Shulou(Shulou.com)11/24 Report--

"the rise and fall of an enterprise comes from itself. But at the same time, we should also consider the changes of the times.

Author: Fei Fei |

Editor: Tang Shi |

Three years ago, the market capitalization of the company skyrocketed; three years later, the founders took the lead in salary cuts and massive layoffs to survive.

In the three years of the epidemic, a large number of enterprises have experienced ups and downs. Today, former employees who have been laid off are witnessing the rise and fall of their old employers.

The rise and fall of an enterprise is closely related to its own operation, but in addition to its own factors, it is inseparable from the influence of the times. Fundamentally, any enterprise or individual is a product of the times, and the epidemic has created a rare opportunity for the outbreak of Zoom, but at the same time, it has also planted the "fruit" of decline.

01. Layoffs, salary cuts, entering the "cold winter" the outbreak of the epidemic at the beginning of 2020 created a unique opportunity for the development of Zoom. At the initial stage of the epidemic, Zoom expanded against the trend, but now the epidemic has basically ended, and the development environment of Zoom has become increasingly severe.

Earlier, the founder of Zoom issued an open letter announcing layoffs, which will reach 1300, accounting for 15 per cent of the total workforce. For most enterprises, labor cost is one of the biggest expenses, and Zoom is no exception. Layoffs will undoubtedly save a lot of money for Zoom.

While drastic layoffs are being made, its founders will take the lead in cutting salaries by 98 per cent this year, while core executives will cut their salaries by 20 per cent and give up bonuses for 2022 altogether. With thousands of layoffs and pay cuts for executives on the one hand, Zoom has entered a "cold winter" moment. Stock price and market value are the most intuitive embodiment, compared with the peak, the current market value of Zoom has evaporated nearly 800 billion yuan.

It is worth noting that in the past three years, although Zoom has bucked the trend and the number of employees has more than tripled, its performance is mediocre, with total revenue of $4.1 billion in 2021, a year-on-year growth rate of 325%, and net profit of $1.375 billion, a year-on-year growth rate of 105%.

If changed to other companies, this set of data may not be associated with "bleak", but compared with themselves, Zoom has fallen sharply. Compared with 2020, Zoom's annual revenue and net profit grew by as much as 325% and 2987% respectively, far exceeding that of 2021 in revenue and net profit.

Since 2022, with the increase of online office products and the gradual end of the epidemic, the market demand for online scenarios has declined, and with the severe competitive environment, the revenue and net profit of Zoom have further declined, which can be said to have reached the "cold winter" moment.

02. Thrive in the epidemic, but also decline in the epidemic

In the three years of the epidemic, although many industries and enterprises have been hit, some industries have benefited from it, and Zoom is a well-deserved beneficiary. The reason is not difficult to understand, the possible closure at any time, so that offline scenes are often blocked, in this case, "online +" has become an inevitable choice, online education, online office, online medical care and so on have ushered in highlights.

During the epidemic, the demand for online office market surged, such as meetings, student classes, corporate training, online consultation and so on, especially in the European and American markets, Zoom is very popular. Spurred by the surge in market demand, Zoom has become the leader in the online office market.

The volume of business has soared, so at a time when most companies are wailing, Zoom is on the road to expansion against the trend. First, the number of Zoom employees has tripled in the three years since the outbreak. According to comprehensive public data, Zoom had only 2500 employees in the world in March 2020, but before this layoff, the total number of employees in the world was close to 9000, about to cross the 10,000 mark.

Second, with the increase in business volume, Zoom continues to upgrade its services to support more application scenarios. Take meetings as an example, Zoom can support a variety of different levels of meetings, of which, for subscribers, up to more than 1,000 people can attend the meeting at the same time. This multi-level, multi-category service product system can greatly meet a variety of online meeting scenarios.

With the surge in market demand, the increase in business volume and the expansion of the number of employees against the trend, Zoom in 2020 was at its peak. In the secondary market, its share price skyrocketed to nearly $600. The soaring share price pushed its market capitalization up sharply, reaching a peak of close to 1 trillion yuan. You know, just six months before the outbreak, Zoom shares hovered around $60, rising nearly tenfold in just one year.

However, as the saying goes, "both prosperity and decline are epidemic." with the gradual stabilization of the epidemic, people's work and life have begun to return to normal, and the online office, which was originally highly dependent, has gradually faded out of sight. In the face of shrinking market demand, Zoom revenue and net profit decline has become an inevitable trend, layoffs and pay cuts are inevitable.

03, online office, can you still play?

Zoom layoffs may be just the tip of the iceberg of the current wave of layoffs.

Affected by the epidemic, geopolitics and other aspects, the global economy is facing downward pressure, and corporate layoffs have become commonplace. Take the global giant as an example, in January this year, Alphabet, the parent company of Google, plans to lay off about 12000 people worldwide, Microsoft will lay off 10,000 people worldwide, Amazon will lay off more than 18000 people worldwide, Dell will lay off more than 6000 people, and Meta has already announced more than 10,000 layoffs.

It can be seen that the global technology giants are laying off staff, which has become an effective measure for enterprises to cope with the economic downturn. But in terms of the layoffs themselves, there is still a big difference between Zoom and the above giants, mainly because of the track where Zoom is located and the business situation of Zoom.

Internally, Zoom's main business is to provide online office services, such as supporting remote meetings, remote training, online lectures, and so on. Compared with technology giants, Zoom has a single line of business and revenue mainly comes from online payments, so it is relatively weak in the face of economic downward pressure.

Externally, the online office track where Zoom is located, and with the gradual end of the epidemic and the orderly recovery of offline activities, most enterprises are "able to meet, not online". In this case, the market demand for "online + office" is declining, and there is no shortage of competitors in the industry, which makes the competitive environment that Zoom faces increasingly severe.

At the moment of Zoom, it can be said that internal and external difficulties, worry is its own business is relatively single, the difficulty is that the market demand continues to weaken. In the short term, layoffs and pay cuts can indeed ease the pressure on enterprises. But in the long run, Zoom wants to return to the rising period, change a single line of business, enrich the product and service system, enhance the core competitiveness of enterprises, or the only way to maintain a long-term market position.

But in any case, Zoom has now reached a crossroads, what will happen in the future, everything is still unknown.

This article is from the official account of Wechat: new Research (ID:chuxinyanjiu), author: Feifei

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