Zoom Video Communications (ZM) AI Stock Analysis

• Market Cap: $23.59B
• Dividend Yield: N/A
• Average Volume (3M): 3.78M
• Price to Earnings (P/E): 21.3
• Beta (1Y): 0.93
• Revenue Growth: 3.63%
• EPS Growth: 36.57%
• Country: US
• Employees: 7,412
• Sector: Technology
• Sector Strength: 86
• Industry: Software - Application
• EPS (TTM): 1.53
• Shares Outstanding: 266,453,600
• 10 Day Avg. Volume: 5,150,626
• 30 Day Avg. Volume: 3,784,599
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 0.64
• Enterprise Value/Revenue: 3.17
• Enterprise Value/Gross Profit: 4.16
• Enterprise Value/Ebitda: 13.15
• 1Y Price Target: $90.90
• Price Target Upside: 12.46% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 22

• Rating: 76 Outperform
• Price Target: $93.00 ▲(15.06% Upside)

Zoom Video Communications receives a strong overall score of 76, driven primarily by its robust financial performance and positive earnings call outlook. The company's strong revenue growth, particularly in the enterprise segment, and strategic focus on AI innovations are significant strengths. Technical analysis presents mixed signals with potential overbought conditions, and valuation is moderate with no dividend yield. Despite these factors, Zoom's strategic positioning and financial health support a positive investment outlook.

Positive Factors

AI Strategy

Encouragement from AI strategy and upcoming announcements at Zoomtopia could drive future growth.

Earnings

Zoom's FQ2 beat was larger than the last 7 quarters, and the growth rate was the highest in 11 quarters.

Negative Factors

Customer Retention

NRRs remain below 100%, with limited line of sight to improving, indicating challenges in customer retention and expansion.

Growth Visibility

This discount is warranted, in our view, based on ZM's weaker visibility with regard to future growth trajectory.

Zoom Video Communications Business Overview & Revenue Model

Company Description

Zoom Video Communications, Inc. is a leading provider of video communication solutions, founded in 2011. The company operates primarily in the technology sector, focusing on delivering a cloud-based platform that supports video conferencing, online meetings, webinars, and collaboration tools. Its core products include Zoom Meetings, Zoom Video Webinars, Zoom Rooms, and Zoom Phone, catering to businesses and individuals seeking reliable and high-quality video communication solutions.

How the Company Makes Money

Zoom generates revenue primarily through a subscription-based model, offering a range of pricing plans tailored to different user needs, from individuals to large enterprises. Key revenue streams include monthly or annual subscriptions for its various services, with tiered pricing based on features and number of users. Additionally, Zoom earns revenue from add-on services, such as Zoom Video Webinars and Zoom Rooms, as well as through enterprise agreements with large organizations. Significant partnerships with technology companies and educational institutions further contribute to its earnings by expanding its user base and integrating Zoom's services into other platforms, enhancing both accessibility and utility for customers.

Zoom Video Communications Financial Statement Overview

Summary

Zoom Video Communications demonstrates strong financial performance with consistent revenue growth and robust margins. The company maintains a high gross profit margin of 75.83% and a net profit margin of 22.31%, indicating efficient cost management and solid profitability. The balance sheet is robust with minimal leverage and strong financial stability, highlighted by a low debt-to-equity ratio of 0.01 and a high equity ratio of 81.28%. Cash flow management is also strong, with positive free cash flow growth and efficient cash generation from operations.

Income Statement

Zoom Video Communications shows a strong income statement with consistent revenue growth and robust margins. The TTM (Trailing-Twelve-Months) gross profit margin is approximately 75.83%, indicating efficient cost management. The net profit margin stands at 22.31%, reflecting solid profitability. Revenue growth is steady with a 3.78% increase from the previous annual period. The EBIT and EBITDA margins are also strong at 16.57% and 22.50%, respectively, demonstrating effective operational management.

