(CBS)–Zoom Video Communications is emerging as the latest internet gold mine as millions of people flock to its online video-conferencing service to see colleagues, friends and family while tethered to their homes during the coronavirus pandemic.
Zoom’s financial results for the February-April period shows the astronomical growth that has turned it into a Wall Street star. Revenue during its first-quarter more than doubled from the same time last year to $328 million. Its earnings were $27 million — up from just $198,000 a year ago.
The user surge has left Zoom with a market value of about $59 billion — greater than the combined market values of the four largest U.S. airlines.
“Videoconferencing is going to become a mainstream service,” Zoom CEO Eric Yuan predicted.
In a sign that the company expects more growth, Zoom forecast revenue of roughly $500 million for its current quarter ending in July, more than quadrupling from the same time last year. Zoom expects revenue of about $1.8 billion for its full fiscal year, nearly tripling in a year.
The San Jose, California, company has always made most of its money from companies that subscribe to a more sophisticated version of its service. But the pandemic-driven shutdown has turned Zoom into an essential tool for employees who once worked alongside each other but have been doing their jobs from home. It’s also become a vehicle for socializing from a distance and connecting with family members and friends.
Analysts from Oppenheimer said it will be interesting to see how Zoom’s growth continues once employees return to their offices.
Zoom’s boom came despite privacy and security problems that enabled outsiders to make uninvited appearances during other people’s video conferences, a practice known as Zoom bombing.
Two Massachusetts schools were Zoom-bomb victims, for instance. The National Association of Real Estate Brokers held a 200-person Zoom conference that was also Zoom-bombed. The Laguna Beach City Council in California had its meeting Zoom-bombed with pornography.
If it hopes to continue to expand, Zoom will likely have to do a better job of protecting the privacy of its video conferences. To help achieve that goal, Yuan has been consulting with Alex Stamos, an online security expert who previously worked at Yahoo and Facebook.
Zoom was also hit with a lawsuit alleging the company sold user data to Facebook. Zoom officials acknowledged its data sharing in blog posts and said they have changed the practice.
The lawsuit states Zoom was paid for sharing user data, although court documents don’t disclose how much money Zoom allegedly received. Aparna Bawa, Zoom’s chief legal officer, said in a blog post that Zoom “has never sold user data in the past and has no intention of selling users’ data going forward.”
Security concerns prompted some schools to stop using Zoom, although the company’s efforts to introduce more protections have brought some back.
Yuan wants to make even more money from all the socializing and learning happening on the service. Some analysts have speculated that Zoom may eventually show ads on its free version. The company hasn’t given any indication it will show ads.
“There are a lot of opportunities ahead of us,” Yuan said in a video conference without elaborating.