Skip to content

Financial Analysts Fail to Meet their Expectations over Zoom

Zoom’s fiscal year starts in February and ends in January, so they just reported financial results for their second quarter, ended in July. Analysts found a lot of things they didn’t like about Zoom after its latest results failed to meet expectations. You know how analysts are: Zoom’s growth is slowing, its profits are down, and its users are leaving. But we run the numbers and never mind expectations, the reality of what people went through together over Zoom is a far more engrossing story.

Consider the two segments of people who pay to use Zoom, individuals and companies. The Wall Street Journal reports that two quarters into the 2020 lockdowns, Zoom got 38% more money from individuals than from companies. That must mean that Zoom sold $450 million to consumers during the fiscal quarter ended in October 2020, when its total revenue was $780 million. The basic individual Zoom subscription is $15 a month, so during that quarter there could have been roughly ten million individual paying subscribers, making Zoom $150 million per month.

Source: Verb estimate based on Zoom financials and WSJ analysis

For context, there are very few software products with ten million individual paying subscribers. Intuit reports over 42 million TurboTax users in its latest quarter, and that software is a popular way to file for mandatory US tax returns. In six months in 2020, Zoom went from being a normal software maker with sales of $248 million to companies and $83 million to consumers, to the software maker that we all gave our money to if we were to make a living. That’s the power of making it easy for regular people to use your software.

Now that people are going back to meeting in person, some are cancelling their Zoom subscriptions. Analysts say the consumer segment has a lot of “churn,” because it’s so easy to cancel a subscription. More original Peter Yang joked on Twitter that he schedules a lot of Zoom calls and then cancels them just to make his coworkers feel better. In any case, Zoom is now emphasizing its corporate customers. We estimate Zoom’s corporate sales must have caught up with its consumer sales after growing in a much more orderly way during the last two years. But that story is boring. Instead of a meeting, it could have been an email.

The Narrow Straits to Dynamic Island

Last week Apple announced the iPhone 14, and the Pro models use a new chip version called A16 Bionic, made by Taiwan Semiconductor (TSMC) in four nanometers. That means circuit etchings on this chip are just 4 billionths of a meter in width. The other iPhone 14 models use the A15 Bionic chip, an earlier version made in five nanometers. We talked about modern chip manufacturing before, so we’ll just summarize it here as “witchcraft.”

More relevant, experts think these chips are probably faster and more efficient than the ones in all other smartphones. Apple has again pressed its hardware advantage to make a very noticeable change in the software of the new Pro models, the most expensive of the new lineup: the space over the front cameras turns into the “Dynamic Island,” an area to dock apps displaying information you want to see while doing something else. It’s a clever way to multitask within the normal confines of a smartphone. iPhone users were excited: the new Pro models will likely sell well.

New Managing Partner at Verb

Verb is delighted to announce that Avedis “Avo” Hadjian is Verb’s new manager. He takes over from former Verb president Victor Aimi, who will continue to advise him as a communications consultant. Make sure to send your congratulations and read the announcement to learn more about Avo’s career, which spans six countries—so far.