Has Zoom Already Passed Its Peak?

Has Zoom Already Passed Its Peak?

In the last eighteen months, the world saw the rise of a new tech company. Zoom was in the right place at the right time and fueled the triumph of video conferencing with its product. The company’s share price soared; suddenly, the company was the focus of global interest. But now, Zoom seems to have reached its first peak. For the first time in its history, Zoom stepped over a billion mark. At the same time, the competition is growing fiercer. The video conferencing software manufacturer is no longer expanding as fast as it did at the beginning of 2020.

Zoom has long been synonymous with video conferencing. Many employees use the developers’ software in the home office to contact their colleagues and superiors. The company was an indispensable part of communication between teachers and students during the months of homeschooling. In 2020, this has led to massive growth of the company.

The company has now published its business figures for the second quarter of 2021. Sales climbed 54 percent over one year to $1.02 billion. The profit also made a giant leap up. It rose from $186 million previously to nearly $317 million. For the first time, Zoom was able to score a billion US dollars in a single quarter. That would be a reason to celebrate at any other company, but for a while the shareholders of Zoom were used to three-digit growth figures. The company can no longer deliver that now even though the pioneer has shown more than an eight-fold rise.

Microsoft and Others Are Involved

Recently, more and more workers have been returning to their offices and therefore the need for video conferencing has decreased somewhat. At the same time, the competition for this type of software is still growing as numerous other companies are now fighting for the lucrative corporate customer market. This is especially true for large tech companies, because they are easily able to integrate these conferencing services into their portfolio and, hence, they can attract and keep their customers. With companies like Slack, Skype, and Cisco, Zoom is facing tough competition.

This sign indicates that the vast boom is over. The management of Zoom recognized this trend a while ago and they are already preparing for lower growth figures, which are expected to increase by only 30 percent. This development was already visible in the last quarter, but now the official confirmation has been released. The company assumes that the number of customers will decrease somewhat in the future too since Zoom has recently won over fewer large corporate customers than hoped. Naturally, that didn’t go over very well on the stock exchanges. After the official announcement of slowed growth, the shares of Zoom collapsed in double digits at times.

Microsoft and Others Are Involved
Microsoft and Others Are Involved

Therefore, the company would like to position itself more broadly in the future. The management has already announced that it will take over the call center provider Five9 for $15 billion. Most recently, Zoom has already been on another shopping spree and has taken over a German company Kites, which specializes in real-time solutions for machine translations. The next few years will show whether Zoom can prevail in the fight against the big tech companies in the long run.