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Zoom nearly DOUBLES revenue forecast to $1.8bn after surge in users because of coronavirus lockdown

The firm behind video conferencing service Zoom has nearly doubled its annual sales expectations after a surge in users prompted by the coronavirus lockdown. 

Zoom Video Communications Inc, which is based in California, raised its full-year revenue forecast to between $1.78billion and $1.80billion.

This is up from between $905million and $915million which was forecasted before the worldwide pandemic struck. 

However, the cost of delivering its service rose 330 per cent to $103.7 million, which lowered its gross margin to 68.4 per cent from 80.2 per cent a year earlier. 

Millions of people across the world have used Zoom as a means of communicating with colleagues after individual nations' lockdowns forced them to work from home. 

People have also used it to stay in touch with friends and family or even to have birthday parties and other celebrations which would have normally happened in person.

But the service has also recently been hit by technical problems as well as claims that it is not secure. Last month, half a million Zoom accounts were found for sale on the dark web.  

The firm behind video conferencing service Zoom has nearly doubled its annual sales expectations after a surge in users prompted by the coronavirus lockdown 

In response to the problems, the firm rolled out major upgrades and said they hired intelligence firms to track down criminals selling accounts. 

Despite a jump in revenue forecast from the $935.2million expected by analysts for the fiscal year ending January 2021, Zoom's costs also rose sharply. 

One of Zoom's biggest costs is data centers and bandwidth to host calls. 

The company runs some of its own data centers, but also pays for cloud computing services from Amazon.com Inc's Amazon Web Services and Microsoft, and in April added Oracle Corp as a vendor.

Executives added that gross margins would likely remain below Zoom's historical norms in the coming quarters, sending shares of the firm down 3.5 per cent to $200.75 in after-market trading.

The company has transformed itself into a global video hangout from a business-oriented teleconferencing tool.  

The latest quarterly report shows the company now has about 265,400 business customers with more than 10 employees, a near fourfold increase from a year earlier.

But there were also possible signs the Zoom boom may be slowing as economies reopen. 

Zoom Video Communications Inc, which is based in California, raised its full-year revenue forecast to between $1.78billion and $1.80billion 

Chief Financial Officer Kelly Steckelberg said the April peak usage of 300 million daily meeting participants declined slightly in May.

The company expects it to rise eventually above 300 million again.

Zoom competes with Cisco Systems Inc's Webex, Microsoft Teams and Google's Meet platform for paying customers, particularly businesses. 

It also offers a free version to consumers.

Zoom reported fiscal first-quarter revenue of $328.2million, beating analysts' estimates of $202.7 million, according to IBES data from Refinitiv.

Zoom's founder China-born founder Eric Yuan, 50, estimated to be worth £4.6 billion, has been forced to apologise for numerous security breaches

On a Zoom call with investors, Chief Executive Eric Yuan said Amazon provided the 'majority' of new capacity that Zoom needed to meet demand.

Steckelberg said on the call that the company planned to expand its own data centers to become more efficient, which should boost margins to the mid-70 per cent range in the next several quarters. 

Analysts had expected gross margins to hover between 79 per cent and 81 per cent over the coming year, according to Refinitiv data.

It comes after more than 3,000 users reported experiencing problems with Zoom last month. 

Many were unable to log in or host or participate in meetings.   

Among the reported problems, 77 per cent said they had issues with video conferencing and 21 per cent reported problems with logging in. 

One user wrote: 'Ummm,@zoom_us? I think you're broken. It took three times to be able to see my church. In case you're not aware, worship services need extra IT support. It's one of the few times each week we get to safely SEE so many people. Please fix the bug. #zoomdown.'

While another said: 'Zoom is down. Like down down. Clergy, organizers, leaders of all types, content creators: TAKE A DEEP BREATH. It's ok if *gestures to everything* this doesn't happen today. 

The company later said the problems had been resolved and that it would 'monitor to ensure no further operational impact'. 

It comes after more than 3,000 users reported experiencing problems with Zoom last month

It also emerged in May that more than half a million Zoom accounts were being offered for sale on the internet's dark web to cyber criminals looking to hack into confidential video meetings.

Crooks could buy usernames, passwords and other data to break into private online meetings and steal sensitive information from banks, financial firms and even universities.

The accounts were on sale for less than a penny each, according to cyber security firm Cyble. 

They included confidential details for employees of international banks including Citibank and Chase.

A Zoom spokesperson said at the time: 'It is common for web services that serve consumers to be targeted by this type of activity, which typically involves bad actors testing large numbers of already compromised credentials from other platforms to see if users have reused them elsewhere. 

The company later said the problems had been resolved and that it would 'monitor to ensure no further operational impact' 

'Through our ongoing investigation of this matter, we have found automated scripts that indicate bad actors have likely attempted this type of attack— also known as 'credential stuffing'— to test previously compromised credentials from other platforms to see if they will work on Zoom.

'We have already hired multiple intelligence firms to find password dumps and the tools used to create them, including a firm that has shut down thousands of websites attempting to trick users into downloading malware or giving up their credentials. 

'Importantly, this kind of attack generally does not affect our large enterprise customers that use their own single sign-on systems.'

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