Zoom nearly doubles revenue forecast on coronavirus remote-work boost, but costs rising

Zoom has transformed itself into a global video hang-out from a business-oriented teleconferencing tool

But it has come under fire over privacy and security issues, prompting it to roll out major upgrades

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Eric Yuan, CEO of Zoom Video Communications takes part in a bell ringing ceremony at the NASDAQ MarketSite in New York, New York, US on April 18, 2019. Photo: Reuters

Published: 10:47am, 3 Jun 2020Updated: 10:46am, 3 Jun 2020

Zoom Video Communications nearly doubled its expectations for annual sales on Tuesday, driven by a surge in users as more people work from home and connect with friends online during coronavirus lockdowns.

But Zoom’s costs also rose sharply, and executives said gross margins would likely remain below Zoom’s historical norms in the coming quarters, sending shares of the San Jose, California-based down 3.5 per cent to US$200.75 in aftermarket trading.

The company has transformed itself into a global video hang-out from a business-oriented teleconferencing tool. It came under fire over privacy and security issues, prompting it to roll out major upgrades.

The company raised its full-year revenue forecast to a range of US$1.78 billion to US$1.8 billion from US$905 million to US$915 million. Analysts on average expected revenue of US$935.2 million for the financial year ending January 2021.

The latest quarterly report shows the company now has about 265,400 customers with more than 10 employees, a near fourfold increase from a year earlier.

But there were also possible signs the Zoom boom may be slowing as economies reopen. Chief financial officer Kelly Steckelberg said the April peak usage of 300 million daily meeting participants declined slightly in May.