Zoom's Post-Pandemic Growth Slows to a Crawl

Almost four years after the beginning of the Covid-19 pandemic, things have returned to normal in almost all aspects of life. With that return, some of the companies that profited from lockdowns and temporary lifestyle changes brought about by the pandemic suddenly found themselves struggling. Some changes are here to stay, however, and many experts believe that hybrid work, i.e. a more flexible way of thinking about work and work locations in particular, is one of them. Zoom, one of the biggest "lockdown winners" of 2020, is banking on that new way of working. And even though the company that rose to fame as a video conferencing tool has managed to hold on to its pandemic gains and build its product into a full-fledged productivity platform, it still lost a lot of momentum in the face of steep competition from industry heavyweights such as Microsoft (Teams) and Salesforce (Slack).

As the following chart shows, Zoom saw its revenue skyrocket in the early days of the pandemic. In the twelve months ended January 31, 2021, Zoom's revenue amounted to $2.65 billion, up more than 300 percent from just $623 million the previous year, which was the last year unaffected by Covid-19. In the following year, the second pandemic year, Zoom's revenue grew another 55 percent to $4.10 billion. From there, things got more difficult, however, and growth slowed to a crawl in the face of intensive competition and return-to-office initiatives. In fiscal year 2024, which ended January 31 of this year, Zoom's revenue amounted to $4.53 billion, up just three percent from the previous year. For the ongoing fiscal year, things aren't looking much better, as the company expects revenue in the range of $4.6 billion, which would mean a further slowdown in terms of growth.

Like many of its competitors, Zoom emphasized the potential of AI in its latest earnings release. "As Generative AI began to take the world by storm, we listened carefully to customers in order to deliver AI that can best serve their needs," the company's founder and CEO Eric Yuan said in an earnings call on Monday. Within five months, Zoom AI Companion, the company's AI assistant, was rolled out to 510,000 accounts and created 7.2 million meeting summaries since its launch.