According to a Grand View Market Research report, the global video conferencing market is estimated to grow 9% annually through to 2025 from $3.4 billion in 2017. Zoom Video Communications (Nasdaq: ZM) is a strong performer in the industry as was evident from their recent quarterly results.

Zoom Video Communications’ Financials

Last month, Zoom announced its first quarterly results since it became a public company, and the results outpaced all market expectations. Revenues for the quarter grew 103% over the year to $122 million, surpassing the analyst forecast of $111.7 million. EPS of $0.03 was also ahead of the Street’s estimated $0.01 for the quarter.

Revenue from US-based customers grew 98% to $98.2 million, and revenue from international customers grew 127% to $49.6 million.

Among key customer metrics, Zoom ended the quarter with 58,500 customers with more than 10 employees, up 86%. 405 of its customers contributed more than $100,000 in trailing 12 months revenue.

For the current quarter, Zoom expects revenues of $129-$130 million with an EPS of $0.01-$0.02. Zoom expects to end the year with revenues of $535-$540 million with an EPS of $0.02-$0.03. The market was looking for revenues of $122.1 million for the quarter and $525 million for the year.

Zoom’s Phone Launch

Earlier this year, Zoom expanded its offerings with the launch of Zoom Phone, a cloud-based phone system for companies. While it is still early days, and the market remains skeptical, Zoom’s management is unfazed. It believes that Zoom Phone will be more of a contributor in the future. Zoom believes that organizations are looking to migrate from the complex, old-fashioned PBX phone systems and would view Zoom Phone as a viable upgrade option.

Previously known as Zoom Voice, Zoom Phone is available as an add-on to Zoom’s Meetings service for US and Canadian customers. It supports inbound and outbound calling through the public switched telephone network (PSTN) and offers seamlessly integrated telephony features to help customers replace the PBX solution and consolidate their communication requirements into Zoom’s video-first platform.

Earlier this quarter, Zoom added some more features to the phone service such as enabling users to seamlessly transition a Zoom Phone call to a Zoom Meeting; adding native integrations with charter members Five9 and Twilio to enable efficient and easy-to-manage call routing options; a Salesforce integration that lets users make Zoom Phone calls by clicking on any phone number within Salesforce and a Zero-Touch provisioning service integration to Polycom and Yealink that reduces the time required by IT administrators to set up and deploy Zoom Phone connected devices.

Zoom’s Collaborative Approach

Zoom continues to enter into several strategic partnerships to drive growth. Recently, it expanded its tie-up with Slack to simplify the ability to set up video conferencing calls and share content. Users of Slack messaging tools can now easily launch a Zoom video conferencing meeting to help drive productivity. Recently, Zoom also entered into a tie-up with Verizon that will allow all of Verizon’s business customers to access Zoom as a cloud service. Verizon customers will have access to call-in numbers and the ability to join in a Zoom meeting from a Verizon phone at no additional cost. The agreement will cover 50 countries.

Zoom’s expanding product offerings and partnerships are helping it compete with its biggest rivals – Cisco and Microsoft. Cisco and Microsoft have their own video and audio conferencing systems in the form of Webex and Microsoft Teams. But Zoom is able to compete with them because of its easy-to-use model and the growing integrations. It is well integrated with other collaboration tools offered by Atlassian and Dropbox. Cisco and Microsoft may very well upgrade their user experience to match Zoom’s, but Zoom is not too worried. It believes that the market is big enough to allow it to prosper and by focusing on customer happiness, it will continue to win a bigger share in the market.

Its stock is trading at $90.76 with a market capitalization of $24.7 billion. In April this year, the stock had listed at $36 apiece, raising $751 million at a valuation of $9.2 billion. It had soared to a record high of $107.34 earlier last month soon after result announcement. Analysts are pleased with Zoom given that it is one of those rare emerging technologies companies that delivers high growth in revenues while remaining profitable.

Prior to listing this year, Zoom had raised $160.5 million in funding from investors including AME Cloud Ventures, Emergence Capital Partners, Horizons Ventures, IT-FARM, Qualcomm Ventures, Maven Ventures, Sequoia Capital, Bart Swanson, Bill Tai, Carmen Elizabeth Sanchez C., Dan Scheinman, Matt Ocko, Mike Everett, Patrick Soon-Shiong, and Subrah Iyar (founder of Webex). Its last funding round was held in January 2017, when it raised $115 million in a round led by Sequoia Capital that valued it at $1 billion.

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