Zoom Video Communications (ZM) AI Stock Analysis

• Market Cap: $27.27B
• Dividend Yield: N/A
• Average Volume (3M): 2.69M
• Price to Earnings (P/E): 17.9
• 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: 3,889,071
• 30 Day Avg. Volume: 2,691,554
• 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: 0.97
• Enterprise Value/Revenue: 5.49
• Enterprise Value/Gross Profit: 7.14
• Enterprise Value/Ebitda: 21.39
• 1Y Price Target: $99.11
• Price Target Upside: 7.61% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 21
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 81 Outperform
• Price Target: $110.00 ▲(19.44% Upside)

The score is driven primarily by strong financial performance (high profitability, minimal leverage, and solid cash conversion). Technicals are supportive with a clear uptrend, though momentum is somewhat stretched. Valuation is reasonable on P/E but lacks dividend support, while the latest earnings call was broadly positive with raised guidance and a $1B buyback, tempered by enterprise net dollar expansion below 100%.

Positive Factors

High margins

Sustained high gross and expanding net margins indicate durable pricing power and efficient cost structure. This supports long-term free cash flow, funds R&D and product development, and enables strategic investments or shareholder returns even if revenue growth moderates.

Very low leverage

Extremely low leverage provides financial flexibility to invest in product innovation, M&A, and go-to-market expansion without material interest burden. It also improves resilience in downturns, allowing Zoom to prioritize strategic initiatives over short-term liquidity concerns.

Strong cash conversion

High cash conversion ratios and robust FCF margins demonstrate durable cash generation from core operations. That underpins repeatable capital allocation (R&D, partnerships, buybacks), reduces refinancing risk, and supports sustained shareholder returns and reinvestment capacity.

Negative Factors

Enterprise net dollar expansion

Net dollar expansion under 100% signals upsell and account expansion are not offsetting churn fully in enterprise segments. Over time this limits organic revenue per account growth, pressuring the company to increase acquisition or launch meaningful new offerings to sustain revenue growth.

Slow top-line growth

Low-single-digit revenue growth reflects a maturing core market and rising competition. Sustaining margin-led profitability becomes harder to translate into material scale without stronger revenue expansion, making long-term EPS and cash flow growth more dependent on product-led expansion or new revenue streams.

Weaker forward revenue visibility

A declining share of deferred revenue within RPO suggests slightly weaker forward-billings or shorter contract duration trends. This reduces near-term revenue visibility and can signal customers shifting to shorter commitments, complicating long-term planning and predictability of cash flow.

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 Eric S. Yuan in 2011 and is headquartered in San Jose, CA.

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

Strong overall fundamentals: high gross margin (76.89%) and improved net margin (33.17%) support profitability, the balance sheet has minimal leverage (debt-to-equity 0.003) with solid ROE (17.67%), and cash generation is strong (operating cash flow to net income 1.05; free cash flow to net income 0.97).

Income Statement

Zoom has demonstrated strong financial performance with consistent revenue growth and robust profitability metrics. The TTM gross profit margin is high at 76.89%, indicating efficient cost management. The net profit margin has improved significantly to 33.17%, showcasing enhanced profitability. Revenue growth, although slower compared to earlier periods, remains positive. EBIT and EBITDA margins are healthy, reflecting strong operational efficiency.

Balance Sheet

The balance sheet is very strong, with a low debt-to-equity ratio of 0.003, indicating minimal leverage and financial risk. Return on equity is solid at 17.67%, reflecting effective use of shareholder funds. The equity ratio is robust, suggesting a strong capital structure with significant equity backing the assets.

Cash Flow

Cash flow metrics are favorable, with a healthy operating cash flow to net income ratio of 1.05, indicating strong cash generation relative to earnings. Free cash flow growth is positive, supporting future investments and shareholder returns. The free cash flow to net income ratio is high at 0.97, demonstrating effective conversion of earnings into cash.

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: 92.10
• 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 92.1 is above the 20-day moving average (MA) of 86.60, above the 50-day MA of 86.27, and above the 200-day MA of 80.98, indicating a bullish trend. The MACD of 1.84 indicates Negative momentum. The RSI at 59.40 is Neutral, neither overbought nor oversold. The STOCH value of 77.84 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	$27.27B	17.89	17.74%	―	3.85%	72.42%
BL	71 Outperform	$2.76B	42.43	21.85%	―	7.36%	-40.62%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
RNG	55 Neutral	$2.22B	182.90	―	―	5.45%	―
CRNC	55 Neutral	$510.03M	-23.78	-12.83%	―	-24.05%	96.90%
LAW	54 Neutral	$390.57M	-6.23	-41.00%	―	6.33%	-66.34%