Zoom’s astronomical growth is tapering off along with the pandemic, raising questions about whether the videoconferencing service’s immense popularity will fade as more people return to classrooms, offices and other places that have been off limits for the past year.
The deceleration emerged in an otherwise impressive quarterly earnings report released Monday. The stellar results capped a year in which Zoom’s name became synonymous with the way millions of people have been forced to gather in online video panels while being corralled at home.
Although Zoom continued to enjoy robust gains from November through January, its subscriber increases were significantly smaller than in each of the previous three quarters that unfolded during pandemic life.
Despite that widely anticipated slowdown, both Zoom's quarterly earnings and revenue easily topped analysts' projections, as did management's forecast for the February-April period and the upcoming year. Those numbers helped lift Zoom's stock price by nearly 9% in Monday's extended trading, still leaving the shares well below their highs reached last autumn.
The deceleration in subscriber growth, which began late last summer, is causing some investors to fret that Zoom won’t be able to sustain its momentum as more people get vaccinated and life starts to revert to pre-pandemic patterns later this year.
Those concerns are the main reason Zoom’s once soaring stock price has dropped by about 30% from its peak reached last October. If the rally in Monday's extended trading is replicated in Tuesday's regular session, Zoom's stock will still be worth more than five times what it was at the end of 2019.
Zoom finished January with 467,100 customers with at least 10 employees that were paying for the subscription version of its service. That was an increase of 33,400 customers from the previous quarter ending in October, far below the gains ranging from 63,500 subscribers to 183,500 subscribers in the previous three quarters of operation during the pandemic.
“Zoom has had an amazing year, but all good things must come to an end," said Nucleus Research analyst Trevor White. “The fundamental problem remains, however: Zoom is not going to be able to keep up with the growth that it has seen."
Even so, Zoom is far larger, more profitable and better known than it was before the pandemic upended society and turned its videoconferencing into staple. The San Jose, California, company now has nearly six times more subscribers than it did a year ago while its annual revenue that has quadrupled to $2.65 billion during the past fiscal year.
In its most recent quarter, Zoom posted revenue of $882 million, more than quadrupling from the same time in the previous year. The company turned a profit of $260 million in the last quarter compared to $15 million during the same period in the prior year.
Realizing that the demand for videoconferencing won’t be as great after the pandemic is over, Zoom has been introducing other features such as an internet phone service for voice-only calls in hopes of bringing in more money. The company disclosed Monday that the phone service now has 10,700 customers, most of whom also subscribe to its videoconferencing service.
Chief Financial Officer Kelly Steckelberg said she believes videoconferencing will remain a key communications tool for most people who latched on to it during the pandemic.
“As we progress to the world reopening, people have now integrated it into their lives in the way they work, in the way they learn, the way that they socialize," Steckelberg told The Associated Press in an interview. “That is not just going to change."
With $4.2 billion in cash and a still-valuable stock, Zoom also now has the wherewithal to expand into other areas through acquisitions, said Third Bridge analyst Scott Kessler. Steckelberg acknowledged the company is “constantly looking at opportunities" to expand.
Zoom also is counting on many businesses to hold on to their videoconferencing subscriptions even after their offices reopen so some employees can continue to work remotely part of the time
Even so, “it would seem offices will be used more and Zoom will be used less," Kessler said.
Zoom believes the success of videoconferencing during the pandemic will encourage companies to hold more meetings online instead of requiring employees to travel from different locations to convene in one physical location.
Facebook announced on Friday preliminary agreements with three Australian publishers, a day after the Parliament passed a law that would make the digital giants pay for news.
Facebook said letters of intent had been signed with independent news organizations Private Media, Schwartz Media and Solstice Media.
The commercial agreements are subject to the signing of full agreements within the next 60 days, a Facebook statement said.
“These agreements will bring a new slate of premium journalism, including some previously paywalled content, to Facebook,” the statement said.
Schwartz Media chief executive Rebecca Costello said the deal would help her company continue to produce independent journalism.
“It’s never been more important than it is now to have a plurality of voices in the Australian press,” Costello said.
Private Media chief executive Will Hayward said the new deal built on an existing Facebook partnership.
Australia's Parliament on Thursday had passed the final amendments to the so-called News Media Bargaining Code.
In return for the changes, Facebook agreed to lift a six-day-old ban on Australians accessing and sharing news. Access to Australian news sites did not appear to be fully restored until Friday.
Google, the only other digital giant targeted by the legislation, has already struck content licensing deals, or is close to deals, with some of Australia’s biggest news publishers including Rupert Murdoch’s News Corp. and Seven West Media.
Prime Minister Scott Morrison said the new Australian law was critical to the deals that Australian media businesses were negotiating with the two gateways to the internet.
Under the law, if a platform can't reach agreement with a news business, an arbitration panel can be appointed to set a legally binding price for journalism.
