The Age of the Videoconference: 4 Stocks to Watch

August 7, 2020 Source


The need to connect, communicate, and collaborate digitally has never been felt more at work or in our personal lives. These unprecedented times have pushed the adoption of secure collaboration tools that enable image, voice, and data transfer over digital networks to a level never seen before. Even after the pandemic passes, videoconferencing will remain a part of our personal and professional environments for the years to come.

Here’s a look at the videoconferencing and meeting solutions market segment, key players, and why it holds further scope for growth.

Digital Platforms & Work-From-Home (WFH)

The use of videoconferencing has significantly surged in recent months due to the spread of coronavirus. Even in pre-COVID times, a Gartner report made some strategic planning assumptions, which highlighted the increased adoption of platforms to conduct work in the coming years. The two broader assumptions were, “a) By 2022, 40% of formal meetings will be facilitated by virtual concierges and advanced analytics and b) By 2024, remote work and changing workforce demographics will impact enterprise meetings so that only 25% will take place in person, down from 60% in September 2019.”

COVID-19 has changed the course of things and has accelerated the adoption of technology. While as people get back to work, the demand for such digital connect will gradually reduce, but is still expected to remain much higher than pre-COVID-19, especially as work-from-home (WFH) becomes a new normal.

Major companies such as Google, Visa, Microsoft, Mastercard, Morgan Stanley, JPMorgan, Slack, Amazon, PayPal, and Salesforce have extended their WFH options. Many have given their employees the choice to continue to WFH if they desired, some companies are considering adopting the WFH option forever.

In May 2020, Jennifer Christie, Vice President, People, Twitter wrote, “If our employees are in a role and situation that enables them to work from home and they want to continue to do so forever, we will make that happen.”

Likewise, Square announced that, “Moving forward, Squares will be able to work from home permanently, even once offices begin to reopen.”

Tobi Lutke, CEO, Shopify, tweeted, “As of today, Shopify is a digital by default company. We will keep our offices closed until 2021 so that we can rework them for this new reality. And after that, most will permanently work remotely. Office centricity is over.”

Mark Zuckerberg, CEO of Facebook, predicts that 50% of the company’s employees could be working remotely within the next five to 10 years.

study conducted by the University of Chicago, Booth School of Business, NBER, and CEPR published in May 2020 found “that 37% of jobs in the U.S. can be performed entirely at home, with significant variation across cities and industries.” A research report estimates that the videoconferencing market size is set to exceed $50 billion by 2026.

Players & Numbers

With the working population shifting to remote work, business travel coming to a halt, students attending school and college online, there has been a significant rise in the number of users by the day. Here are a look at some of the major players in this field:

Cisco (CSCO)

Cisco WebEx is among the leading enterprise solutions for videoconferencing, online meetings, screen share, and webinars. During the month of May, WebEx was running at three times the capacity as compared to February amid a dramatic increase in usage growth. Chuck Robbins, Chairman and Chief Executive Officer, Cisco said during the May earnings call, “We had well over 500 million meeting participants, generating 25 billion meeting minutes in April, more than triple the volume in February. We also added many new prospects through free WebEx trials that we anticipate converting to revenue in the future.” WebEx was acquired by Cisco back in 2007, with a vision for enabling collaboration in the small to medium business segment.

Zoom (ZM)

San Jose, California-headquartered Zoom is a cloud platform for video, voice, content sharing, and chat runs across devices and systems. Data for the past quarter shared during its Q1 2021 earnings call showed that its customers with more than 10 employees grew 354% year-over-year while usage by customers in the Global 2000 grew over 200% sequentially. “We had an approximately twentyfold increase in our metric of annualized meeting minutes run rate, which jumped from 100 billion at the end of January 2020 to over 2 trillion meeting minutes, based on April 2020’s run rate,” said Eric S. Yuan, Founder and CEO, Zoom Video Communications.

LogMeIn (LOGM)

LogMeIn is a market leader in unified communications and collaboration (UCC), identity and access management with its product line starting with the prefix ‘GoTo’ – GoToConnect, GoTo Webinar, GoToTraining, GoTo Room, and GoToMeeting. LogMeIn’s combined UCC products support over 28 million users per month, with over 1.5 billion conferencing minutes a month contributing to over 8 million meetings per month, and nearly 20 billion voice minutes per year. In March, LogMeIn’s videoconferencing and meetings usage spiked as much as 10x over 2020 norms over the last month.

Microsoft (MSFT)

Microsoft Teams is a platform to connect, coordinate and organize – all in one place. Teams has witnessed a huge surge in recent months amid the work-from-home norm. During the earnings call in April end Satya Nadella, CEO, Microsoft, shared, “Teams now has more than 75 million daily active users, engaging in rich forms of communication and collaboration, and two-thirds of them shared, collaborated, or interacted with files on Teams. And, the number of organizations integrating their third-party and line of business apps with Teams has tripled in the past two months.” Teams has been supporting meetings of all sizes, from 10 active participants, to live events for up to 100,000 attendees.

In November 2019, Microsoft and Cisco collaborated to enable Cisco’s WebEx video devices to connect to the Microsoft Teams meeting services in multiple ways.

Zoom, Cisco, Microsoft and LogMeIn were featured on Gartner’s Magic Quadrant for meeting solutions in 2019 while a report by Datanyze suggests that Zoom, LogMeIn, and Cisco are the market shareholders in web conferencing. There are many more credible names in this segment with each having its own unique offering; some of them are Avaya, PGi, Huawei, Enghouse Systems, TrueConf, pexip, BlueJeans (by Verizon), StarLeaf, Lifesize, Google, and Adobe.

Final Word

As the world inches back to normalcy, some of the changes which have been adopted during this period will last well after the pandemic passes. The choice to WFH, and the use of digital platforms to communicate and collaborate will be one of them.

Disclaimer: The author has no position in any stocks mentioned. Investors should consider the above information not as a de facto recommendation, but as an idea for further consideration. The report has been carefully prepared, and any exclusions or errors in reporting are unintentional.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Published on 18.06.2020 by Nasdaq
Categories Social Connection