Zoom Video Communications (ZM) AI Stock Analysis

• Market Cap: $21.69B
• Dividend Yield: N/A
• Average Volume (3M): 3.16M
• Price to Earnings (P/E): 22.0
• Beta (1Y): 0.95
• Revenue Growth: 2.98%
• EPS Growth: 24.11%
• Country: US
• Employees: 7,412
• Sector: Technology
• Sector Strength: 94
• Industry: Software - Application
• EPS (TTM): 1.43
• Shares Outstanding: 260,280,060
• 10 Day Avg. Volume: 2,487,452
• 30 Day Avg. Volume: 3,159,133
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 0.76
• Enterprise Value/Revenue: 3.51
• Enterprise Value/Gross Profit: 4.63
• Enterprise Value/Ebitda: 15.61
• 1Y Price Target: $90.62
• Price Target Upside: 26.56% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 23

• Rating: 74 Outperform
• Price Target: $87.00 ▲(21.51% Upside)

Zoom Video Communications scores a solid 74.2, driven primarily by strong financial performance and a positive earnings call that highlights growth in key areas like AI and enterprise revenue. While technical analysis shows some short-term weaknesses, the company's strategic focus on innovation and robust financials support a positive outlook. Valuation is reasonable, though the lack of a dividend may limit appeal to some investors.

Positive Factors

Financial Performance

Adjusted EPS rose 8% y/y to USD1.43, 9.2% above consensus expectations.

Stock Buyback

Zoom repurchased $418 million of stock in FQ1, with $1.2 billion on its buyback remaining.

Strategic Initiatives

The company plans to monetize AI Companion Add-On at USD12/user/month, marking a strategic shift in emphasizing AI-driven revenue streams.

Negative Factors

Competitive Environment

Zoom participates in a highly competitive environment globally, with intensified competition potentially creating downward pressure.

Enterprise Sales

Enterprise sales forecasts have been slightly reduced due to a more challenging and uncertain macroeconomic environment.

Market Demand

The resumption of face-to-face meetings has lowered the video conferencing demand.

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 subscription fees from its various product offerings. The company operates a Software-as-a-Service (SaaS) model, charging businesses and individual users for access to its platform. Key revenue streams include Zoom Meetings, Zoom Phone, Zoom Webinars, and Zoom Rooms. Each product is typically offered in tiered plans, ranging from free basic options to more comprehensive paid plans with additional features and capabilities. Zoom also earns income from hardware sales, such as Zoom Rooms conference room equipment. Additionally, Zoom has established significant partnerships with other technology companies that enhance its platform capabilities and distribution, contributing to its revenue growth. The company's global reach and adaptability to various sectors, especially during the rise of remote work and virtual collaboration, have been critical in driving its financial success.

Zoom Video Communications Financial Statement Overview

Summary

Zoom Video Communications demonstrates strong financial performance with consistent revenue growth, robust margins, and minimal leverage. The company has efficient cost management with a gross profit margin of 75.83% and a net profit margin of 22.31%. The balance sheet is stable with a low debt-to-equity ratio of 0.01, and cash flow generation is strong with positive free cash flow growth.

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	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
EBITDA	935.93M	629.73M	245.43M	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	90.42M
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: Negative
• Last Price: 71.60
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ZM, the sentiment is Negative. The current price of 71.6 is below the 20-day moving average (MA) of 74.04, below the 50-day MA of 76.67, and below the 200-day MA of 78.66, indicating a bearish trend. The MACD of -1.27 indicates Positive momentum. The RSI at 36.95 is Neutral, neither overbought nor oversold. The STOCH value of 27.27 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ZM.

Zoom Video Communications Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DOCU	75 Outperform	$14.92B	14.20	70.20%	―	7.85%	935.80%
ZM	74 Outperform	$21.69B	21.97	12.19%	―	2.98%	24.11%
MNDY	66 Neutral	$12.69B	262.20	5.39%	―	32.25%	156.94%
COMP	64 Neutral	$4.42B	―	-9.57%	―	21.23%	78.54%
GRAB	63 Neutral	$19.44B	180.00	1.77%	―	18.84%	―
Sector *	61 Neutral	$34.83B	4.75	-10.43%	2.08%	6.55%	-9.99%
GRND	61 Neutral	$3.49B	―	-63.52%	―	30.08%	-196.62%

Zoom Video Communications Corporate Events

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.

The most recent analyst rating on (ZM) stock is a Buy with a $84.00 price target. To see the full list of analyst forecasts on Zoom Video Communications stock, see the ZM Stock Forecast page.