A leading video communications company used by corporations around the world could be launching a new product to help diversify itself, increase revenue and take share away from peers.
What Happened: Helped by the shift to work-from-home jobs and communication activities, Zoom Video Communications ZM experienced significant growth during the COVID-19 pandemic. Shares of the company fell after the most recently reported quarter, with guidance below estimates from analysts.
Zoom has introduced several new products including the Zoom Phone and Contact Center to help boost its enterprise offerings.
The company may have another service for enterprise customers and a way to beat peers in the video market.
A new trademark filing by the company on Jan. 9 for the name “Zmail” suggests the company could offer email services using the name. The filing was reported by trademark attorney Josh Gerben of Gerben Law on Twitter.
The trademark filing lists the following as potential use cases:
- Downloadable computer software for use in providing electronic transmission of secure e-mail
- Communication services, namely, transferring of electronic messages for groups of two or more people by means of a global computer network; providing electronic transmission of secure e-mail
- Software as a service (SAAS) services, featuring software to use in providing electronic transmission of secure e-mail
Gerben suggests that Alphabet Inc GOOG GOOGL “may want a word” with Zoom, given the name is similar to the Gmail name used for the e-mail segment of the company.
Apple Inc AAPL and Alphabet rank first and second for e-mail share according to most reports. Gmail has a market share of around 23.5% in 2023, falling from 35% in late 2021.
Other large players in the e-mail market include Outlook from Microsoft Corporation MSFT and Apollo Global Management APO owned Yahoo! Mail at 3.4% and 2.9% market share respectively.
With many companies already using Zoom for their conferencing and meeting needs, the launch of a dedicated enterprise e-mail service could help Zoom compete with Google, which has Gmail and its Google Meet video conferencing offering.
Related Link: 6 Zoom Analysts Offer Key Takeawyas After Stock Plummets On Heels Of Q3 Earnings
Why It’s Important: The new e-mail product from Zoom could help increase the use cases from the company and strengthen the long-term bullish take on the stock by Ark Funds CEO Cathie Wood.
Zoom is the second-largest holding in both the Ark Innovation ETF ARKK and the Ark Next Generation Internet ETF ARKW making up 8.3% and 7.4% of assets respectively.
In August 2022, Ark Invest said it may have underestimated the online churn as brick-and-mortar businesses reopened, but remained bullish on the future.
“Our Zoom investment thesis hinges on our projection that the majority, if not all, of Zoom’s business by the end of 2026 will be focused on enterprise customers,” Ark Invest said in an email. “We believe enterprise customers will continue to rise as a percent of revenues.”
Ark said churn could normalize for Zoom and new products like the Zoom Phone and Contact Center could accelerate growth.
“We maintain our high conviction in Zoom and its potential to become a leading communications platform for enterprise-to-enterprise communication.”
In June 2022, Ark Invest laid out a price target of $1,500 by the year 2026 for Zoom Video Communications.
Among the factors impacting the price target were remote work, monetization rate and revenue per user.
ZM Price Action: Zoom shares are down 2% to $68.48 on Wednesday, versus a 52-week trading range of $63.55 to $164.89. Shares of Zoom are down 55% in the last year.
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