As the vast majority of companies begin working from home, instant messaging and video conferencing tools such as Slack and Zoom become paramount to keep in touch and maintain workflow.
However, increase in popularity does not always equate to profitability. While Zoom Video Communications’ shares are up 61% this year, Slack trails behind; its projection for the current quarter and full fiscal year fell short of analyst expectations, resulting in a 20% drop in share prices.
- Slack and Zoom both said last week that it was still too early to determine the net impact the coronavirus pandemic will have on the business in the long term, The Wall Street Journal reported.
Despite an enormous uptick in consumer interest in professional apps that can simulate the workplace and enable companies to conduct meetings virtually, executives at Slack and Zoom are not coasting.
Many obstacles will keep the two companies from cashing in on the current tidal wave of interest. Competitive applications from large corporations, such as Microsoft Teams and Google Hangouts, will pose a challenge, TechCrunch noted.
Additionally, with a surge of millions of high-bandwidth users, including many high schools, colleges and universities, Zoom and Slack hope to tighten their infrastructure so it doesn’t buckle under the pressure.
Zoom, however, is better situated to weather the storm. Since its smash IPO in April, Zoom has exceeded Wall Street’s quarterly profit expectations every single quarter.
During Zoom’s earnings webinar with analysts last week, senior leadership addressed how coronavirus will impact their momentum, The Motley Fool reported.
Zoom’s CFO Kelly Steckelberg said amid the pandemic, the company has "definitely seen an uptick in usage." But most of that usage, she said, has been for their free products. "So it's very early to tell whether or not that's going to convert long term into paying customers."
"It's prudent that Zoom management doesn't want to count its chickens before they hatch," The Motley Fool wrote. "But [...] the businesses using the company's free offerings as a means to mitigate the effects of the pandemic will eventually convert to paid users."
"Due to the coronavirus, we have already seen significant usage of our platform, and accordingly, we will expand our capacity to meet the increased demands of both paid and free users," Steckelberg said.
Over at Slack, the future is similarly unclear.
"Modern work requires modern tools to collaborate and be flexible and agile," Slack CFO Allen Shim told Yahoo Finance Friday. "I think people have seen this [coronavirus outbreak] as an opportunity to re-evaluate the way they’ve been doing business. Email is two, three decades old, which is primarily the way we collaborate."
Like Zoom, Shim confirmed a steep uptick in free Slack users amid the outbreak. Also like Zoom, the question remains to be whether these free trials have a hope of being converted to paying customers.
Regardless, increased reliance on Zoom and Slack in the place of in-person meetings or travel will likely result after the pandemic ends. Which is to say, Zoom and Slack will still likely reap the benefits of their newfound popularity, whether or not their balance sheet suggests so this year.
"Changes are on the way to the workplace," Yahoo Finance reported. "And that may be the only good thing coming out of the coronavirus."