What Zooms in must Zoom out… The Zoom boom may be over. On Monday, the company reported slightly better than expected earnings — but revenue growth slowed for the third consecutive quarter. Zoom’s quarterly sales grew just 35% from last year, compared to 10X faster growth a year ago. Shares slid 15% yesterday, dropping Zoom’s market cap to a third of its pandemic peak. Now Zoom’s focused on two things:
Zoomed in too far… Zoom’s growth didn’t just slow from pandemic highs: It had its slowest quarter since 2018. Other pandemic thrivers also experienced the “DPF effect” — demand pulled forward. Demand boomed all at once early in the pandemic (aka was “pulled forward”), then slowed as new customers dwindled. The stock market’s up 26% this year, but some WFH winners are seeing slowdown-driven selloffs:
Some pandemic habits could stick… But Zoom could still lose to the conference room. People who flocked to Zoom, Peloton, and Chegg are returning to offices, gyms, and schools — and growth is slowing. But not everyone is experiencing subscripturation: DocuSign’s subscription revenue grew faster last quarter than a year earlier, because people who started signing digitally aren’t returning to physical paperwork.