COVID-19 Report

Is Zoom’s breakout moment with individuals creating additional revenue for the company?

Tuesday, April 14, 2020 • 12:00 PM EST

Over the past few months, few companies have received as much attention and scrutiny as Zoom.  The traditionally business-focused company has made enormous headway with individuals. Family members are using the product to stay in touch with each other, schools and universities are embracing it as a viable substitute for in-class learning, and friends are throwing dinner-dates, parties and even weddings on Zoom. 
There has been much talk of Zoom’s meteoric rise in usage. But the question remains as to what degree this increase in consumer usage translates to revenue for the company. After all, Zoom does offer a robust free plan that could be more than enough for the average person.

The reality is that individuals are in fact increasingly paying to use Zoom. While it’s still early, we’ve seen a sharp increase in Zoom subscriptions on personal (not corporate) credit and debit cards.

Food Delivery: Last 6 Months

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The increase coincides with statewide stay-at-home orders across the country, with every state  exhibiting a nearly identical pattern.

Food Delivery: Last 6 Months

Airlines
Car Rentals
Lodging

Food Delivery: Last 6 Months

Airlines
Car Rentals
Lodging

The vast majority of the spending comes from new customer acquisitions, which have been growing rapidly since early March, peaking at ~1190 paid subscribers per million people. That means that roughly 0.12% of US individuals are paying for a Zoom subscription. Now, while we're only looking at consumer cards (debit and credit), it's worth calling out that many small business owners are likely using their personal cards for company expenses. This could be a major driver in the rapid increase in adoption.

Food Delivery: Last 6 Months

Airlines
Car Rentals
Lodging

Food Delivery: Last 6 Months

Airlines
Car Rentals
Lodging

Food Delivery: Last 6 Months

Airlines
Car Rentals
Lodging

As to what these individuals are paying, Zoom offers two major plans at $15 (Pro) and $20 (Business) per host. The vast majority of people are purchasing the Pro plan, with 68% of individuals opting for a single host subscription, and 17% adding up to 10 hosts. The other 15% of individuals appear to be paying for the Business plan, which requires a minimum purchase of 10 hosts, effectively raising the minimum monthly spend to $200/month. This again supports the hypothesis that small business spending is influencing the overserved results.

Zoom Subscription Breakdown

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While Zoom's increased marketshare with individuals is admirable, it's still too early to tell if these consumers will stick with their paid plans for the long term, or revert to their legacy modes of communication once the pandemic is behind us. We'll make sure to follow this story, with a focus on retention and churn, once the pandemic recovery period is underway.