Zoom Video Communications (ZM) AI Stock Analysis

• Market Cap: $21.78B
• Dividend Yield: N/A
• Average Volume (3M): 2.59M
• Price to Earnings (P/E): 22.3
• Beta (1Y): 0.99
• Revenue Growth: 3.05%
• EPS Growth: 55.96%
• Country: US
• Employees: 7,412
• Sector: Technology
• Sector Strength: 68
• Industry: Software - Application
• EPS (TTM): 1.41
• Shares Outstanding: 262,753,500
• 10 Day Avg. Volume: 2,862,132
• 30 Day Avg. Volume: 2,593,976
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 4.97
• Price to Cash Flow (P/CF): 13.70
• P/FCF Ratio: 13.70
• Enterprise Value/Market Cap: 0.91
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 5.60
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $87.09
• Price Target Upside: 11.33% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 26

Zoom Video Communications demonstrates strong financial performance with solid profitability and cash flow, coupled with a robust balance sheet. The earnings call highlighted strategic growth initiatives and partnerships, though concerns about slower revenue growth persist. Technical indicators suggest mixed momentum, and the valuation appears fair but not particularly attractive. Overall, the stock is positioned well for stability and moderate growth but faces hurdles in achieving higher revenue growth.

Positive Factors

Customer Engagement

The number of $100K customers grew 100% year over year, indicating strong customer engagement and sales growth.

Financial Performance

Free cash flow of $416.2 million exceeded expectations, demonstrating strong financial performance.

Stock Buybacks

ZM repurchased $1.1 billion of stock in F2025, with $1.6 billion remaining for future buybacks, indicating confidence in the company's future.

Negative Factors

Foreign Exchange Impact

Foreign exchange presents a modest headwind for Zoom's financial performance.

Innovation Pace

There is some frustration over the modest pace of continued innovation, particularly with the adoption of Zoom AI Companion and Workvivo gains, impacting guidance momentum.

Revenue Guidance

Revenue projections for fiscal 2026 are approximately $100 million below consensus, indicating potential challenges in meeting market expectations.

Zoom Video Communications Business Overview & Revenue Model

Company Description

Zoom Video Communications, Inc. provides unified communications platform in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. The company offers Zoom Meetings that offers HD video, voice, chat, and content sharing through mobile devices, desktops, laptops, telephones, and conference room systems; Zoom Phone, an enterprise cloud phone system; and Zoom Chat enables users to share messages, images, audio files, and content in desktop, laptop, tablet, and mobile devices. It also provides Zoom Rooms, a software-based conference room system; Zoom Hardware-as-a-Service allows users to access video communication technology from third party equipment; Zoom Conference Room Connector, a gateway for SIP/H.323 endpoints to join Zoom meetings; Zoom Events, which enables users to manage and host internal and external virtual events; OnZoom, a prosumer-focused virtual event platform and marketplace for Zoom users to create, host, and monetize online events; and Zoom Webinars to provide video presentations to large audiences from many devices. In addition, the company offers Zoom Developer Platform that enables developers, platform integrators, service providers, and customers to build apps and integrations using Zoom's video-based communications solutions, as well as integrate Zoom's technology into their products and services; Zoom App Marketplace, which helps developers to publish their apps, as well as third-party integrations of Zoom; and Zoom Contact Center, an omnichannel contact center solution. It serves individuals; and education, entertainment/media, enterprise infrastructure, finance, government, healthcare, manufacturing, non-profit/not for profit and social impact, retail/consumer products, and software/Internet industries. The company was formerly known as Zoom Communications, Inc. and changed its name to Zoom Video Communications, Inc. in May 2012. The company was incorporated in 2011 and is headquartered in San Jose, California.

How the Company Makes Money

Zoom Video Communications generates revenue primarily through a subscription-based model. Its key revenue streams include the sale of subscription plans for its core product, Zoom Meetings, which is offered in various tiers, catering to different customer needs from individuals to large enterprises. Additional revenue is derived from Zoom Phone, a cloud-based phone system, Zoom Webinars, which allows hosting of large-scale online events, and Zoom Rooms, a software-based conference room system. The company also offers Zoom Chat for team messaging and collaboration. Significant partnerships and integrations with platforms like Slack, Microsoft Teams, and Salesforce enhance its ecosystem, driving further adoption and revenue growth. Zoom's business model focuses on expanding its user base and increasing the adoption of its various service offerings among existing customers to boost recurring revenue.

