Zoom's share price has continued to rise after releasing its Q3 earnings report, in which the company said it had offered to settle a probe into its privacy policies.
The company’s earnings report includes a US$18 million (A$27.63 million) expense for litigation settlements. This would settle a United States Securities and Exchange Commission (SEC) investigation that has been ongoing since 2020, according to Bloomberg.
"During the three months ended October 31, 2024, we recorded an $18 million accrual with respect to a tentative settlement offer for the SEC matter that remains subject to SEC approval,” Zoom said in a quarterly report filing.
“We do not know when these matters will be completed, including the SEC matter, which facts we will ultimately discover as a result of the investigations, or what actions the government may or may not take.”
The SEC opened its investigation after it said Zoom had falsely claimed that its video calls were protected by end-to-end encryption. End-to-end encryption protects conversations from all outside parties, including the communication platform itself; however, Zoom was still able to access users’ unencrypted video at the time, it was alleged.
The SEC issued subpoenas to Zoom in July 2020, seeking information on the company’s privacy policies and usage metrics, as well as on employees’ interactions with Chinese government contacts.
Zoom’s Q3 earnings report also saw net income reach $207.1 million, up from $141.2 million in Q3 2023. Its earnings per share were $1.38, a 7% increase year-over-year.
Zoom said this week that the company would be renamed Zoom Communications, after 13 years as Zoom Video Communications. “This change reflects our evolution into an AI-first work platform for human connection and our vision for long-term growth,” said CEO Eric Yuan.
While U.S. markets are closed today due to the Thanksgiving holiday, Zoom’s (NASDAQ: ZM) share price closed at US$85.36 on Wednesday after releasing its earnings report. This is an increase from the previous day’s $83.41.
Zoom’s share price is up 19% across the year to date. Its market cap is $26.2 billion.