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Congrats to Zoom on their IPO

Posted by Ryan Pinke on

Zoom Goes Public!  

Last Thursday, Zoom Video Communications (NASDAQ: ZM) hit a historic milestone for the company - becoming a publicly traded stock on NASDAQ.  The following highlights are from their original filing documents - and sheds light on their success in the market, and their acceptance as a leading provider of video conferencing for businesses.  You can read the full document here.

Below are a few relevant stats from their S-1:

Zoom is a fast-growing and efficient business — they credit their “virtuous cycle of positive user experiences” in large part for their efficiency. Users can sign up and invite others to a meeting (for free) and when they realize how easy-to-use and great the product is, they sign up too and then pay for more features. The company did $330.5M of revenue in FY’19 (ending January 31st) and grew 118% YoY. Almost all their revenue is subscription-based, and they’re at $423.2M of implied ARR (quarterly subscription* 4), and grew 108% YoY in Q4'19. Even with that rapid growth, the company is profitable and generates cash. They had a 5% and 9% GAAP and non-GAAP operating margin last quarter, respectively. 

Since Zoom’s founding in 2011, their platform has been used to conduct tens of billions of meeting minutes.

The company had 50,800 customers with greater than 10 full-time-employees in FY’19, up 97% YoY. They generated 78% of total revenue in FY’19.

Zoom had 344 customers that generated more than $100K in annual revenue, up 141% YoY. 30% of their total revenue in FY’19 came from those customers. 55% of those 344 customers started with at least one free host prior to subscribing.

In FY’19, greater than 50% of the Fortune 500 had at least one paid Zoom host, compared to only 4% that contributed more than $100,000 of revenue, representing a huge growth opportunity for Zoom.

Zoom’s trailing 12-month net dollar expansion rate was 140% as of Q4'19. The company only started tracking this metric in Aug-2017 and therefore cannot calculate the net dollar expansion rate for a trailing 12-month period prior to July 31, 2018.

In FY’19 74% of their annual recurring revenue (ARR) was generated from annual and multi-year subscriptions. The average term for multi-year contracts is 2.4 years.

Zoom’s average customer Net Promoter Score (NPS) was over 70 in 2018.

Zoom customers typically see large increases in usage after deployment. For example, prior to 2014, BAYADA Home Health Care was averaging less than 100 meetings a week using other products, and with Zoom, they averaged 2,000 Zoom meetings a week.

Zoom has customers in over 180 countries, and 18% of their revenue in FY’19 was generated from customers in APAC and EMEA.

Zoom’s platform can continue to deliver a productive meeting experience even with up to 40% packet loss. Their architecture can support tens of thousands of video participants in a single meeting.

Zoom offers 24/7/365 support through live chat, phone, and video. For the 90-day period ended January 31, 2019, their customer support team had a customer satisfaction score (CSAT) of over 90%.

Zoom was incorporated in Delaware in April 2011 under the original name of Saasbee, Inc., and in February 2012, changed their name to Zoom Communications, Inc. In May 2012, they changed their name to Zoom Video Communications, Inc.

Zoom’s CEO, Eric Yuan, received Glassdoor’s #1 CEO of a large company award in 2018 and placed #2 in Glassdoor’s Best Places to Work in the large company category in 2019.

Zoom has 13 co-located data centers in Australia, Brazil, Canada, China, Germany, India, Japan, the Netherlands, and the United States.

Zoom operates R&D centers in China employing over 500 employees as of FY’19.

Zoom has two issued patents and seven pending patent applications.

Zoom’s top 10 customers accounted for less than 10% of revenue for each of the fiscal years 2017, 2018 and 2019. No individual customer represented more than 5% of revenue in FY’19.

According to a 2017 report from Salesforce Research, 71% of employees want their companies to provide the same level of technology as they use in their personal lives.

Zoom has a unique GTM for an enterprise software company. The company utilizes its end users’ “viral enthusiasm” to sell the product through their inside sales team, self-serve, or through resellers or strategic partners. This enables them to drive cost-effective upgrades and in many cases, they turn a single free user into a full enterprise deployment — 55% of their 344 $100K+ revenue customers in FY’19 started with at least one single free host. The company sells subscriptions primarily based on the number of paid hosts as well as additional products like Zoom Rooms and Zoom Video Webinars. Their Basic offering is free and has their core features with the only limitations on the number of attendees and time of meetings. The paid versions include Pro, Business, and Enterprise plans that offer administrative controls, reporting, and participation limits. Zoom charges customers on a monthly, annual or multi-year basis although almost 75% of ARR comes from annual and multi-year contracts. Pricing from their website is below.

We are proud to be an Integration and Business Partner with Zoom and it has been a great journey for us, and we have completely enjoyed seeing the great people at Zoom get rewarded for their contribution to Video Communications and Collaboration.

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