Zoom posts big quarter even as subscriber growth slows

SAN RAMON, CALIFORNIA (AP) — Zoom’s astronomical growth is tapering off along with the pandemic, raising questions about whether the videoconferencing service’s immense popularity will fade as more people return to classrooms, offices and other places that have been off limits for the past year.

The deceleration emerged in an otherwise impressive quarterly earnings report released on Monday. The stellar results capped a year in which Zoom’s name became synonymous with the way millions of people have been forced to gather in online video panels while being corralled at home.

Although Zoom continued to enjoy robust gains from November through January, its subscriber increases were significantly smaller than in each of the previous three quarters that unfolded during pandemic life.

Despite that widely anticipated slowdown, both Zoom’s quarterly earnings and revenue easily topped analysts’ projections, as did management’s forecast for the February-April period and the upcoming year.

Those numbers helped lift Zoom’s stock price by nearly nine per cent in Monday’s extended trading, still leaving the shares well below their highs reached last autumn.

A sign for Zoom Video Communications ahead Nasdaq IPO in New York. PHOTO: AP

The deceleration in subscriber growth, which began late last summer, is causing some investors to fret that Zoom won’t be able to sustain its momentum as more people get vaccinated and life starts to revert to pre-pandemic patterns later this year.

Those concerns are the main reason Zoom’s once soaring stock price has dropped by about 30 per cent from its peak reached last October.

Zoom finished January with 467,100 customers with at least 10 employees that were paying for the subscription version of its service.

That was an increase of 33,400 customers from the previous quarter ending in October, far below the gains ranging from 63,500 subscribers to 183,500 subscribers in the previous three quarters of operation during the pandemic.

“Zoom has had an amazing year, but all good things must come to an end,” said Nucleus Research analyst Trevor White.

“The fundamental problem remains, however: Zoom is not going to be able to keep up with the growth that it has seen.”