The company is already making progress with its popular phone and chat services. That's why the biggest factor driving returns over the next few years will be Zoom's ability to widen its reach beyond video communications. And Zoom shares some of the software titan's financial strength, but not its diversity of product offerings.
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The company has put itself in a leadership position, too, along with the likes of Microsoft. In any case, Zoom's biggest targets - business productivity and communication - are likely to be much larger in 2027 than they are today. The outlook is weak for those smaller and medium-size businesses that needed Zoom during the lockdown phases of the pandemic. That's why Zoom is leaning harder into the enterprise niche, targeting large companies. Even Best Buy has complained about slumping consumer demand in this area. Industry peers like Microsoft have noted declining demand for productivity and communications software after soaring results through most of the pandemic. But Zoom isn't alone in showing weaker growth.
Sure, sales trends are slowing, and revenue rose by just 8% in the most recent quarter. The good news is that Zoom is entering a potentially rough short-term period from a position of strength. With that big picture in mind, let's look at Zoom's prospects over the next five years. Investors are worried that this phenomenal growth story is over, and that Zoom's next few years will be marked by weakening earnings and stagnant sales. Annual sales are comfortably above $4 billion today compared to less than $1 billion pre-pandemic, and its video communication platform has become an essential service for many large and small enterprises.īut you wouldn't know it from its slumping stock price - down 60% year to date. And it is a far stronger business as a result. Millions of people have turned to it to connect with each other.
Zoom Video Communications ( ZM -2.15%) is a pandemic-era icon.
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