Zoom Video Communications Financial Statement Overview

Summary

Zoom Video Communications exhibits a strong financial standing, characterized by impressive revenue growth, high profitability margins, and robust cash flow generation. The company's minimal debt levels and strong equity base enhance its financial stability, positioning it well for future growth and resilience against market fluctuations.

Income Statement

Zoom has demonstrated strong revenue growth over the years, with a robust revenue growth rate of 3.05% in TTM (Trailing-Twelve-Months). The gross profit margin stands at an impressive 74.46%, indicating efficient cost management. The net profit margin improved significantly to 21.65% in the TTM period, showcasing strong profitability. EBIT and EBITDA margins are solid at 18.99% and 18.63%, respectively, reflecting strong operational efficiency.

Balance Sheet

Zoom maintains a strong balance sheet with a low debt-to-equity ratio of 0.0042, highlighting minimal leverage and financial risk. The return on equity (ROE) is a healthy 11.31%, indicating effective use of shareholder funds. An equity ratio of 81.32% underlines a strong equity base, enhancing financial stability.

Cash Flow

Zoom's cash flow is robust, with a free cash flow growth rate of 22.85% illustrating strong cash generation capabilities. The operating cash flow to net income ratio of 1.93 indicates efficient conversion of profits to cash. The free cash flow to net income ratio stands at 1.79, further emphasizing strong cash flow dynamics.

Breakdown
Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement		Total Revenue
4.67B	4.53B	4.39B	4.10B	2.65B
	Gross Profit
3.54B	3.45B	3.29B	3.05B	1.83B
	EBIT
813.29M	525.28M	245.43M	1.06B	659.85M
	EBITDA
813.29M	629.73M	245.43M	1.11B	688.71M
	Net Income Common Stockholders
1.01B	637.46M	103.71M	1.38B	672.32M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
7.79B	6.96B	5.41B	5.42B	4.24B
	Total Assets
10.99B	9.93B	8.13B	7.55B	5.30B
	Total Debt
64.43M	72.95M	96.48M	105.72M	90.42M
	Net Debt
-1.28B	-1.49B	-990.35M	-957.11M	-2.15B
	Total Liabilities
2.05B	1.91B	1.92B	1.77B	1.44B
	Stockholders Equity
8.94B	8.02B	6.21B	5.78B	3.86B
Cash Flow		Free Cash Flow
1.81B	1.47B	1.18B	1.46B	1.39B
	Operating Cash Flow
1.95B	1.60B	1.29B	1.61B	1.47B
	Investing Cash Flow
-1.11B	-1.18B	-318.32M	-2.86B	-1.56B
	Financing Cash Flow
-1.03B	60.19M	-936.94M	34.07M	2.05B

Zoom Video Communications Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 78.23
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ZM, the sentiment is Positive. The current price of 78.23 is above the 20-day moving average (MA) of 72.78, above the 50-day MA of 74.36, and above the 200-day MA of 74.28, indicating a bullish trend. The MACD of 0.88 indicates Negative momentum. The RSI at 62.64 is Neutral, neither overbought nor oversold. The STOCH value of 92.76 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ZM.

Zoom Video Communications Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MNDY	78 Outperform	$14.17B	461.43	3.51%	―	33.21%	―
ZM	77 Outperform	$21.78B	22.28	11.92%	―	3.05%	55.96%
DOCU	76 Outperform	$16.63B	16.06	68.18%	―	7.78%	1345.45%
GRAB	67 Neutral	$19.92B	873.21	0.38%	―	17.24%	―
GRND	64 Neutral	$4.53B	―	-966.61%	―	32.71%	-131.68%
Sector *	60 Neutral	$10.94B	10.58	-7.08%	2.98%	7.52%	-12.04%
COMP	50 Neutral	$3.90B	―	-36.85%	―	15.23%	55.04%

Zoom Video Communications Corporate Events

Zoom’s Chief Accounting Officer Resigns, CFO Steps In

On April 11, 2025, Shane Crehan announced his resignation as Chief Accounting Officer of Zoom Video Communications, effective May 2, 2025, to pursue a position at another company. Following his departure, Michelle Chang, the current Chief Financial Officer, will take over as the principal accounting officer, while the company searches for a permanent successor.

Spark’s Take on ZM Stock

According to Spark, TipRanks’ AI Analyst, ZM is a Outperform.

Zoom’s overall stock score is driven by its strong financial performance and a cautiously optimistic outlook from its recent earnings call. While technical indicators suggest the stock lacks upward momentum, the company’s moderate valuation and strategic focus on AI and enterprise growth present a balanced investment opportunity.

To see Spark’s full report on ZM stock, click here.