Specialist
Former Head at Zoom Video Communications Inc
Agenda
- Zoom's (NASDAQ: ZM) operating environment – demand environment for 2021 vs 2020
- Sizing any potential churn risk from coronavirus-driven new logo wins, expectations for new logo wins over the next 12-24 months
- Zoom Phone product overview and growth prospects
- Competition vs RingCentral (NYSE: RNG), 8x8 (NYSE: EGHT), Microsoft (NASDSAQ: MSFT) and others
- Outlook for 2021 and beyond – product innovation pipeline, M&A opportunities and potential wildcards
Questions
1.
Could you give an overview of the UCaaS [unified-communications-as-a-service] and meeting solutions markets? What key trends or drivers do you expect to impact them over the next 12-24 months?
2.
How do you think about post-pandemic work behaviours and whether those behaviours are favourable to remote video conferencing longer-term? What could drive Zoom Video Communications’ post-pandemic churn across the SMB vs large enterprise wins of 2020? Do you think the new logos on monthly contracts are more susceptible to churning as the world normalises?
3.
Would you say most buying processes are for fixed-number subscriptions that can be shared across the entire corporation? Are they allocated to fixed individuals or departments? Could you elaborate on the potential for rationalisation of the number of licences customers hold?
4.
Could you estimate the magnitude of licences that might be rationalised? Do you expect only a single-digit percentage decrease in licence numbers, given the onerousness of reassigning individual licences and the potential for an increasingly hybrid workforce post-coronavirus?
5.
Could you outline how Zoom competes with GoToMeeting, Slack, RingCentral, Avaya and Cisco across its product set?
6.
You mentioned that Zoom established a video offering before moving into the phones segment, whereas RingCentral evolved in the opposite direction. To what extent do you think video and voice offerings are purchased together through one decision-maker? Would you say video or voice is a larger driver of buying discussions?
7.
What could drive a customer to choose RingCentral over Zoom once RingCentral’s meeting solutions have come up to par with Zoom’s – conversely, once Zoom has built out its cloud PBX [private branch exchange]? What could drive customers’ evaluations of the companies once they’re at parity?
8.
Could you comment on players’ carrier relationship strategies? To what extent do you think RingCentral and 8x8 providing the direct-routing integration for free is a large driver of new logo wins in the phone segment?
9.
Zoom quotes a USD 23bn TAM for its Phone product. How much of that TAM might be accessed via telco partner-facilitated sales? How important are the carrier relationships to winning significant market share? Do you consider RingCentral and 8x8’s carrier relationships to be ahead of Zoom’s?
10.
How do you think about demand for phones vs meetings products generally, given Zoom Phone has 5,800 customers with over 10 employees vs an overall Zoom customer base of around 400,000 with over 10 employees? Do you think cloud-based PBX products are yet to reach high demand? Could uncertainty around the durability of the work-from-home environment have delayed buying decisions? What could drive an eventual acceleration in phone-product adoption?
11.
It seems as if there’s limited opportunity for Zoom to increase the number of paid licences in a company that already has the Meetings product by subsequently selling in the entire UCaaS bundle – to a certain extent, Meetings deteriorates the need for the Phone product. Do you think there are opportunities to increase the number of paid licences in a company via the platform sale?
12.
How significant do you think the price commodity will be for Zoom, given the volume discounting the platform sale necessitates? Could there be a ceiling on potential ARPU if Zoom Phone is around USD 15 per month per licence vs Zoom’s full platform at around USD 30 per month per licence? Could ARPU even deflate over time?
13.
To what extent do you think Zoom needs to differentiate its business around the platform play and expand into alternative revenue streams? You’ve referenced contact-centre solutions, e-commerce and perhaps even tying in PaaS [platform-as-a-service], ie Zoom enabling companies to embed real-time video into their apps. Where could Zoom go next? What expansions might be feasible in-house vs achievable through any likely M&A opportunities?
14.
Could the need for bespoke and seamless integrations hinder Zoom undertaking M&A, given the execution risks around achieving that quality of integration? Would you say the company is capable of achieving that quality? If so, would it prefer to acquire to increase speed-to-market vs build out organically?
