The News: Zoom stock has managed to find a bright spot in the morass of global coronavirus fears. Shares of Zoom Video Communications, Inc. have been one of the few companies to benefit from the recent coronavirus outbreak. The company’s shares rose even during the tumult of past two days, when the market has largely taken a beating, although it retreated a bit on Wednesday. Stock price aside, it’s reported that average daily downloads at Zoom increased 90% over the past 30 days, compared to the prior month. More at MarketWatch.
Zoom Stock Finds a Bright Spot in Coronavirus Fears
Analyst Take: In the business world today (and especially in the tech world), it’s relatively easier to find companies who are suffering as a result of supply chain issues and global worries around the coronavirus outbreak than it is to find companies who are benefitting. Unless, of course, you’re a maker of masks. Or in the collaboration platform business and focused on making the business of video conferencing a breeze. That’s where Zoom comes in. With major industry conferences like MWC 2020 cancelled completely, talk of the 2020 Olympics being questionable, and daily reports of the spread of the coronavirus in parts of the world well beyond China, anxiety is omnipresent. Companies the world over are jittery about sending employees into what could be potentially dangerous situations, and employees are equally as jittery about going. In fact, we’ve got clients who’ve shared that their companies have issued a full on moratorium on travel for the foreseeable future until we see what happens with this quickly spreading virus.
In short, we are collectively hunkered down, working on the “non-plan-plan” which is how I described our “agile” spring break travel plans to my teenagers just today, and perfectly happy to meet online rather than in person.
Suddenly, remarkably, yet not at all surprisingly, a video conference seems almost better than an in-person meeting or event. Whether you’re a COO trying to mitigate risk, or an employee trying to do what you need to do, turning to video conferencing in lieu of travel and meetings means greater peace of mind, face-to-face meetings with colleagues, customers, and prospects can still happen, and the work that needs to get done can still get done. That’s a win all the way around.
Zoom’s Immediate Future Looks Rosy
As a result, and certainly for Zoom, who aims to be a leading force in enterprise comms, there has perhaps never been a better time to be in the video conferencing business.
In the MarketWatch coverage of Zoom, it was reported that Bernstein analyst Zane Chrane reported Zoom’s average daily downloads increased by some 90% over the course of the last month, compared to the previous month. Even more of an attention-getter, Chrane reported Zoom has added more active new users YTD in 2020 than in all of 2019 combined. It’s a given that many of those new downloads are for Zoom’s free service offering, that’s a no-brainer.
That notwithstanding, I think that represents a tremendous upside. Here’s the thing about Zoom — it’s a little bit like crack. My F100-employed husband remarked just last week: “You use it for a little while and before you know it, realize you can’t remember what you did before you handled your meetings and conferences by way of Zoom.” I got it. It is that easy to get hooked and the Zoom video conferencing solution really is that good. In fact, I can’t remember the last time I booked an external meeting without automatically opting to “make it a Zoom meeting.” If you’re a Zoom user, you know exactly what I mean.
Beyond my personal affinity for Zoom, all you have to do is do the math and it’s hard not to get excited about what might potentially be ahead for the video conferencing company. Zoom had more active users in the first 55 days of 2020 than in all of 2019 combined. The company also reports an increased number of sessions per day (17%), and a 3% rise in the average session length. As Chrane wrote:
“Zoom has added 3.5x more [monthly active users year to date] (through Feb 24) than it did in 2019 [2.22 versus 0.64 million), so even if the conversion rate of new users to paid users is half of that seen in 2019, this would still yield 75% net new paid users in the first 8 weeks of 2020 versus 2019.”
Users are, today anyway, flocking to Zoom and giving it a try and that is no doubt in some ways spurred by the coronavirus outbreak — and a very real need for a video conferencing solution and the ability to get back to business as usual, in spite of the anxiety. It is inevitable that there will be some attrition over time, but bottom line, Zoom is hard not to like. Some of those users are going to stick around.As Chrane noted, if the company manages to convert even half of those users to paid customers, the future for Zoom is rosy indeed. As a user, it’s easy to love the Zoom platform.
As a tech analyst, however, I would be remiss not to mention that Zoom has had some serious security issues that have given me and others in the industry pause, and this continues to be a hot topic when it comes to enterprise collaboration. You can’t play in the big leagues, today anyway, if a security first focus isn’t the way you operate.
I’ll note here that Zoom’s Q3 growth slowed a bit, so we’ll look forward to Zoom reporting Q4 earnings next Wednesday.
Futurum Research provides industry research and analysis. These columns are for educational purposes only and should not be considered in any way investment advice.
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Image credit: Zoom
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