Zoom’s surging subscriber growth highlights its potential staying power as Google and Microsoft look to steal market share

Zoom’s revenues surged 355% year-over-year (YoY) for the company’s fiscal Q2 2021 earnings (ended July 31, 2020). The earnings announcement pushed Zoom’s market capitalization beyond that of AMD and IBM, a feat that would have seemed next to impossible only a year ago.

The performance is particularly impressive considering the obstacles Zoom has faced in recent months: Microsoft and Google updated their respective enterprise software platforms to steer consumers toward in-house video conferencing offerings; Jio launched a Zoom clone for the India market; and geopolitical pressure forced Zoom to end direct sales to all of Mainland China.

While we’ve previously expressed skepticism about Zoom’s ability to sustain its success, we must also give credit where credit is due—Zoom managed to further capitalize on the shift to remote work and expand its customer base, proving that it isn’t just a flash in the pan. 

Here are a few highlights from Zoom’s earnings that showcase its potential staying power: 

  • Zoom managed to grow its base of large enterprise subscribers, signaling that video conferencing isn’t yet a winner-take-all market. In its earnings announcement, Zoom reported a 112% YoY increase in its base of customers contributing more than $100,000 in trailing annual revenues. Large enterprise subscribers tend to be more sophisticated software buyers, so it’s a great sign for Zoom that it is still managing to gain traction with this demographic. We predicted that enterprises would instead look to cut subscriptions for standalone video conferencing services, since Microsoft and Google were bundling them with their enterprise productivity suites, which account for virtually the entire market. This data suggests that, for now, companies are instead subscribing to multiple platforms—a JD Power survey conducted in April found that more than half of video conferencing users had engaged with multiple platforms in the previous week.
  • Zoom’s base of subscribers with over 10 employees grew by 458% YoY. The company reported a base of more than 370,200 enterprise customers in this demographic, up from 265,400 in the preceding quarter. This quarter-over-quarter growth shows that Zoom has had continued success in converting subscribers using its freemium model, even as key markets such as China and India have become more closed off.


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