Zoom went public just a couple months ago in April 2019 and its stock price has since doubled. Recently, it announced its first quarterly earnings report and not surprisingly it beat analyst expectations. If there’s a recipe for success founder Eric Yuan seems to have found it. But these recent events highlighting the CEO’s and Company’s strengths and bright future ahead were undoubtedly a result of several long years of hard work.
Hindsight is 20/20 and looking back, Eric laid out and executed on a masterful plan on how to build a software empire. First he identified a huge problem related to a rapidly growing trend – remote working. Second, he hired the best people he could find that had the exact domain expertise in the market he was entering. Third, he aggressively formed partnerships throughout the software and hardware ecosystem. Fourth, he developed and evangelized a compelling vision to do good for society enabling people to better connect with each other in a time where a feeling of isolation can be all too common.
Eric’s recipe for success has played out superbly well in terms of financial results. The year ended January 2017, Zoom generated $61 million in revenue. That number grew to $152 million the following year and $330 million by January 2019. If we take the most recent quarter ending April 2019, where revenues were $122 million, on an annual basis assuming no growth, it puts the company at $488 million for the current year. Zoom has also done an excellent job at managing net income right at breakeven over the last three years, effectively plowing all earnings back into company growth.
We can understand why the market is so bullish on the Company, but the story goes beyond prior performance. Zoom has a long way to go, with its uptake of business users who are delighted by its solutions, it can extend into other areas such as collaboration. And it has done so using the same playbook it developed to scale its core business – establish key partnerships. This time it’s with Microsoft and Slack. Real-time messaging and file sharing is now available through Zoom’s own chat feature or deep integrations with Slack and Microsoft Teams.
Collaboration is a hot space, particularly when practically all business SaaS companies can create inroads to compete in the area. Zoom is doing much more than extending into the space, however, it is enriching the human remote workplace experience by making users feel more connected to each other.