ZOOM Skyrockets on IPO, Video as a Service (VaaS) Takes Off

Did you hear about Zoom Video Communication’s IPO on April 18, 2019? If you saw the headlines in the financial news, it set new records on many fronts. Attaining a market capitalization over $14 Billion before the trading closed on Thursday yielded an enterprise value of more than 49 times its annual revenue. This is the highest EV/sales ratio of a U.S. technology company valued over $500M. Zoom also reported profitability last year on $330.5 Million in revenue, with an adjusted profit of 3 cents per share, making them one of the few technology companies to reach profitability before their IPO. The highly successful outcome of the IPO was fueled by their cloud-based Video as a Service (VaaS) offering which has become widely used by organizations of all sizes and markets, now exceeding five (5) BILLION monthly meeting minutes of usage. But wait, there is more. What is motivating people, like yourself, to switch from traditional, on-premise video infrastructure hardware and software licenses to a cloud service offering. Let’s take a few minutes to dig deeper into this.

In the Zoom S1 Filing, they presented a great snapshot of industry trends that are driving changes from the traditional products and services to a consumption, cloud-based model. Here are a few of the headlines that I found most interesting from their IPO filing that are defining and impacting all VaaS offerings:

Communication is at the Center of Organizational Performance

Communication is fundamental for organizations. High-quality communication increases happiness throughout teams and, when coupled with strong execution, can improve business performance. The evolving nature of the modern workforce has made communication even more important than it has been in the past.

Communication and Collaboration Must Evolve as the Nature of Work is Changing

The way people work is changing. Organizations must evolve their approach to communication and collaboration in response to the following trends:

  • Employees are increasingly distributed. Historically, teams were physically located together, even in the largest organizations, to drive productivity. Mobile and cloud technologies and ubiquitous network connectivity have enabled modern organizations to be increasingly distributed.
  • Organizations seek to drive deeper engagement with employees, customers and partners. People derive more personal satisfaction and are more productive when they engage at a deeper level across internal and external business relationships. With increasingly distributed workforces, maintaining this level of engagement is difficult. Video is a rich form of interaction as it allows the communication of facial expressions, emotions, body language and the surrounding environment. However, the lack of reliable business solutions has limited the adoption of video in the workplace.
  • Workforce demographics are changing. Shifting demographics alongside increasingly distributed workforces increase the need for effective ways to communicate beyond in-person meetings. For example, millennials currently make up 35% of the U.S. workforce. This population values agility and flexibility in their work environment, and millennials expect technology to meet their needs and work seamlessly.
  • Employees are influencing IT decisions. Employees are increasingly the primary force for IT modernization at work as they bring the latest technologies from their personal lives to their jobs. Employees often expect to seamlessly communicate on any device and across mediums and, as a result, are increasingly influencing IT decisions.

Organizations Need a Comprehensive Platform that Enables Modern Communication

Legacy approaches to workplace communication have failed to address the evolving nature of work. Legacy communication tools have been ineffective due to substandard technology, expensive deployments, complicated interfaces and aging, proprietary architectures. This dynamic has resulted in organizations deploying disparate and siloed technologies to address each of the various ways in which people communicate, including video, voice, email, chat and content sharing. These disparate technologies are difficult for employees to adopt and navigate and cumbersome and expensive for IT to support and manage. To effectively enable modern communication, a comprehensive platform must have the following qualities:

  • Reliable, high-quality communications. Organizations have a significant need for a platform that reliably delivers high-quality video and voice, even with varying levels of network performance.
  • Easy to use. To drive broad adoption, a platform’s user interface must be intuitive and easily navigable. In addition, users want solutions that have feature parity across devices and seamlessly integrate with their calendars, contacts and overall workflows.
  • Easy to deploy and manage. Organizations want a single platform that is easy to deploy, leverages existing network infrastructure and conference room hardware and is simple to manage at scale through an intuitive administrative console and reporting system.
  • Attractive return on investment. Organizations want a single platform that not only reduces the costs of proprietary infrastructure and conference room investments but also provides other opportunities for further cost savings, such as reducing unnecessary and expensive business travel.
  • Scalability. Organizations need a communications platform that can be optimized for their footprint and scales as they grow.
  • Integrated. Organizations need a platform that integrates with their physical workspaces and existing business applications.
  • Flexible terms. Organizations also want to purchase technology under flexible terms that are right-sized for their business needs.

If any of these topics sparked your interest in learning more about Zoom, please contact us to discuss your requirements and arrange a free Zoom trial to see firsthand how quick and easy video conferencing and collaboration can be from your desktop to the boardroom.