The beginning of the year didn't start very well for Zoom. From 2018 to the last quarter, the company reported a $104 million loss. The company attributed this to share-based compensation costs. Another view shows that the company has to face increasing competition from apps like Google Meet and Microsoft Teams, which have been improved over the years and are being used by more and more consumers.

Reducing costs

Like other tech companies, Zoom has recently started laying off employees. Around 15% of the employees, roughly1,300 people, will lose their jobs. The layoffs are part of a broader cost-cutting effort that could help Zoom improve its balance sheet.

Increase in shares

However, the early forecast for Zoom this week seems to be starting on a positive note. In fact, on Monday we saw shares rise by around 8%.* This is due to the release of fourth quarter results, which beat analysts' estimates and provided an optimistic outlook for 2023. Looking ahead to this year, growth will be modest, with Zoom expecting revenue in the range of $4.435 billion to $4.455 billion, roughly a 1.1% increase. [1]

Zoom during the pandemic

Zoom experienced the most growth between 2020 and 2021 due to the high demand for their services during the pandemic, which slowed abruptly after the pandemic was over. However, the company's latest announcement may be a fresh start to renewed growth, as revenue increased 4% year-over-year in the quarter ended January 31.

Zoom Video Communications Inc's performance over the past 5 years. (Source: Investing) *

Hybrid is the future

What might Zoom's direction be in the long term? The entire technology industry and how people will operate in the future is adapting to digitization and other factors. Artificial intelligence and automation will play an important role. Work positions will increasingly use digital tools, which are gradually being introduced also in healthcare, administration and elsewhere.

The hybrid way of working is becoming more and more preferred, and the hybrid work environment or hybrid events will be at the forefront in the coming years. In this respect, Zoom should also be ahead of its successful years of operation. Zoom said it will introduce email and calendar services during the fourth fiscal quarter, along with a chatbot for virtual agents to handle customer service inquiries.

Adam Austera, chief analyst at Ozios

* Past performance is no guarantee of future results.

[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or the current economic environment, which may change. Such statements are not guarantees of future performance. They involve risks and other uncertainties that are difficult to predict. Results may differ materially from those expressed or implied by any forward-looking statements.