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June, 2021

Will Back to Work and School Doom Zoom (ZM)?

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Will Back to Work and School Doom Zoom (ZM)?

Last quarter ZM shares popped +11% after beating expectations (revenue +369% YoY) and projecting +42% revenue growth for the upcoming fiscal year.
 
Demand for video conferencing software rocketed as workforces worked from home, and now Zoom wants to leverage what it considers to be a future that embraces the “work from anywhere” mantra.
 
LikeFolio data shows a sharp decline in Zoom user growth, as well as normalization in consumer behaviors that drove Zoom adoption.
  • Zoom Purchase Intent mentions (signing up, opening an account, renewing, using) have fallen -53% QoQ. While this decline is substantial, these mentions DO remain higher vs. pre-pandemic levels.
  • Zoom cancellation mentions confirm churn remains elevated. Last quarter the company reported that churn rates were higher vs. pre-pandemic levels but were stabilizing. We recorded a spike to kick off the new year, and now cancellation mentions are holding higher.
  • Consumer mentions of working from home have fallen -9% vs. last quarter (-51% YoY) as this trend slowly tapers down. There is some stickiness here, but it’s definitely not growing.
  • Mentions of attending a digital work conference are showing even more drastic signs of normalization: -64% YoY, while in-person conferences resume: +22% QoQ
Perhaps JPMorgan’s CEO expressed it best: “I’m about to cancel all my Zoom meetings… I’m done with that.” 
 
We’ll be listening to see if Zoom can continue to meet investor expectations when it releases 22Q1 results June 1 after market close.

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