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Could the age of Zoom be over soon?

Zoom
(Image credit: Shutterstock)

Shares in Zoom have dropped sharply despite the company recording encouraging financial results once again.

The video conferencing giant's share price fell by more than 11% in after-hours trading despite the comapny beating Wall Street's predictions on revenue and EPS (earnings per share). What appeared to have triggered the sell off was the guidance for the third quarter for earnings per share (between $1.07 and $1.08, compared to $1.09 based on an analyst consensus poll) and just 15% growth for the fiscal fourth quarter.

The company, which became the poster child for the work-from-home pandemic era, saw its market capitalization shoot up by nearly nine times in 2020. At its peak, its stock hit $559 -but it's  now worth just under $350.

Now, nearly two years after the pandemic began, sales have hit a buffer with the company acknowledging that its core business is decelerating, which in turn, has caused Zoom to look for growth elsewhere.

It has already started its transformation from being a product into a platform with the $14.7 billion acquisition of Five9, a major call-centre-as-a-software player, and significant investment in building its own apps environment, Zoom Apps.

Teams factor

Zoom also faces the same foe as Slack: Microsoft Teams. But the popular text-based collaboration tool was ultimately acquired by Salesforce before it could fully transition to a platform. Zoom, given its size, may have a harder time finding a potential suitor as hybrid working becomes the de facto working agreement for agile workforces.

Teams remains Zoom's biggest threat as the company hasn't been able to attract as many organizations with more than 10 paid seats as analysts had expected. Why? Perhaps because Microsoft has assiduously pushed Microsoft 365, which includes Teams, for as little as $8 per month per user. Zoom costs almost twice the price and doesn't come with Office 365 apps or OneDrive.

Bundling is ultimately how smaller outfits like Zoho and Freshworks will manage to thrive.

Desire Athow

Managing Editor, TechRadar Pro

Désiré has been musing and writing about technology in a career spanning four decades. Following an eight-year stint at ITProPortal.com where he discovered the joys of global techfests, Désiré now heads up TechRadar Pro. He has an affinity for anything hardware and staunchly refuses to stop writing reviews of obscure products or cover niche B2B software-as-a-service providers.