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What "Land and Expand" Looks Like for Zoom

By Jon Quast and Brian Withers – Oct 10, 2021 at 2:22PM

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The expand is even more exciting than the impressive land.

Zoom meetings are Zoom's (ZM -0.28%) main product and are quite impressive. But expansions like Zoom Rooms and Zoom Phone are worthy growth opportunities.

In this Backstage Pass video, which aired Sept. 28, 2021, Motley Fool contributors Jon Quast and Brian Withers explain.

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Jon Quast: Yeah. This is just amazing. These case studies that they put forth, Zoom's management team. Now, granted, everyone is going to show their best example. They're not going to show a humdrum example here. This is a good example. But a case study here, just what this optionality can do with our existing customer base.

If you had just Zoom meetings, which is the most basic of the Zoom packages, you are spending X amount of dollars, but if you add on Zoom Rooms and Zoom Phone, in one case it was four times the income potential as just Zoom meetings. That is outstanding optionality.

Normally, the core product is the biggest thing that you can imagine. Then you tack on these little tiny optionality levers on the side. But in the case of Zoom, we're seeing that rooms and phone, that's potentially as big of an opportunity as meeting is by itself.

Incredible optionality potential here for Zoom.

Brian Withers: Yeah. You can see this is a large financial services company. They also did a large retail company. The other thing I like to point out here is this is over four years. Zoom has been around for a while, and you can see that throughout the coronavirus, they expanded some of their spend, but until just recently when they added their Zoom Phones to the mix here, they really made a huge incremental uplift in their spend resume. You can see here, this is over three years, and it's possible that a company will implement Zoom for their sales team, for instance, or their inside sales reps or whatever. They're getting benefit from it, and then Zoom, the salesperson comes to that company and goes, well, we can give you a better deal if you go to enterprise. We'll give you discounts on phones, these additions, and there's great opportunities to upsell throughout to a number of different ways.

The other piece that I'm excited about, as companies come back into the office, and it's a mixed bag of where companies are in that transition, it's likely that Zoom is going to be a critical part of the daily routine. Fitting up the offices with Zoom capability across the company and their physical space will be an opportunity going forward.

Jon Quast owns shares of Zoom Video Communications. The Motley Fool owns shares of and recommends Zoom Video Communications. The Motley Fool has a disclosure policy.

Stocks Mentioned

Zoom Video Communications Stock Quote
Zoom Video Communications
ZM
$72.16 (-0.28%) $0.20

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