Zoom Video Communications (ZM) AI Stock Analysis

• Market Cap: $26.03B
• Dividend Yield: N/A
• Average Volume (3M): 3.05M
• Price to Earnings (P/E): 17.2
• Beta (1Y): 0.96
• Revenue Growth: 3.85%
• EPS Growth: 72.42%
• Country: US
• Employees: 7,412
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 1.52
• Shares Outstanding: 265,569,700
• 10 Day Avg. Volume: 2,596,276
• 30 Day Avg. Volume: 3,048,828
• PEG Ratio: 0.48
• Price to Book (P/B): 3.00
• Price to Sales (P/S): 5.74
• P/FCF Ratio: 14.80
• Enterprise Value/Market Cap: 0.72
• Enterprise Value/Revenue: 3.89
• Enterprise Value/Gross Profit: 5.06
• Enterprise Value/Ebitda: 15.16
• 1Y Price Target: $97.78
• Price Target Upside: 11.23% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 20
• EPS Forecast (FY): 5.97
• Revenue Forecast (FY): $4.86B

• Rating: 81 Outperform
• Price Target: $98.00 ▲(11.48% Upside)

Zoom's strong financial performance and positive earnings call insights are the most significant factors driving the score. Technical analysis supports a moderately positive outlook, while valuation is reasonable but not exceptional. The absence of corporate events does not impact the overall score.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong market demand and effective business strategies, supporting long-term financial health.

Cash Flow Generation

Strong cash flow growth enhances financial flexibility, enabling strategic investments and shareholder returns, crucial for sustained growth.

AI Innovation

Innovations in AI enhance product offerings and competitive edge, potentially driving future revenue streams and market leadership.

Negative Factors

Enterprise Net Dollar Expansion

Suboptimal enterprise expansion may limit revenue growth from existing customers, impacting long-term profitability and market penetration.

Deferred Revenue Decline

A decline in deferred revenue as a percentage of RPO could signal challenges in securing long-term contracts, affecting future revenue visibility.

Market Saturation Risk

Slowing revenue growth may indicate market saturation, requiring innovation and diversification to sustain long-term growth.

Zoom Video Communications Business Overview & Revenue Model

Company Description

Zoom Video Communications, Inc. (ZM) is a leading technology company that provides a video-first communications platform, enabling virtual meetings, webinars, and collaboration tools for businesses and individuals. Founded in 2011, Zoom primarily operates in the software and telecommunications sectors, offering core products such as Zoom Meetings, Zoom Video Webinars, Zoom Rooms, and Zoom Phone. Its user-friendly interface and robust functionality have made it a popular choice for remote work and online education, especially during the COVID-19 pandemic.

How the Company Makes Money

Zoom generates revenue primarily through a subscription-based model, offering tiered pricing plans for its services that cater to different user needs, ranging from individual users to large enterprises. The key revenue streams include subscriptions for Zoom Meetings, Zoom Video Webinars, and Zoom Phone services. Furthermore, Zoom offers add-ons such as additional cloud storage and large meeting capabilities, which contribute to incremental revenue. The company has established significant partnerships with various organizations and platforms, further enhancing its reach and service offerings. Additionally, during peak periods of remote work, Zoom experienced a surge in demand, leading to increased customer acquisition and retention, which positively impacted its revenue growth.

Zoom Video Communications Financial Statement Overview

Summary

Zoom Video Communications exhibits strong financial health across all verticals. The company maintains high profitability and efficient operations, supported by a solid balance sheet with minimal leverage. Cash flow metrics are robust, ensuring liquidity and operational flexibility. While revenue growth has slowed, the company's financial foundation remains strong, positioning it well for future challenges and opportunities.

Income Statement

Zoom Video Communications shows strong profitability with a TTM gross profit margin of 76.38% and a net profit margin of 24.99%. The company has maintained a positive revenue growth rate, albeit at a slower pace of 1.1% in the TTM period. EBIT and EBITDA margins are healthy, indicating efficient operations. However, the deceleration in revenue growth could be a concern for future expansion.

Balance Sheet

The balance sheet is robust, with a very low debt-to-equity ratio of 0.006, indicating minimal leverage. Return on equity is strong at 13.40%, reflecting effective use of shareholder funds. The equity ratio is high, suggesting financial stability and low risk. Overall, the company is well-positioned to manage its obligations and invest in growth.

Cash Flow

Cash flow generation is impressive, with a TTM free cash flow growth rate of 8.49%. The operating cash flow to net income ratio is nearly 1, indicating strong cash conversion. The free cash flow to net income ratio is also high at 0.96, demonstrating efficient cash management. These metrics highlight the company's ability to generate cash and support its operations.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 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
EBITDA	935.93M	629.73M	327.75M	1.11B	688.71M
Net Income	1.01B	637.46M	103.71M	1.38B	672.32M
Balance Sheet
Total Assets	10.99B	9.93B	8.13B	7.55B	5.30B
Cash, Cash Equivalents and Short-Term Investments	7.79B	6.96B	5.41B	5.42B	4.24B
Total Debt	64.43M	72.95M	96.48M	105.72M	106.02M
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: 87.91
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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 87.91 is above the 20-day moving average (MA) of 85.46, above the 50-day MA of 83.82, and above the 200-day MA of 79.07, indicating a bullish trend. The MACD of 1.52 indicates Negative momentum. The RSI at 58.59 is Neutral, neither overbought nor oversold. The STOCH value of 41.75 is Neutral, 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
ZM	81 Outperform	$26.03B	17.24	17.74%	―	3.85%	72.42%
BL	71 Outperform	$3.42B	52.55	21.85%	―	7.36%	-40.62%
RNG	63 Neutral	$2.54B	208.62	―	―	5.45%	―
LAW	62 Neutral	$519.93M	-8.31	-41.00%	―	6.33%	-66.34%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
CRNC	61 Neutral	$501.52M	-22.50	-12.83%	―	-24.05%	96.90%
VMEO	57 Neutral	―	―	0.35%	―	-0.67%	-95.68%

Zoom Video Communications Corporate Events

Zoom’s Earnings Call Highlights Strong Growth and Innovation

Zoom Video Communications, Inc. recently held its earnings call, revealing a generally positive sentiment driven by strong financial performance. The company reported notable revenue growth, increased profitability, and robust cash flow, largely attributed to innovations in AI and strategic partnerships. Despite these successes, challenges such as enterprise net dollar expansion below 100% were acknowledged, though the positive aspects significantly outweighed the negatives.

Zoom Video Communications Reports Strong Q3 Earnings

Zoom Video Communications, Inc., a leader in the technology sector, specializes in providing a comprehensive AI-first platform designed to enhance human connection and collaboration through various communication tools such as meetings, chat, and phone services. The company is headquartered in San Jose, California.

Zoom’s Earnings Call Highlights Growth and AI Focus

Zoom Video Communications, Inc. recently held its earnings call, presenting a generally positive outlook on its recent performance. The company reported strong revenue growth, particularly in the Enterprise segment, alongside significant advancements in AI adoption. However, the flat performance in the Online business and conservative future revenue growth estimates tempered the enthusiasm. Overall, the highlights significantly outweigh the lowlights, suggesting a promising trajectory for Zoom.