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Zoom Video Communications (ZM)
NASDAQ:ZM
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Zoom Video Communications
(NASDAQ:ZM)
Select Model
Select Model
Rating:81Outperform
Price Target:
$98.00
▲(13.12% 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 (ZM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$25.39B
Dividend YieldN/A
Average Volume (3M)2.56M
Price to Earnings (P/E)16.8
Beta (1Y)0.98
Revenue Growth3.85%
EPS Growth72.42%
CountryUS
Employees7,412
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)1.52
Shares Outstanding265,569,700
10 Day Avg. Volume1,558,223
30 Day Avg. Volume2,564,321
Financial Highlights & Ratios
PEG Ratio0.48
Price to Book (P/B)3.00
Price to Sales (P/S)5.74
P/FCF Ratio14.80
Enterprise Value/Market Cap0.74
Enterprise Value/Revenue3.89
Enterprise Value/Gross Profit5.06
Enterprise Value/Ebitda15.16
Forecast
1Y Price Target
$98.67Price Target Upside13.90% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering20
EPS Forecast (FY)5.97
Revenue Forecast (FY)$4.86B
Zoom Video Communications Business Overview & Revenue Model
Company DescriptionZoom 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 MoneyZoom 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 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:Nov 24, 2025
(Q3-2026)
| % Change Since: |
Next Earnings Date:Mar 02, 2026
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance, particularly in revenue growth, profitability, and cash flow, driven by innovations in AI and strategic partnerships. However, challenges such as enterprise net dollar expansion below 100% persist. Overall, the positive aspects significantly outweigh the negatives.Q3-2026 Updates
Positive Updates
AI Companion 3.0 Unveiled
Zoom introduced AI Companion 3.0, a next-generation AI agent, which has seen adoption surge more than four times year over year.
Zoom Phone Milestone
Zoom Phone surpassed 10,000,000 paid seats early in Q3, with consistent ARR growth in the mid-teens.
Revenue and Profitability Growth
Total revenue grew 4.4% year over year to $1,230,000,000, and non-GAAP income from operations grew 11% year over year, to $507,000,000.
Strong Free Cash Flow
Operating cash flow in Q3 grew 30% year over year to $629,000,000 with a free cash flow margin of 50%, up 11 points year over year.
New Share Repurchase Authorization
An incremental $1,000,000,000 share repurchase was authorized, reflecting confidence in Zoom's financial health.
Negative Updates
Enterprise Net Dollar Expansion Below 100%
The net dollar expansion rate for enterprise customers remained below 100%, indicating room for improvement.
Deferred Revenue and RPO Insights
Deferred revenue was at the high end of guidance but showed a slight decline in the percentage of total RPO as revenue over the next twelve months, down one point year over year.
Company Guidance
During Zoom's Q3 FY26 earnings call, the company provided a robust set of metrics reflecting its financial health and strategic initiatives. Total revenue grew by 4.4% year-over-year to $1.23 billion, exceeding the high end of guidance by $15 million. Enterprise revenue saw a 6.1% increase, making up 60% of total revenue, while the average monthly churn stabilized at an all-time low of 2.7%. Non-GAAP operating income rose by 11% to $507 million, with an operating margin of 41.2%. Zoom Phone reached over 10 million paid seats, and AI Companion adoption surged fourfold year-over-year. The company raised its full-year revenue guidance to $4.852 billion to $4.857 billion, projecting a growth of 4.1% and increasing its non-GAAP EPS outlook to $5.95 to $5.97. Additionally, Zoom announced a $1 billion share repurchase authorization, demonstrating confidence in its financial strategy and growth prospects.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
Neutral
86.63
Price Trends
85.39
Positive
83.58
Positive
79.91
Positive
Market Momentum
0.03
Positive
47.70
Neutral
58.56
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ZM, the sentiment is Neutral. The current price of 86.63 is below the 20-day moving average (MA) of 87.50, above the 50-day MA of 85.39, and above the 200-day MA of 79.91, indicating a neutral trend. The MACD of 0.03 indicates Positive momentum. The RSI at 47.70 is Neutral, neither overbought nor oversold. The STOCH value of 58.56 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 |
|---|---|---|---|---|---|---|---|
81 Outperform | $25.39B | 16.83 | 17.74% | ― | 3.85% | 72.42% | |
71 Outperform | $3.31B | 51.54 | 21.85% | ― | 7.36% | -40.62% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
55 Neutral | $2.47B | 205.51 | ― | ― | 5.45% | ― | |
55 Neutral | $542.89M | -25.81 | -12.83% | ― | -24.05% | 96.90% | |
54 Neutral | $472.44M | -7.49 | -41.00% | ― | 6.33% | -66.34% |
* Technology Sector Average
ZM
Zoom Video Communications
85.65
6.19
7.79%
RNG
RingCentral
28.98
-3.97
-12.05%
BL
BlackLine
55.20
-0.46
-0.83%
CRNC
Cerence
12.62
-2.53
-16.70%
LAW
CS Disco
7.42
2.50
50.81%
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.