There's a solid argument to be made that no company benefited from the massive shift to remote work during the COVID-19 pandemic as much as Zoom Video Communications (ZM 1.77%). In this Fool Live video clip, recorded on Jan. 24, Fool.com contributors Jon Quast, Marc Rapport, and Matt Frankel discuss whether Zoom can keep its growth alive in the years to come.
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Matt Frankel: With Zoom for me, I put the big pandemic winners in two categories. One there are companies that change things for a little while, like Peloton. Peloton I think in the past few months, at least has proven itself to not have permanently changed the way people get healthy and get fit.
Then we have companies like DocuSign, which took something that was already not great and made it better permanently. I have trouble figuring out where if that spectrum Zoom fits. I think it's toward the middle, where a lot of companies are going to pivot to hybrid work and need things like Zoom Phone and Zoom Rooms.
But a lot of businesses and organizations that pivoted toward using Zoom during the pandemic are going to go back. Just as an example, I used to sit on my HOA board and we bought paid Zoom membership so we could continue to hold community meetings virtually. That has since been canceled in favor of in-person meetings. There are a lot of smaller organizations, especially like that, who I think you're going to go back and that's where I struggle with it.
I think a lot of the bigger companies that are allowing permanent work forever are going to continue to be Zoom customers and expand their relationship. But I don't know enough to figure out where in that spectrum of recovery play it would sit if that makes sense.
Jon Quast: Yeah. I think that that's fair, and like I said, the thesis with Zoom is predicated on retaining the majority of the business that they have. The retention rates have looked good to this point. I mean, it's something to definitely watch going forward if the retention rates start to plummet and I'm not talking about a percent down. It ticked down from 95% retention to 94%. I'm talking if they start really heading down south fast, that would be something that you might want to reevaluate the thesis in my opinion, in the meantime. Well, we might have different perspectives on Peloton as well.
Marc Rapport: Well, let me ask you something about that Jon. I wonder about their ability to compete with like for instance, Microsoft Teams if Microsoft sees real opportunity in small businesses there and they really ramp that up. I'm thinking back to the days in the early 2000s when they could buy a competitor or kill it and I wonder is that Zoom too big for that? Same with RingCentral for that matter. How can it compete with that?
Quast: Well, I mean, in my perspective, Microsoft is the one who had the position to lose and already lost to Zoom because I had a paid Microsoft Skype account more than 10 years ago and the reason that I no longer do is because I only had it because I had to have it. I lived overseas. But it was awful. It was the only option I had, but it was just, gosh, awful as a product. It never worked the way I wanted it to. I know it's corporate speak this is Zoom press stuff. It just works.
But that has been my experience with Zoom. It just works. Zoom has already out-competed Microsoft in that front. Now we just saw that Microsoft just bought Activision for $64 billion or whatever it was and Zoom's market cap is below that right now. Microsoft, hypothetically they have enough cash just to buy it outright. I mean, I don't know. I don't see Teams being the Zoom killer, but that's just my perspective based on their failure with Skype.