Zoom’s earnings call for Q3 2023 was a positive affirmation of its post-pandemic strategic direction, as it diversifies its portfolio with the likes of Zoom Contact Centre and collaboration solution Zoom Docs while strengthening its video conferencing offerings at its core.
They announced several momentous milestones, including that Zoom Phone now has seven million paid seats and that Zoom AI Companion has already been enabled by over 220,000 accounts.
They are, as Dom Black, Director of Research at Cavell Group, told UC Today, “still growing very fast” because “they just continue to execute, they continue to add products to their portfolio.
“I think execution on Zoom Phone, seven million users is exceptional,” Black added. “You look at the other UCaaS providers on the market (but let’s take Microsoft Teams out for a second); they’ve blown everyone out of the market in terms of growth, so it’s fantastic what they’ve been achieving on that.”
“Contact centre, I think there’s a great opportunity there as well, seeing some real innovation coming out through that. At the Zoom Analyst event at Zoomtopia, there was a huge amount of focus on what they’re doing (in the contact centre). I think that’s only going to start improving the cross-sell and up-sell that they’re going to do. We’re speaking to a lot of partners at the moment, not only in North America but Europe as well, who are looking for new platforms to take to market, and it’s fascinating to see what they can do there.”
One of the key challenges Zoom faces is that those customers who signed a three-year contract back in 2020 at the start of the pandemic have those contracts coming up for renewal. What happens then? Are those customers who made that choice three years ago still convinced that Zoom is the UCC platform to take them forward?
“I think from a product portfolio perspective, they’ve only added to that,” Black said. “So I speak to a lot of people who are very happy with the Zoom experience, and adding contact centre, adding AI Companion to that is only going to be beneficial to keeping those customers there long-term.”
While Zoom’s product portfolio has grown impressively, Black underlines a key difference between Microsoft, Cisco and Zoo, however.
“Zoom hasn’t got a coherent mobile strategy at the moment,” Black argued. “I think you see Webex launching Webex Go, and you see Team Phone Mobile working with carriers and operators through that. Zoom hasn’t gone down that route yet, and speaking to them, their argument is, ‘Look, the Zoom experience is better in the app. Why do we need to bring it out to the mobile?'”
“I think it’s going to be fascinating to see how mobile changes over the next 12, 18, 60 months, let’s say, on the long-term outlook,” Black continued. “Where mobile plays a role in that and what Zoom is going to do around that to see if they can leverage mobile carriers networks to offer a better experience to their customers in the long run.”
For Zeus Kerravala, Principal Analyst at ZK Research, Zoom expanding its mobile products would be a significant challenge, given the complexity illustrated by other solutions like Webex Go.
“I’ve talked to customers who have looked at Webex Go, and while the concept is interesting, it does get very complicated very fast because you typically need to either own the device or own the line on the device,” Kerravala said. “Everyone’s got to be on the same carrier, so what do you do with users who aren’t, in the Webex case, on the Verizon footprint? You can do AT&T now, but there are a lot of issues with trying to scale that type of mobile offering.”
“I suppose long-term you’d be able to manage it through Webex Control Hub or something, but I do know from a Zoom perspective they’re keeping an eye on that, I think they just feel it isn’t quite ready for scalability,” Kerravala added. They’ve backburned that in favour of some of the other things they’ve done, which I think is more important for them. Getting contact centre right, getting phone right.”
While Zoom’s positive earnings call buoyed analysts, it’s not been entirely reflected by Wall Street. Kerravala pointed out that, for all the growth they’ve had and exciting products they’ve launched, “On July 1 2019, the stock was $94 a share. Today, I’m looking at trading at $64,” Kerravala said.
“So despite all the growth, and all the extra customers and things like that, and I know the whole sector’s down, but the company’s actually worth less than it was pre-pandemic, which is pretty fascinating because I think the one unique asset that Zoom has that Wall Street maybe doesn’t fully appreciate is users like Zoom.”
“So, if you put Teams in, and I talk to a lot of companies, Teams really doesn’t work well for B2B communications or outside the organisation, whereas Zoom does, so you’ll see a lot of companies use Zoom as the alternative,” Kerravala added. “Because that’s what users want, and I think that user affinity, in the long run, will allow Zoom to be one of the vendors in the space that actually manages to scale and continue to grow, whereas I’m not so sure about the rest of the field.
