Zoom’s new users raising costs, focus is keeping video calls reliable


Zoom Chief Finance Officer Kelly Steckelberg said on CNBC’s Squawk Box Tuesday that the company is seeing an increase in cost associated with its massive user growth.

Steckelberg didn’t provide new guidance and instead pointed toward the company’s March 4 earnings report. Steckelberg said then that Zoom expects gross margins to be at the lower end of its 80% to 82% long-term target in the 2021 fiscal year. 

“We did indicate then that we expected to see an increase in our costs that would have an impact on our gross margins, and that is consistent with what we continue to see,” Steckelberg said Tuesday. 

Zoom has seen a spike in users since the Covid-19 pandemic has pushed several companies and schools to remote work. Zoom CEO Eric Yuan told CNBC earlier this month that 200 million people used the software per day in March, after several stay-at-home mandates were implemented, from about 10 million in December.

The surge in users has also sparked criticism around Zoom’s privacy and security. The company announced it was will halt new features for the next 90 days while it works to improve the platform’s privacy.

“Coming into this pandemic and seeing the increase in demand, we have been very focused on ensuring that the platform is stable, reliable and sustainable,” Steckelberg said on Tuesday. “We really are focused on ensuring that, and anybody who needs Zoom or has use for it can get access to it.” 

Zoom was designed for enterprises, not day-to-day consumer use, and it’s unclear whether the company can convert the free users to paid ones.

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