Zoom Video Communications, Inc. (ZM): history, ownership, mission, how it works & makes money

A Brief History of Zoom Video Communications, Inc.

Zoom Video Communications, Inc. (ZM) was founded in 2011 by Eric Yuan, a former executive at Cisco WebEx. The company quickly gained traction due to its user-friendly video conferencing platform, which became particularly popular during the COVID-19 pandemic. As of 2024, Zoom has established itself as a leader in the unified communications space.

Financial Performance Overview

For the three months ended July 31, 2024, Zoom reported revenue of $1,162.5 million, a 2.1% increase from $1,138.7 million in the same period in 2023. The net income for this quarter was $219.0 million, compared to $182.0 million in 2023.

For the six months ended July 31, 2024, total revenue reached $2,303.8 million, up from $2,244.0 million in 2023, marking a growth of 2.7%. The corresponding net income for this period was $435.3 million, compared to $197.4 million for the same period in the previous year.

Key Financial Metrics

Market Trends and Challenges

As of 2024, Zoom is navigating a competitive landscape characterized by increasing demand for remote communication tools. Despite the growth in revenue, the company faces challenges such as elongated sales cycles and heightened scrutiny on IT spending from customers. This has impacted the demand dynamics for its services, particularly among enterprise clients.

Cash Flow and Liquidity Position

For the six months ended July 31, 2024, Zoom generated $1,037.5 million in net cash from operating activities, an increase from $754.5 million in 2023. The free cash flow for the same period was $934.8 million, compared to $686.0 million in 2023.

Strategic Investments

As of July 31, 2024, Zoom's strategic investments amounted to $438.5 million, showing a diversified portfolio that includes equity and debt securities. The fair value of equity securities was reported at $434.1 million and debt securities at $4.4 million.

Zoom's strong liquidity position, reflected by cash, cash equivalents, and marketable securities totaling $7.5 billion as of July 31, 2024, positions the company favorably to pursue growth opportunities in both existing and new markets.

A Who Owns Zoom Video Communications, Inc. (ZM)

Ownership Structure

As of July 31, 2024, Zoom Video Communications, Inc. has two classes of common stock: Class A and Class B. The Class B common stock has 10 votes per share, while Class A common stock has one vote per share. The holders of Class B common stock collectively hold approximately 63.5% of the voting power of the outstanding capital stock.

As of January 31, 2024, Eric S. Yuan, the founder, President, and CEO, and his affiliates held approximately 7.3% of the outstanding capital stock but controlled about 31.3% of the voting power of the outstanding capital stock.

Major Shareholders

The following table summarizes the major shareholders of Zoom Video Communications, Inc. as of July 31, 2024:

Institutional Ownership

As of July 31, 2024, institutional investors own a significant portion of Zoom's shares. The major institutional shareholders include:

Recent Stock Performance

As of July 31, 2024, Zoom Video Communications, Inc. had a market capitalization of approximately $24 billion. The stock price was trading around $78 per share, reflecting a 2.7% growth in revenue year-over-year.

Financial Metrics

For the three months ended July 31, 2024, Zoom reported:

Overall, the ownership structure and shareholder composition of Zoom Video Communications, Inc. demonstrates a significant concentration of voting power among its founders and executive team, while institutional investors also play a critical role in the company’s equity landscape.

Zoom Video Communications, Inc. (ZM) Mission Statement

Zoom Video Communications, Inc. aims to provide one platform that delivers limitless human connection. The company emphasizes a culture of delivering happiness, which drives its mission and values, fundamental to everything it does.

Core Values and Strategic Focus

Zoom's mission is supported by its core values which include:

• Customer Centricity: Focus on enhancing the customer experience.
• Innovation: Continuous investment in technology to improve collaboration and productivity.
• Trust and Security: Commitment to providing safe and secure interactions for users.

Product Offerings and Innovations

In 2024, Zoom introduced several innovations aimed at enhancing user experience, including:

• Zoom AI Companion for productivity and collaboration.
• New features for Zoom Contact Center and Zoom Docs.
• Enhanced security measures, including end-to-end encryption (E2EE) for video conferencing.