Balance Sheet

The balance sheet of Zoom is robust, characterized by a low debt-to-equity ratio of 0.01, highlighting minimal leverage. The return on equity (ROE) is impressive at 11.78%, reflecting efficient use of equity to generate profits. The equity ratio is high at 81.28%, indicating strong financial stability and a low risk profile.

Cash Flow

Zoom's cash flow statements exhibit strong operational cash flows with an operating cash flow to net income ratio of 1.76, indicating efficient cash generation from operations. The free cash flow to net income ratio is 1.62, suggesting ample free cash flow relative to net income. Free cash flow growth is positive at 6.68% from the previous annual period, reflecting healthy cash flow management.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	4.75B	4.67B	4.53B	4.39B	4.10B	2.65B
Gross Profit	3.63B	3.54B	3.45B	3.29B	3.05B	1.83B
EBITDA	1.15B	935.93M	629.73M	245.43M	1.11B	688.71M
Net Income	1.19B	1.01B	637.46M	103.71M	1.38B	672.32M
Balance Sheet
Total Assets	11.04B	10.99B	9.93B	8.13B	7.55B	5.30B
Cash, Cash Equivalents and Short-Term Investments	7.78B	7.79B	6.96B	5.41B	5.42B	4.24B
Total Debt	54.26M	64.43M	72.95M	96.48M	105.72M	106.02M
Total Liabilities	2.09B	2.05B	1.91B	1.92B	1.77B	1.44B
Stockholders Equity	8.95B	8.94B	8.02B	6.21B	5.78B	3.86B
Cash Flow
Free Cash Flow	1.34B	1.81B	1.47B	1.18B	1.46B	1.39B
Operating Cash Flow	1.40B	1.95B	1.60B	1.29B	1.61B	1.47B
Investing Cash Flow	-582.42M	-1.11B	-1.18B	-318.32M	-2.86B	-1.56B
Financing Cash Flow	-1.12B	-1.03B	60.19M	-936.94M	34.07M	2.05B

Zoom Video Communications Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 80.83
• 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 80.83 is above the 20-day moving average (MA) of 74.19, above the 50-day MA of 75.30, and above the 200-day MA of 78.68, indicating a bullish trend. The MACD of 1.52 indicates Negative momentum. The RSI at 63.40 is Neutral, neither overbought nor oversold. The STOCH value of 70.52 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	76 Outperform	$23.59B	21.33	13.60%	―	3.63%	36.57%
VMEO	72 Outperform	$687.70M	55.86	3.26%	―	-1.35%	-59.67%
BL	66 Neutral	$3.27B	43.99	23.79%	―	7.99%	-28.47%
Sector *	61 Neutral	$36.05B	6.66	-10.10%	1.86%	8.68%	-8.81%
RNG	60 Neutral	$2.74B	―	16.58%	―	6.47%	90.60%
CRNC	58 Neutral	$447.49M	―	-16.63%	―	-31.20%	95.56%
LAW	49 Neutral	$317.35M	―	-36.64%	―	4.05%	-100.64%

Zoom Video Communications Corporate Events

Zoom Appoints Kimberly McGarry as New Accounting Officer

On August 14, 2025, Peter Gassner announced his resignation from Zoom’s board of directors, effective August 31, 2025, with no disagreements cited. On the same day, Kimberly McGarry was appointed as the principal accounting officer, replacing Michelle Chang. McGarry, with over two decades of experience, has been with Zoom since June 2025 and previously worked at Circana, Inc. and Morningstar, Inc.

Zoom Holds 2025 Annual Stockholders Meeting

On June 12, 2025, Zoom Communications, Inc. held its 2025 Annual Meeting of Stockholders. During the meeting, stockholders elected Class III directors, ratified KPMG LLP as the independent accounting firm for the fiscal year ending January 31, 2026, and approved the executive compensation on an advisory basis. These decisions reflect the company’s ongoing governance and operational strategies, potentially impacting its future direction and stakeholder interests.