Zoom may be benefiting from unprecedented numbers of users flocking to the platform, but that newfound popularity comes with some downsides.
In the midst of the coronavirus pandemic, Zoom and other video conferencing solutions have become the new way many individuals are working, worshiping and keeping in touch with loved ones. While that has resulted in the company having many more users, it has also significantly raised the cost of doing business and it’s not clear how many of those users are paying subscribers.
In a regulatory filing with the SEC, the company said: “While we have seen increased usage of our service globally, there are no assurances that we will also experience an increase in paying customers or that new or existing users will continue to utilize our services at the same levels after the outbreak has tempered. Furthermore, such increased usage by free Basic account users during this time could require us to expand our network capacity which would increase our operating costs.”
The company also fears the increased number of users will raise its infrastructure cost as it works to keep up with demand. “We expect our cost of revenue to increase for the foreseeable future, both in absolute dollars and as a percentage of total revenue, as we expand our data center capacity and third party cloud hosting due to increased usage stemming from the recent outbreak of the COVID-19 virus,” the statement continued.
Zoom also expressed concern that any perceived issues or performance problems could irreparably hurt its reputation. This is especially a concern as the platform, and the meetings it hosts, become a greater target for hackers as a result of its growing popularity.
Zoom should serve as a good example for other companies whose business is booming during the coronavirus pandemic. While the added users and potential income are welcome, it will almost always come with greater scrutiny, expense and potential for things to go wrong.
