Zoom Hits US$1 Billion in Quarterly Revenue - Shows Signs of Easing Growth

Zoom Video Communications Inc.’s quarterly revenue surpassed US$1 billion for the first time in the company’s history, though the strong demand for its videoconferencing services that made it ubiquitous during the pandemic is showing signs of easing as regular activities resume.

The roughly 54% increase in revenue, while slightly better than Wall Street expected, couldn’t match the huge growth that Zoom had in the year-earlier period, when revenue surged fourfold compared with the prior year as companies leaned more heavily into remote working.

While the company forecast revenue of more than $1 billion again in the current quarter, its adjusted earnings guidance came in lower than expected. And company officials said small businesses and consumers were starting to spend less as opportunities for in-person meetings and gatherings expand. Zoom officials said some metrics supercharged by the pandemic had begun to normalize as customers returned to “more thoughtful, measured buying-patterns.”

Zoom shares fell 12% in after-hours trading, after closing up 2% on Monday.

Research firm International Data Corp. projects that collaboration applications will become a roughly $51 billion market by 2025, nearly double 2020 levels.

Microsoft Corp. in its most recent earnings report said that usage of Teams, its group conferencing and collaboration software, had reached record levels with nearly 250 million monthly active users and nearly 80 million monthly active Teams Phones users, with total calls surpassing 1 billion in one month.

Zoom Phone, which the company sells as a telephone option for huddle rooms and executive offices, in August reached 2 million seats sold, and the number of Phone customers that generated more than $100,000 in revenue over the previous 12 months more than tripled from the comparable period a year earlier, company executives said.

As offices start to reopen, analysts are raising questions about Zoom’s ability to retain paying customers and sustain the kind of growth rate it has enjoyed during the pandemic.

On Monday, Zoom said it had about 504,900 customers with more than 10 employees, up from about 497,000 in the April quarter, and said about 2,278 customers generated more than $100,000 in revenue over the past 12 months, up from about 1,999 in the previous quarter.

Zoom has been adding features and services and in July agreed to buy cloud-based customer-service software provider Five9 Inc., in a deal that Zoom said would allow it to tap into a $24 billion contact-centre market.

“Today we are a global brand counting over half a million customers with more than 10 employees, which we believe positions us extremely well to support organizations and individuals as they look to reimagine work, communications, and collaboration,” Zoom founder and Chief Executive Eric S. Yuan said.

Zoom’s second-quarter profit rose to about $317 million from about $186 million a year earlier, while revenue reached $1.02 billion, up from $663.5 million a year ago.

The results beat Zoom’s and Wall Street projections, according to FactSet.

The California-based company said it now expects annual revenue to reach $4.01 billion to $4.02 billion, compared with its earlier view of $3.98 billion to $3.99 billion, and $4.75 to $4.79 a share in adjusted profit, compared with its previous range of $4.56 to $4.61 a share.

An original watercolour illustration for the cover of Harry Potter and the Philosopher’s Stone, 1997 — the first book in J.K. Rowling’s hit series—could sell for US$600,000 at a Sotheby’s auction this summer.

The illustration is headlining a June 26 sale in New York that will also feature big-ticket items from the collection of the late Dr. Rodney P. Swantko, a surgeon and collector from Indiana, including manuscripts by poet Edgar Allan Poe and Arthur Conan Doyle, author of the Sherlock Holmes books

The Harry Potter illustration, which introduced the young wizard character to the world, is expected to sell for between US$400,000 to US$600,000, which would make it the highest-priced item ever sold related to the Harry Potter world. This is the second time the illustration has been sold, however—it was on the auction block at Sotheby’s in London in 2001, where it achieved £85,750 (US$107,316).

The artist of the illustration, Thomas Taylor, was 23 years old at the time and a graduate student working at a children’s bookshop. According to Sotheby’s, Taylor took a “professional commission from an unknown author to visualise a unique wizarding world,” Sotheby’s said in a news release. He depicted Harry Potter boarding the train to Hogwarts on platform9 ¾ platform, and the illustration became the “universal image” of the Harry Potter series, Sotheby’s said.

“It is exciting to see the painting that marks the very start of my career, decades later and as bright as ever! It takes me back to the experience of reading Harry Potter for the first time—one of the first people in the world to do so—and the process of creating what is now an iconic image,” Taylor said in the release.

Meanwhile, to commemorate the 175th anniversary of Edgar Allan Poe’s For Annie , 1849, Sotheby’s recently reunited the autographed manuscript of the poem with the author’s home, Poe Cottage, in the Bronx.

The cottage is where the author lived with his wife, Virginia, and mother-in-law, Maria Clemm, from 1846 until he died in 1849. The manuscript, also from the Swantko collection, will remain at the home until it is offered at auction at Sotheby’s on June 26 with an estimate between US$400,000 and US$600,000.

The autographed manuscript will remain at Poe Cottage until it is offered at auction at Sotheby’s on June 26.
Matthew Borowick for Sotheby’s

Poe Cottage, preserved and overseen by the Bronx County Historical Society, is home to many of the author’s famous works, including Eureka , 1948, and Annabel Lee , 1927.

“To reunite the For Annie manuscript with the Poe Cottage nearly two centuries after it was first composed brought to life literary history for a truly special and unique occasion,” Richard Austin , Sotheby’s Global Head of Books & Manuscripts, said in a news release.

For Annie was one of Poe’s most important compositions, and was addressed to Nancy “Annie” L. Richmond, one of the several women Poe pursued after his wife Viriginia’s death from tuberculosis in 1847.

In a letter to Richmond herself, Poe proclaimed For Annie was his best work: “I think the lines For Annie much the best I have ever written.”

The poem was composed in 1849, only months before Poe’s death, Sotheby’s said in the piece, Poe highlights the romantic comfort he feels from a woman named Annie while simultaneously grappling with the darkness of death, with lines like “And the fever called ‘living’ is conquered at last.”

Poe Cottage, preserved and overseen by the Bronx County Historical Society, is home to many of the author’s famous works, including Eureka, 1948, and Annabel Lee,, 1927.
Matthew Borowick for Sotheby’s

In the margins of the manuscript are the original handwritten instructions by Nathaniel P. Willis, co-editor of the New York Home Journal, where Poe published other poems such as The Raven and submitted For Annie on April 20, 1849.

Willis added Poe’s name in the top right and instructions about printing and presenting the poem on the side. The poem was also published in the Boston Weekly that same month.

Another piece of literary history included in the Swantko sale could surpass US$1 million. Conan Doyle’s autographed manuscript of the Sherlock Holmes tale The Sign of Four , 1889, is estimated to achieve between US$800,000 and US$1.2 million.

Zoom Hits US$1 Billion in Quarterly Revenue – Shows Signs of Easing Growth

Company raises full-year guidance, reports more than half a million customers with more than 10 employees.