Market commentary by eToro analyst for Romania, Bogdan Maioreanu
Despite the fact that many countries are facing rising pandemic infections at the moment, CEOs around the world are starting to plan for the post-pandemic workforce policies. According to a recent poll , 67% of the CEOs said that they are personally leading the planning process with the majority wishing to see the employees back to the office.
This is starting to have profound implications in the usage of remote conferencing software, in a blow to the leading provider of online conferencing services during the pandemic, Zoom Video Communications (ZM).
The 2020 lockdown and the need to work from home raised Zoom to a common name. “Shall we have a zoom?” became a very common question during that time. On the other hand, the company capitalized very well on the need to offer an easy and reliable way to video conference, using an electronic, online platform. As a result Zoom’s shares rose from about 100 USD before the pandemic to a peak of 559 dollars in October 2020. But then the price went only downhill from there.
After the company published its earnings report this week, the price tumbled a further 16% to 204 dollars, despite the results exceeding the analysts expectations. The company posted 1.05 Billion dollars in revenues for the fiscal third quarter, a respectable 35% increase year on year but far from the 367% registered in October 2020. But the guidance sees further slowing of revenues to about 19% year on year growth, the smallest increase since the company went public in 2019. Also there are fears about the future growth of the company as many companies are planning on having their employees returning fully to the office for at least part time. This could, in theory, result in less usage of Zoom’s (ZM) video services since workers would be meeting more often in person. Just last week, Apple (AAPL) said its employees would begin coming back to company offices starting Feb. 1.
In Europe, 40% of the employees were working from the office in September 2021, with Prague being the region’s top city, with approximately 80% of employees back at work. The Czech capital was followed by Hamburg (60%) and Warsaw (45%). Returning to the office in these cities is directly linked to the high vaccination rate and low infection rates.
Romania is in line with the global trend, in September 2021, with about 40% of the employees working from the office, according to the Cushman & Wakefield “Return to the office” report.
However, a Future Forum Pulse survey has revealed that coming back to work might have its challenges. The executives who work remotely are nearly three times more likely than employees to prefer returning to the office full-time but 76% of employees do not want to return to full-time office work. We have changes in the way employees want to work, 76% of them looking for flexibility where they work, and 93% for flexibility when they work. 66% of executives reported that they are designing post-pandemic workforce policies with little or no direct input from employees.
Zoom continues to be the market leader with around 46% of the market, followed by Google Meet (GOOG) with 21% and Microsoft Teams with 14.5%. Compared with 2020 the largest market share loss was suffered by Skype who lost about 80% of its client base dropping the market share from 32% in 2020 to 6% in 2021.
Zoom also faces intensifying competition in both the core video conferencing market and in its new target market for cloud-based corporate phone systems. The drop in share value destroyed its Five-9 merger last month but the analysts consider that Zoom core competencies will allow the company to develop its own phone system. Microsoft (MSFT) recently said it now has 250 million users for Teams, its suite of communications tools, which includes videoconferencing, messaging, and voice calls. At the beginning of this week, Ericsson (ERIC) announced a deal to acquire the cloud-based telephony pioneer Vonage Holdings ( VG ) for $6.2 billion dollars.
Notes :
*Survey research conducted by Opinium from September 17th – 30th 2021. In total, 6,000 retail investors sampled across 12 countries – 500 in each: UK, US, Germany, France, Italy, Spain, Netherlands, Denmark, Australia, Poland, Romania and the Czech Republic. Retail investors were defined as self-directed or advised and had to hold at least one investment product including shares, bonds, funds, investment ISAs or equivalent. They did not need to be eToro users
Bogdan Maioreanu, eToro analyst and markets commentator, has over 20 years of experience in financial services and investments and a strong background in journalism. He held different Corporate Banking management positions in both Raiffeisen Bank and OTP Bank, before moving to business consultancy roles working for IBM Romania among others. Bogdan is an Executive MBA from Asebuss and Washington University.
