Zooms valuation plummets despite strong earnings
Zoom saw its valuation tumble by as much as 13 per cent after reporting Q3 numbers. Sales for the period ending 31 October 2020 rocketed 367 per cent, but the rate at which it beat expectations and raised guidance for the following quarter dipped, following blowout earnings earlier in the year. Zoom CEO Eric Yuan said: “We remain focused on the communication needs of our customers and communities
as they navigate the current environment and adapt to a new world of work from anywhere using Zoom. “We aspire to provide the most innovative, secure, reliable, and high-quality communications platform to help people connect, collaborate, build and learn on Zoom.” Zoom said that the number of customers it has with over 10 employees grew by 485 per cent year on year in the quarter. Yuan also highlighted a number of notable customer wins, including Peloton and Rakuten. Operating profit swung from a $1.7m loss in the same quarter last year, to $192.2m this time around. But the seemingly robust numbers did little to turn the tide on Wall Street, with investors increasingly concerned that Zoom is overvalued. The vendor’s share price has risen by as much as 713 per cent this year but has dipped by a quarter since its peak in October. The decline has been accelerated by positive news around vaccines, with investors feeling a potentially imminent return to more normal working patterns could hinder growth. Zoom’s earnings came as Amazon Web Services (AWS) announced it has been chosen as the conferencing firm’s preferred cloud partner. The pair have a pre-existing relationship, but AWS was rattledearlier in the yearwhen bitter rival Oracle announced a partnership with Zoom. AWS CEO Andy Jassy hammered home the duration of the partnership in the press release. He said: “COVID-19 changed everything for Zoom, putting demands on the company to meet the video conferencing needs of hundreds of millions of new participants around the globe, and AWS was there from the beginning to ensure Zoom could scale to meet these new requirements virtually overnight. “When organizations build on AWS - as Zoom has done since 2011 - they transform their business, expanding and innovating much faster. Together, Zoom and AWS have delivered great experiences for new Zoom users around the world, and we look forward to using the cloud to develop new ways to help the world communicate.”
Author: thomas.wright@incisivemedia.com(Tom Wright)
Date: 2020-12-01
URL: https://www.channelweb.co.uk/news/4024296/zoom-valuation-plummets-despite-strong-earnings
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