Zoom Video Communications, Inc. Class A (ZM)
NASDAQ:ZM
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Zoom Video Communications
(NASDAQ:ZM)
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Rating:70Outperform
Price Target:
$91.00
▲(10.44% Upside)
Action:ReiteratedDate:02/27/26
The score is driven primarily by strong financial quality (high margins, robust free cash flow, and very low leverage) and a constructive but tempered earnings outlook (modest growth with strong margins and backlog). These positives are partially offset by weak technicals (price below key moving averages with negative MACD) and only moderate growth, while valuation appears reasonable at a ~16.6 P/E with no dividend support.
Positive Factors
Recurring subscription business model
Zoom's core subscription model (Meetings, Phone, Rooms, Webinars, Contact Center) creates predictable recurring revenue and high customer lifetime value. Durable monetization via seat-based and capacity add-ons supports steady cashflows and allows expansion inside accounts over multi-quarter cycles.
Negative Factors
Muted revenue growth
Top-line has been stuck in low single-digit growth, limiting runway for margin expansion to translate into meaningful EPS growth. Durable acceleration requires successful cross-sell of Phone, Contact Center and AI features; failure to scale those will constrain long-term revenue momentum.
Read all positive and negative factors
Positive Factors
Negative Factors
Recurring subscription business model
Zoom's core subscription model (Meetings, Phone, Rooms, Webinars, Contact Center) creates predictable recurring revenue and high customer lifetime value. Durable monetization via seat-based and capacity add-ons supports steady cashflows and allows expansion inside accounts over multi-quarter cycles.
Read all positive factors
Zoom Video Communications (ZM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$24.40B
Dividend YieldN/A
Average Volume (3M)3.77M
Price to Earnings (P/E)14.6
Beta (1Y)0.86
Revenue Growth3.85%
EPS Growth72.42%
CountryUS
Employees7,412
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)1.44
Shares Outstanding265,969,820
10 Day Avg. Volume3,629,122
30 Day Avg. Volume3,765,527
Financial Highlights & Ratios
PEG Ratio0.16
Price to Book (P/B)2.82
Price to Sales (P/S)5.68
P/FCF Ratio14.38
Enterprise Value/Market Cap1.03
Enterprise Value/Revenue5.17
Enterprise Value/Gross Profit6.71
Enterprise Value/Ebitda13.45
Forecast
1Y Price Target
$99.88Price Target Upside21.21% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering19
EPS Forecast (FY)5.88
Revenue Forecast (FY)$5.07B
Zoom Video Communications Business Overview & Revenue Model
Company Description
Zoom Communications, Inc. engages in the provision of a communications and collaboration platform. It operates through the following geographical segments: Americas, Asia Pacific, and Europe, Middle East, and Africa. The company was founded by Eri...
How the Company Makes Money
Zoom primarily makes money by selling subscriptions to its cloud communications products and platform services. The company’s core revenue stream is recurring subscription revenue from paid plans for Zoom Meetings/Zoom Workplace (licensed per user...
Zoom Video Communications Key Performance Indicators (KPIs)
Any
Revenue by Geography
Breaks down revenue across different regions, revealing where Zoom is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Breaks down revenue across different regions, revealing where Zoom is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Data provided by:
The Fly
The FlyZoom Video Communications Earnings Call Summary
Earnings Call Date:Feb 25, 2026
(Q4-2026)
| % Change Since: |
Next Earnings Date:May 25, 2026
Earnings Call Sentiment Positive
The call conveyed meaningful progress: revenue acceleration versus the prior year, strong enterprise and AI monetization momentum (notably in Contact Center, ZVA Voice, Phone and AI Companion adoption), improved non-GAAP margins for the full year, a healthy cash balance and continued buybacks. Offsetting these positives were declines in quarterly operating and free cash flow, a net dollar expansion rate below 100% (98%), modest churn uptick, near-term billing/recognition dynamics tied to transition credits for competitive takeouts, and some tax and interest headwinds. Overall, execution on AI products and large competitive displacements were emphasized as drivers for durable growth, though several near-term financial and recognition headwinds temper the outlook.Positive Updates
Q4 Revenue Above Guidance and Year-over-Year Growth
Q4 FY26 revenue grew 5.3% year-over-year to $1.25 billion (4.8% in constant currency) and was $12 million above the high end of guidance.
Negative Updates
Quarterly Operating Cash Flow and Free Cash Flow Declines
Q4 operating cash flow fell to $355 million from $425 million a year earlier (down ~16.5%), and Q4 free cash flow fell to $338 million from $416 million (down ~18.8%), reducing QoQ cash generation.