Financial Performance

As of July 31, 2024, Zoom reported the following financial highlights:

Key Business Metrics

Zoom tracks several key metrics to measure its performance:

Market Presence and International Expansion

Zoom's international revenue represented 28.1% of total revenue in Q2 2024, compared to 29.0% in Q2 2023. The company continues to explore opportunities in global markets, supported by strategic partnerships and localized sales support.

As of July 31, 2024, Zoom had approximately:

• 191,600 Enterprise customers
• 3,933 customers contributing more than $100,000 in trailing 12-month revenue

Future Outlook

Zoom is focused on expanding its product offerings and enhancing user experiences through AI-driven solutions and improved collaboration tools. The company remains committed to maintaining high standards of security and privacy in all its communications.

How Zoom Video Communications, Inc. (ZM) Works

Business Model

Zoom Video Communications, Inc. generates revenue primarily through subscription fees for its unified communications and collaboration platform. The company offers multiple products, including Zoom Meetings, Zoom Phone, and Zoom Rooms, with a focus on enhancing remote work and communication.

As of July 31, 2024, Zoom reported total revenue of $1,162.5 million for the three months ended July 31, 2024, compared to $1,138.7 million for the same period in 2023, marking a 2.1% year-over-year increase.

Financial Overview

Key financial metrics for the six months ended July 31, 2024, include:

• Revenue: $2,303.8 million
• Net Income: $435.3 million
• Net Cash Provided by Operating Activities: $1,037.5 million

Revenue Breakdown

The revenue composition for the three months ended July 31, 2024, is as follows:

Cost Structure

For the three months ended July 31, 2024, Zoom reported the following costs:

Operating Income and Expenses

Zoom's operating income for the three months ended July 31, 2024, was $202.4 million, with total operating expenses amounting to $675.1 million.

Cash Flow Analysis

For the six months ended July 31, 2024, Zoom's cash flow details are as follows:

Market Performance

As of July 31, 2024, Zoom's market capitalization was approximately $25.5 billion with a current share price of around $82.50.

Customer Metrics

Zoom's customer base has shown growth, with approximately 191,600 Enterprise customers as of July 31, 2024, down from 218,100 in the previous year. Additionally, customers contributing more than $100,000 in trailing twelve months revenue represented 30.5% of total revenue.

International Revenue

Revenue from international markets (APAC and EMEA) accounted for 28.1% of total revenue for the three months ended July 31, 2024.

Future Outlook

Zoom continues to invest in product innovation and expansion, particularly in AI capabilities and international markets, positioning itself for sustained growth in the coming years.

How Zoom Video Communications, Inc. (ZM) Makes Money

Revenue Streams

Zoom Video Communications, Inc. generates revenue primarily through subscription services. The main offerings include:

• Zoom Workplace Pro
• Zoom Business Services
• Zoom Phone
• Zoom Webinars
• Zoom Rooms

For the three months ended July 31, 2024, Zoom reported total revenue of $1,162,520 thousand, reflecting a 2.1% increase from $1,138,676 thousand in the same period of 2023. The revenue growth was driven by a 3.5% increase in revenue from Enterprise customers.

Revenue by Customer Type

Revenue is derived from two primary customer segments: Enterprise customers and Online customers. For the three months ended July 31, 2024:

Cost Structure

The cost of revenue for the three months ended July 31, 2024, was $285,089 thousand, an increase of 7.0% from $266,559 thousand in the previous year. This resulted in a gross profit of $877,431 thousand, leading to a gross margin of 75.5%.

Operating Expenses

Operating expenses for the three months ended July 31, 2024, included:

Net Income

For the three months ended July 31, 2024, Zoom reported a net income of $219,015 thousand, compared to $181,974 thousand in the same period of 2023.

Cash Flow Overview

Net cash provided by operating activities for the six months ended July 31, 2024, was $1,037,525 thousand, an increase from $754,458 thousand in 2023. The cash flow details are as follows:

Market Segmentation

Zoom's revenue distribution by region for the three months ended July 31, 2024, is as follows:

Future Outlook

As of July 31, 2024, the remaining performance obligations were reported at $3,778.3 million, with expectations to recognize approximately 60% over the next 12 months.