Zoom: boom or bust?

There is no doubt that Zoom has enjoyed meteoric success during the pandemic, but does the future of the company look as bright? Is the recent acquisition of Five9 a smart move? Dr Miriam Marra discusses the future of Zoom in part one of two in her series on technology and hybrid working.

From a 100% enterprise-focused communication company to – using the words of its CEO and founder Eric Yuan – a “world infrastructure company”, the story of Zoom’s rise is a truly fascinating one.

Zoom revenues rose 326% in 2020 and its stock surged over 600%. Just two years ago, the company was valued at almost $16 billion. In 2020 its market cap reached about $106.7 billion. Zoom has been “powering” the world: Zoom traffic rocketed up to 3,000% in May 2020.

However, Zoom’s stock price growth has started to slow down during 2021 hinting at investor scepticism as to how the company would fare in a return to normality. In addition to many competitors’ (Google, Microsoft, etc.) aggressive presence in the market, globally some restrictions have been lifted, and more activities resume face-to-face interactions. Zoom needs to, and is, working towards diversifying its business and improving the core one, which is videoconferencing and technological support to distance and remote-working.

In terms of diversification, Zoom recently announced the acquisition of Five9, a leading provider of the intelligent cloud contact centre, in an all-stock transaction valued at approximately $14.7 billion. The acquisition is expected to help enhance Zoom’s presence with enterprise customers and to allow Zoom to create a $24 billion customer engagement platform that will help redefine how companies of all sizes connect with their customers.

Back in June, Zoom already announced plans to acquire German company Kites, which develops real-time machine translation, and entered into discussions to invest $5 billion in the event-management software company Cvent public to complement Zoom's expanding live-events strategy.

Zoom’s plans do not stop here. The words CEO Yuan uses to define Zoom’s ambitions are themselves a post-pandemic promise: the company aims to “deliver even more happiness and value” to its customers by providing a robust and reliable communications technology enabling “interactions that build greater empathy and trust”.

Since 2020 the company has been expanding its core video conferencing business through several product launches: Zoom events, a platform for hosting interactive and immersive virtual events; Zoom Phone, a modern, cloud phone system; and more recently Zoom Apps which offers ways for users to chat, brainstorm, play games and even take regular healthy breaks within the virtual meeting tool.

Some believe the platform’s expansion comes at a time of high remote-worker burnout, with meeting overloads and a sort of ‘Zoom fatigue’.

So, is the company right to insist and invest on expanding its business?

With a recent Chartered Institute of Personnel and Development (CIPD) survey showing that many employers (44%) plan to take additional measures or to increase investments to enable greater homeworking in the future, it would seem Zoom’s investment could pay off. Yet only time will tell if their future holds the same meteoric success as their past.