Within weeks of being stuck in our homes, “Zoom” became a ubiquitous term. Work Zooms, workout Zooms, yoga Zooms, Zoom happy hours, Zoom birthday parties - even if it didn’t actually take place via Zoom, the video chatting company’s name became the catch-all term for any kind of group video chat.
Even though “Zoom” ($ZM) only entered most people’s lexicon around six months ago, it’s grown to become a technology giant and one of the fastest growing companies of the pandemic. Though it went public in spring of 2019, Zoom’s share price has nearly septupled - yes, that is a real word - in 2020 alone, skyrocketing from $68.04 to over $459 per share as of today thanks to Monday’s impressive earnings report, which showed that Zoom made more money in the last three months than in all of 2019.
So how did Zoom go from a $30 dollar stock to a market cap of $130 billion in just over a year?
You’ve probably noticed that you’ve been using Zoom all through the pandemic without paying for it. That’s because the software runs on a freemium model and most base-level users don’t have use for it beyond simple video chats for work or social gatherings. In its earnings call, Zoom attributed the majority of its earnings to premium plans for companies and contract deals with large corporate clients, which have increased dramatically year-over-year and even month-over-month. In the last three months, Zoom made deals with game publisher Activision Blizzard ($ATVI) and Exxon Mobil ($XOM).
The widespread free use of Zoom has no doubt led to greater exposure, attracting such large corporate clients and getting smaller companies to sign on to premium plans. Zoom’s roll isn’t going to stop anytime soon either, as many companies are beginning to indefinitely extend work from home policies, making mass-communication tools like Zoom invaluable to companies small and (especially) large. Zoom is such a crucial tool for so many companies that the few times it has gone down, it becomes a major news story and disruption across the globe. Just search for “Zoom Down” on Google News, and you’ll see the influence this company has accrued is undeniable.
One of the biggest secrets to Zoom’s success is the way it's handled hiring. Zoom was already a relatively fast-growing company - it added about 600 new employees in 2019 - but once COVID-19 began to look like a serious threat, hiring increased dramatically. Today, Zoom boasts a workforce of 3,590, up 101% in 2020 alone and 200% from January 2019.
While Zoom’s hiring ramps up in the above chart further into 2020, it may have foreseen a demand for its services early and seized to capitalize on it as early as possible. Many applications from games to work communication tools found themselves unable to handle the load of new users during COVID, but Zoom has handled it in stride thanks to its increased workforce.
In mid-August the company’s Linkedin headcount spiked up by 500 employees. That sudden increase isn’t because Zoom suddenly hired 500 employees in a day, but more likely because Zoom encouraged employees to update their information ahead of its earnings call, or because contractors attached the company name to their profiles.
Job listing data supports the idea that Zoom pounced early to prepare for the pandemic. There were 128 open positions as of January, which quickly lurched up to a high of 256 positions by the end of March when the pandemic took hold in the United States. In the last four months, however, Zoom’s job listings have plummeted to 28, perhaps as part of a strategy to hold at its current size and stop increasing expenses to fatten up its Q2 earnings report - a strategy which has clearly paid off.
There is a discrepancy, however, between the company’s growth on Linkedin and its job listings. The number of open listings has remained at 28 since June 8 even though Linkedin headcount increased by over 1100 in the same time period. This could be because of contractors putting the company name on their profiles, or because Zoom’s hiring mainly comes from recommendations or poaching talent from other companies rather than broad job listings.
Either way, Zoom is growing and showing no signs of stopping anytime soon. Many on Wall Street have privately grumbled that Zoom might be overvalued - and it's hard to see any company sustaining this rate of growth - but it's clear that Zoom’s strategies in terms of hiring, optics and payment models have brought the company to the forefront of the tech industry. Zoom is no longer the “growing” company, but rather the company everyone wants to grow to become.