Read all updates
Q4-2026 Updates
Positive
Negative
Q4 Revenue Above Guidance and Year-over-Year Growth
Q4 FY26 revenue grew 5.3% year-over-year to $1.25 billion (4.8% in constant currency) and was $12 million above the high end of guidance.
Read all positive updates
Company Guidance
Zoom's guidance for Q1 FY‑27 calls for revenue of $1.22–$1.225 billion (midpoint ~4.1% YoY growth), non‑GAAP operating income of $487–$492 million (operating margin ~40% at the midpoint), and non‑GAAP EPS of $1.40–$1.42 based on ~304 million shares; deferred revenue is expected to be up 1–2% YoY. For full FY‑27 the company expects revenue of $5.065–$5.075 billion (midpoint +4.1% YoY), non‑GAAP operating income of $2.05–$2.06 billion (operating margin ~40.5% at the midpoint, reflecting a +180 bps amortization accounting tailwind partly offset by ~‑70 bps from the shift from stock‑based to cash bonuses), non‑GAAP EPS of $5.77–$5.81 on ~308 million shares (future repurchases not included), and free cash flow of $1.7–$1.74 billion (including ~ $75 million incremental CapEx); management also flagged an expected ~$50 million interest‑income headwind and noted RPO is up >10% YoY to ~ $4.2 billion with ~57% expected to be recognized over the next 12 months.Zoom Video Communications Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
90
Very Positive
Cash Flow
82
Very Positive
| Breakdown | Jan 2026 | Jan 2025 | Jan 2024 | Jan 2023 | Jan 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 4.87B | 4.67B | 4.53B | 4.39B | 4.10B |
| Gross Profit | 3.75B | 3.54B | 3.45B | 3.29B | 3.05B |
| EBITDA | 2.56B | 935.93M | 629.73M | 327.75M | 1.11B |
| Net Income | 1.90B | 1.01B | 637.46M | 103.71M | 1.38B |
Balance Sheet | |||||
| Total Assets | 11.96B | 10.99B | 9.93B | 8.13B | 7.55B |
| Cash, Cash Equivalents and Short-Term Investments | 7.82B | 7.79B | 6.96B | 5.41B | 5.42B |
| Total Debt | 58.48M | 64.43M | 72.95M | 96.48M | 105.72M |
| Total Liabilities | 2.15B | 2.05B | 1.91B | 1.92B | 1.77B |
| Stockholders Equity | 9.81B | 8.94B | 8.02B | 6.21B | 5.78B |
Cash Flow | |||||
| Free Cash Flow | 1.92B | 1.81B | 1.47B | 1.18B | 1.46B |
| Operating Cash Flow | 1.99B | 1.95B | 1.60B | 1.29B | 1.61B |
| Investing Cash Flow | -278.90M | -1.11B | -1.18B | -318.32M | -2.86B |
| Financing Cash Flow | -1.81B | -1.03B | 60.19M | -936.94M | 34.07M |
Zoom Video Communications Technical Analysis
Positive
82.40
Price Trends
82.37
Positive
84.32
Negative
81.93
Positive
Market Momentum
0.67
Negative
54.13
Neutral
47.88
Neutral
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 82.4 is above the 20-day moving average (MA) of 79.77, above the 50-day MA of 82.37, and above the 200-day MA of 81.93, indicating a bullish trend. The MACD of 0.67 indicates Negative momentum. The RSI at 54.13 is Neutral, neither overbought nor oversold. The STOCH value of 47.88 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ZM.
Zoom Video Communications Risk Analysis
Zoom Video Communications disclosed 61 risk factors in its most recent earnings report. Zoom Video Communications reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Zoom Video Communications Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Outperform | $24.40B | 14.57 | 20.57% | ― | 3.85% | 72.42% | |
66 Neutral | $3.10B | 57.31 | -8.90% | ― | 5.45% | ― | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
54 Neutral | $1.87B | 168.71 | 6.57% | ― | 7.36% | -40.62% | |
52 Neutral | $341.24M | -22.93 | 0.22% | ― | -24.05% | 96.90% | |
44 Neutral | $239.38M | -10.79 | -32.94% | ― | 6.33% | -66.34% |
* Technology Sector Average
ZM
Zoom Video Communications
82.40
11.20
15.73%
RNG
RingCentral
37.17
14.66
65.13%
BL
BlackLine
31.03
-13.59
-30.46%
CRNC
Cerence
7.70
0.36
4.90%
LAW
CS Disco
3.77
0.34
9.91%
Zoom Video Communications Corporate Events
Executive/Board Changes
Zoom Announces Planned Resignation of Chief Operating Officer
Neutral
Apr 2, 2026
On March 30, 2026, Zoom Video Communications, Inc. announced that Chief Operating Officer Aparna Bawa notified the company of her intention to resign, effective May 8, 2026. The company stated that Bawa’s decision to step down was not due to...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.