"Global tech giants are changing the world, but we can’t let them run the world,” Morrison told reporters.
“People in free societies like Australia, who go to ballot boxes and who go and they vote, that’s who should run the world,” Morrison added.
Facebook Vice President of Global Affairs Nick Clegg on Wednesday took a veiled swipe at News Corp. in a social media post criticizing Australia’s law, which is aimed at setting a fair price for the Australian journalism that the digital platforms display.
“It is ironic that some of the biggest publishers that have long advocated for free markets and voluntary commercial undertakings now appear to be in favor of state sponsored price setting,” the former British deputy prime minister wrote.
News Corp. Australia executive chairman Michael Miller said last week that his company had pay negotiations with Facebook.
“Having been someone who’s dealt with Facebook over the past months, we have some weeks where we’re getting good engagement and think we’re progressing and then you get silence. I think the door is still open,” Miller told a Senate inquiry into Australian media diversity.
News Corp. owns most of Australia’s major newspapers, and some analysts argue the U.S.-based international media empire is the driver for the conservative Australian government making Facebook and Google pay. News Corp. has announced a wide-ranging deal with Google covering operations in the United States and Britain as well as Australia.
Indian newspapers on Thursday demanded up to 85% advertisement revenue share from US search giant Google for publishing their content online, with Australia approving a new law aimed at forcing tech giants to pay for news.
In a letter to Google, the Indian Newspaper Society (INS), representing 800 publishers across the country, said the US search engine "should pay for news generated by the newspapers which employ thousands of journalists".
"Since the content which is generated and published by newspapers at considerable expense is proprietary, the Society pointed out that it is this credible content which has given Google the authenticity in India ever since its inception," INS said in a statement.
"Advertising has been the financial backbone of the news industry. However, newspaper publishers are seeing their share of the advertising pie shrinking in the digital space, even as Google is taking a 'giant share of advertising spends'," it added.
Earlier in the day, the Australian Parliament passed the new law that will force tech giants like Facebook and Google to enter into commercial deals with that country's publishers, seen as a test case for similar regulation in other nations.
Canada is also reportedly considering bringing a law similar to Australia's. In 2020, Canadian media outlets warned of a potential bankruptcy if the government did not step in. They also warned of shrinking jobs in the country's print journalism.
Both Facebook and Google have pledged to spend $1bn each in the news industry globally over the next three years.
Global smartphone brand realme has carved out a niche for itself in the Bangladesh smartphone market after beginning its journey in the country on February 24 last year.
Also, realme was the only mobile brand that launched 12 smartphones and five smart devices in 2020, the company said on Thursday.
In its first year in the Bangladesh market, realme sold a good number of smartphones.
Around 3,000 realme C17 units were sold within only a minute at Daraz in 2020, while 1,500 units of realme 6 were sold in just under a minute in the online marketplace, the smartphone manufacturer said.
The last realme phone launched during its first year in Bangladesh was the Narzo 20 with a G85 gaming processor which sold 2,000 units in two minutes in Daraz, making it the fastest-selling gaming phone in the online marketplace.
Also read: Realme grows over 50% for 2 years
Realme's meteoric growth in the last year helped the brand bag one of the top four positions in the Bangladesh market.
According to Counterpoint Research, realme grew 1,000% in Bangladesh within the first quarter of 2020.
The growth rate was 250% in the next quarter and was maintained in the subsequent quarters.
Also read: Realme plans to leap into a prosperous 2021
Realme Bangladesh Manager Tim Shao said, "We are overwhelmed by the love we have received within such a short time. We will continue to amaze the customers with more exciting and innovative trendy smartphones and products in the second year of our journey in Bangladesh."
Facebook, following in Google’s footsteps, says it plans to invest $1 billion to “support the news industry” over the next three years.
The social networking giant, which has been tussling with Australia over a law that would make social platforms pay news organizations, said it has invested $600 million since 2018 in news.
Google said in October that it would pay publishers $1 billion over the next three years.
News companies want Google and Facebook to pay for the news that appears on their platforms. Governments in Europe and Australia are increasingly sympathetic to this point of view. The two tech companies suck up the majority of U.S. digital advertising dollars, which — among other problems — has hurt publishers.
Facebook said on Tuesday it would lift a ban on news links in Australian after the government agreed to tweak proposed legislation that would help publishers negotiate payments with Facebook and Google. Facebook was criticized for its ban, which also temporarily cut access to government pandemic, public health and emergency services on the social networking site.
Facebook said Tuesday that the changes allow it to choose which publishers it will support and indicated that it will now start striking such deals in Australia.
Google had already been signing content licensing deals with Australian media companies, and says that it has arrangements with more than 50 publishers in the country and more than 500 globally.
There may be more such regulation in other countries. Microsoft is working with European publishers to push big tech platforms to pay for news. European Union countries are working on adopting copyright rules that allow news companies and publishers to negotiate payments.