Zoom’s name came into the spotlight after the pandemic began in 2020 and lockdown regulations shut down schools and businesses across the world. By May 2020, Zoom was seeing 300 million daily meeting participants, a sharp spike from 10 million in December 2009. Given that it’s largely used as a free platform, how does Zoom make money is a question many have had.
An Introduction to Zoom
Zoom is a cloud-based conferencing tool through which up to 500 participants can virtually interact and share their screens. It offers high-quality audio/video and is very easy to use.
In 2011, a former Cisco executive named Eric Yuan founded Zoom as a response to the problems users faced with existing video conference applications. The existing systems were burdened with loading problems and audio-video quality because of the need for the software to identify the product version of the device in use.
Zoom was able to create a mobile-friendly application that could support conferences with up to 15 participants without any lags or breaks in quality.
It was already growing steadily in popularity, but after the increased demand for work-from-home tools due to the COVID-19 pandemic, Zoom became the most downloaded application of 2020 in both the Google Play Store and App Store.
How Does Zoom Work?
Zoom is a cloud-based SaaS (Software As A Service) application that offers communication through video, audio, chats, or all three. A SaaS software model delivers applications via the internet as a service rather than by having to download the app. As a result, customers don’t require any hardware or software investments to install or maintain the app. All they need is a stable internet connection.
Users can hold large-scale video conferences without lagging and can share their screens. This makes Zoom an incredibly versatile tool for businesses to communicate and share information via presentations. With Zoom, you can schedule meetings, record meetings, invite new participants, change the host, use live chat for queries, and create polls.
How Does Zoom Make Money?
Zoom uses what is known as a freemium business model. What this means is that the business will provide limited services to all users free of cost. The idea is to use the free service to showcase the major strengths of the application, thus encouraging users with greater needs to purchase upgrades.
The Freemium Zoom plan lets you host meetings of up to 100 participants with a 40-minute time limit, free of charge. And if you’re having a one-on-one meeting, Zoom lets you use their application for an unlimited amount of time, free of charge. This is also known as the Zoom Basic Plan.
· Zoom Meetings Subscription Plans
Zoom’s free conferencing services are ideal for small businesses. However, larger businesses might require one of the following premium packages, depending on their size.
1. Zoom Pro
This plan costs USD 149.90 per year/license or USD 14.99 per month/license and allows you to host meetings with up to 100 participants for an unlimited duration.
2. Zoom Business
This plan costs USD 199.90 per year/license or USD 19.99 per month/license and allows you to host meetings with up to 300 participants. It also provides additional features such as single sign-on, cloud recording transcripts, company branding, and managed domains.
3. Zoom Enterprise
This plan costs US 240 per year/license and lets you host meetings with up to 500 participants. It offers all the features of Zoom Business, unlimited cloud storage, and much more.
· Other Products of Zoom
In addition to their main meeting application Zoom, being a telephony company also provides other communication solutions.
1. Zoom Phone
Zoom phone is an intelligent cloud phone system offering useful features such as call routing, call recording, automated attendants, voicemail, and many more. Like Zoom meetings, it also has various pricing plans based on the needs of the business.
2. Zoom Video Webinar
This tool allows firms to host live webinars for anywhere between 100 and 10,000 participants, as per your pricing plan. The webinars also have several live interaction features such as polling, queries, likes, and upvotes.
3. Zoom Rooms
Zoom Room is the more efficient twin of Zoom Video webinar. It’s for businesses that have large interactive team meetings on a regular basis and require lag-free, high-quality video streaming. The number of rooms you can have varies with the pricing plan you choose.
4. Zoom United
Zoom United is the go-to plan for all needs in one place. By opting for Zoom United, you consolidate all your communication needs with Zoom. This allows for a much more streamlined process. The pricing plans are made according to the size classes of businesses.
Zoom Funding, Valuation & Revenue
· Trends in Revenue and Market Cap
Zoom’s revenue and profit have grown exponentially through the provision of its video telephony services since the pandemic.
In 2018, Zoom reported a revenue of USD 331 million. By the third quarter of 2020, this figure leaped, or rather sky-rocketed, to a colossal USD 2.6 Billion with all forecasts strongly suggesting rapid future expansion.
As of June 1, 2020, Zoom has a market cap of USD 96.26 Billion and at this rate is well on its way to becoming one of the most valuable companies in the world.
Zoom earns a tremendous amount of profit through its video conferencing software, but that’s not all. According to Crunchbase, Zoom managed to raise USD 146 million through Venture Capital Funding with many of its top investors coming from both the Tech and Finance industries.
In April 2019, the company also made its debut on the NASDAQ stock exchange, raising another USD 356.8 million through its Initial Public Offering (IPO) on the very first day of trading. You can find Zoom Video Communications Inc. under the symbol ZM on the stock exchange to check the current price.
A Few Parting Words
Hopefully, all this information has answered the question: how does Zoom make money.
Like it or not, Zoom is here to stay despite the lawsuit it had to face due to privacy concerns. Its popularity today is often attributed to the changing needs of society resulting from the pandemic.
But in reality, it is the versatile video conference capabilities and economic pricing plans that have earned Zoom its place in the telecommunications industry.