Zoom achieves first $1bn revenue quarter but warns online sales are dwindling

Sales to SMBs and individuals using online products are expected to continue falling as pandemic restrictions ease

Zoom has achieved its first $1bn-revenue quarter, but has warned that some parts of its business will begin to slow down as pandemic-related restrictions on travel are lifted.

For its quarter ending 31 July 2021, revenues grew by 54 per cent year on year - hitting $1bn for the first time in a single quarter.

The revenue growth was driven by new customer acquisition, Zoom claims. New customers accounted for around 74 per cent of Zoom's incremental revenue during the quarter, while existing customers accounted for 26 per cent.

In addition, the video communications vendor saw a 131 per cent uptick in the number of customers contributing more than $100,000 in trailing 12-month revenues, as well as a 36 per cent jump in the number of customers with more than 10 employees.

The growth rates are markedly slower than those enjoyed by the vendor in 2020. For its quarter ending 31 October 2020 sales had rocketed by as much as 367 per cent.

Zoom's share price has fallen by 49 per cent since it reached a high point in October last year at $568 a-share.

Speaking to investors, Zoom CFO Kelly Steckelberg said that Zoom's direct and channel businesses are growing at twice the rate of its online business.

Its EMEA operations were hit hardest by declines in Zoom's online segment, which Steckelberg attributed to an increase in travel among users as Covid restrictions are eased.

"Even though the pandemic seems to be far from over, we are happy that people are feeling more comfortably out andd traveling, and that's really where we're seeing the slowdown," she said.

"If you go back to when we gave guidance at the beginning of the year, we had expected that [to happen] toward the end of the year, but it's just happened a little bit more quickly than we expected."

Zoom's online business is primarily made up of SMB-sized customers with 10 or fewer stadd as well as individual users.

CEO Eric Yuan said the declines in its online segment will present an opportunity to continue growing its enterprise customer base.

The online business used to be just a marketing channel, but it also contributed a lot to our revenue from a percentage perspective," he said.

"That percentage is going down for online. But with that we can focus on our core enterprise customer base," he added.

"I would say it may not be a sustainable strategy to further the online user monetization. We've got to have other ways to monetize that online install base. That's why we are very excited about the future"