As many expected, Zoom Video Communications Inc. (NASDAQ:ZM) reported a blockbuster first quarter. The platform became the primary option for video chat while half of the world's population was in self-isolation. Its quarterly results were impressive on almost every measure, only rivaled by a 152% increase in its share price over the past year that's expanded its market cap from $19bn to $58bn.

Q1 Earnings Report

Zoom's revenue for the quarter was $382 million. This is a 169% increase from the same quarter a year ago.

More impressively, customer growth almost tripled. New customers accounted for 71% of revenue growth during the quarter, with the remainder coming from subscriptions added by existing customers. The biggest growth was among individuals and smaller organizations with fewer than 10 employees. These two groups contributed almost 1/3 of the revenue during the quarter. This is an increase compared to a 20% share in the previous quarter. This infrastructure also influenced the billing mix, as these customers typically pay monthly fees rather than opting for annual contracts.

This top line resulted in a GAAP net income of $27.0 million, or $0.09 per share. To give you a better idea, one year ago it was $0.2 million, or $0.00 per share. Cash at the end of the quarter totaled $1.1 billion.

Zoom expects the good times to continue through the year as it almost doubled its revenue guidance for the fiscal year from $910 million to $1.79 billion.

Privacy Issues Remain A Concern

Zoom's CEO Eric Yuan admitted that the company could have done better regarding various security flaws that came to light as Zoom use rocketed among individual consumers. But Zoom attracted new criticism by announcing users will have to pay for the end-to-end encryption. The company was further criticized for Yuan's vague assertion that that the company would to work together with FBI and local law enforcement, which raised further questions about the security and privacy of the platform.

Competition Muscling In On The Zoom Boom

Deep-pocketed rivals including Microsoft Corporation (NASDAQ:MSFT), Alphabet, Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) and Facebook, Inc. (NASDAQ:FB) have jumped to take their own piece of the video conferencing pie. Microsoft announced it would launch a version of its video-conferencing service for individual consumers in March. While both Facebook and Google introduced their own group video-calling feature in April called Messenger Rooms and Meet, respectively.

Zoom's Strategy

Despite its experience of the past few months, Zoom is sticking to its focus on larger enterprise customers as its major growth opportunity. The company is happy to leave other aspects of digital teamwork, such as messaging and content sharing to Slack Technologies Inc (NYSE:WORK), Box, Inc. (NYSE:BOX) and Dropbox Inc (NASDAQ:DBX).

The Yuan also reiterated his belief in extending into cloud-based PBX with the Zoom Phone service as a significant opportunity to build on the success of the video conferencing service. If anything, Zoom seems not to be at all afraid of its big tech rivals.

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