mainly. The Phone app offers pricing plans on a country basis. For customers in the US and Canada its pricing plans are:
- $ 120 per year/user with metered rates
- $ 180 per year/user with unlimited regional calls
- $ 240 per year/user with unlimited local calls in 40+ countries
Additionally, Zoom offers a hardware lease ($ 25 per month per device) and Ads-on pricing plans for Audio and Cloud Storage. The Audio plan starts at $ 1,200 per year on rates per call basis. The Cloud storage plan $ 480 per year with a maximum limit of 3TB data storage per month.
Zoom generates its most of the revenue from the subscription sales of its flagship products Zoom Meeting, Zoom Webinar, and Zoom Rooms.
Zoom Corporate Clients
Zoom reported revenues of $ 330.5 million and $ 622.7 million for the years 2019 and 2020 respectively. Its mainstream of revenue came through corporate customers having 10 or more users.
The revenues from corporate clients contributed as much as 95% of the total sales. The individual subscription plan sales stood at merely 5% as of now.
Zoom witnessed an exceptional increase in its corporate client base from 50,800 in 2019 to 81,800 in 2020. Its client base of customers with more than 10 employees increased by a whopping 130% for the year ended 31 January 2020.
1) Clients with $100,000 and above sales
Zoom uses another unique financial metric of annual sales of $ 100,000 and above from its corporate clients. It aims to increase corporate sales for customers with more than $ 100,000 in sales per year.
For the last three years, its corporate sales for the targeted revenue of $ 100,000 and above remained 143, 314, and 641 customers.
The portion of revenue from these large corporate clients remained 25%, 30%, and 33% for the fiscal years 2018, 2019, and 2020 respectively.
2) Interest Revenue from Cash Reserves
Although Zoom does not hold a large sum of cash and cash equivalents, it still represents a measurable figure on its financial statement. Zoom holds $ 283 million in cash and $ 572.1 million of marketable securities.
The company invests these cash reserves in short-term interest schemes protecting it against the interest rate fluctuation risks.
Although Zoom Inc. reported profits in the year 2019 for the first time, its marketable securities generated $ 0.944 million unrealized revenue for the fiscal year 2020.
Zoom Market Valuation and Share Price
For the time being, Zoom share pricing is witnessing an upwards trend with a current share price of $ 429.68. The high share prices are mainly attributable to the current demand-driven by Covid 19 crises globally. Zoom’s total market valuation crossed a whopping figure of $125 billion recently.
However, the company anticipates a share price and total market cap settlement effect once the demand lowers back to the normal level.