Zoom reports first billion-dollar quarter despite slowing growth

Zoom posted its first billion-dollar quarter on Monday but issued a cautious estimate for the rest of the year with demand for the platform expected to slow dramatically.

The company's Q3 revenues brought in between $1.015 billion and $1.020 billion, a 31.2% rise year-on-year.

Zoom was one of the biggest success stories of the pandemic, enjoying unparalleled growth and adoption in its business while consumers and companies were forced into multiple lockdowns. By the middle of 2020, the company had seen its daily active users grow by 355%.

However, there has long been a feeling that this would dissipate with the successful rollout of COVID vaccines and the return to the workplace.

"We had expected that (the slowdown) towards the end of the year, but it's just happened a little bit more quickly than we expected," chief financial officer Kelly Steckelberg said on an earnings call.

Zoom has also faced stiff competition from the likes of Cisco Webex and Microsoft Teams, both of which have dented its efforts to win bigger contracts from businesses.

Zoom said it expects a decline in revenue from smaller businesses - those with 10 or fewer employees - that pay their subscriptions on a monthly basis. The company has adjusted its earnings for the third quarter, expecting between $1.07 and $1.08 per share, compared to previous estimates of $1.09 a share.

The company has also pushed ahead with plans to expand its business, essentially moving from a service to a global platform like Google. It recently announced a buyout of call-centre software maker Five9 for $14.7 billion - its largest deal to date - and has also begun to invest in smaller firms to build products and services on its platform.