What happened
Shares of Zoom Video Communications (ZM 0.05%) climbed by nearly 14% on Monday. The video conferencing company released some sought-after software updates, and investors are looking forward to its upcoming earnings results.
So what
Zoom rolled out a security update over the weekend that will provide stronger encryption for video calls to its paying customers. While some organizations, such as schools, will also receive these security features, most non-paying users will not.
The strategy could drive more free users to upgrade their accounts. That, in turn, could help to fuel Zoom's already impressive sales growth. The technology company's revenue soared 88% to $622.7 million in fiscal 2020, which ended on Jan. 31.
Zoom Video Communications' stock rose sharply on Monday, as investors grew more optimistic about the video call star's revenue growth prospects. Image source: Getty Images.
Now what
Encryption is a delicate topic. Privacy concerns must be balanced with the need to avoid enabling criminal conduct, and regulators are sure to weigh in at some point. Unsurprisingly, Zoom security consultant Alex Stamos said in an interview with Reuters that the plan was subject to change.
Zoom's leadership team will likely speak more about its new strategy during its upcoming earnings conference call. The company is scheduled to release its fiscal 2021 first quarter results after the market close on Tuesday, June 2. Its earnings call is scheduled for 5:30 p.m. EDT that same day.
