Zoom reports big 3Q gains, but slowing growth sinks stock

SAN RAMON, Calif. (AP) — Zoom’s videoconferencing service remains a fixture in pandemic life, but its breakneck growth is showing signs of tapering off as investors debate whether the company will be able to build upon its recent success after a vaccine enables people to intermingle again.

For now, Zoom is thriving as tens of millions of people who never heard of the service at the beginning of the year rely on its video meeting tools to connect with their co-workers, teachers, friends and family while efforts to fight contain the pandemic prevent them from going into offices, schools and most many other places. That dependence boosted Zoom’s fortunes, producing a pandemic-driven success story that was highlighted again Monday with the release of the company’s quarterly results for the August-October period.

Zoom’s revenue more than quadrupled from the same time last year to $777 million, yielding a profit of $198 million, up from just $2.2 million a year ago. Both those figures easily topped the estimates among analyst surveyed by FactSet Research, but Zoom’s stock still shed 4% in Monday ’s extended trading after the numbers came out.

One possible reason for the reaction is that number of companies anteing up for Zoom’s subscription version of its service isn’t rising as rapidly as during the pandemic’s early stages. Zoom ended its latest quarter with 433,700 customers with at least 10 employees, an increase of 63,500 customers from July. In each of the previous two quarters, Zoom had added more than 100,000 customers with at least 10 employees.

While that slowdown was considered an inevitable, the drop-off is nevertheless causing many investors to start considering the possibility that Zoom won’t be able to maintain the momentum it gained from this year’s stay-at-home orders after a...