Could the age of Zoom be over soon?

Zoom
(Image credit: Shutterstock)
Audio player loading…

Shares in Zoom (opens in new tab) have dropped sharply despite the company recording encouraging financial results once again.

The video conferencing (opens in new tab) 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 (opens in new tab) 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 (opens in new tab), a major call-centre-as-a-software (opens in new tab) player, and significant investment in building its own apps environment, Zoom Apps (opens in new tab).

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 (opens in new tab) 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 during a career spanning four decades. He dabbled in website builders and web hosting when DHTML and frames were in vogue and started narrating about the impact of technology on society just before the start of the Y2K hysteria at the turn of the last millennium.