Zoom Video Communications (ZM) AI Stock Analysis

• Market Cap: $23.79B
• Dividend Yield: N/A
• Average Volume (3M): 3.06M
• Price to Earnings (P/E): 21.0
• Beta (1Y): 0.91
• Revenue Growth: 3.63%
• EPS Growth: 36.57%
• Country: US
• Employees: 7,412
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 1.53
• Shares Outstanding: 266,453,600
• 10 Day Avg. Volume: 2,507,112
• 30 Day Avg. Volume: 3,062,905
• 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: 0.63
• Enterprise Value/Revenue: 3.17
• Enterprise Value/Gross Profit: 4.16
• Enterprise Value/Ebitda: 13.65
• 1Y Price Target: $92.30
• Price Target Upside: 11.61% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 23

• Rating: 78 Outperform
• Price Target: $96.00 ▲(16.08% Upside)

Zoom Video Communications shows strong financial performance and a positive outlook from its recent earnings call, particularly in the Enterprise segment and AI adoption. Technical analysis supports a moderately positive trend, while valuation metrics suggest the stock is fairly valued. The absence of a dividend yield indicates a focus on growth. Despite some challenges in the Online business, the company's strategic initiatives position it well for future growth.

Positive Factors

Enterprise Business Strength

The strong growth in the Enterprise segment underscores Zoom's ability to capture larger, more stable revenue streams, enhancing long-term business resilience and market position.

AI Adoption and Innovation

Zoom's focus on AI advancements positions it at the forefront of tech innovation, potentially driving future revenue through enhanced product offerings and customer engagement.

Free Cash Flow Increase

The significant increase in free cash flow indicates strong cash generation capabilities, providing financial flexibility for strategic investments and growth initiatives.

Negative Factors

Flat Online Business

The stagnation in the Online business suggests challenges in maintaining growth in this segment, potentially impacting overall revenue diversification and growth prospects.

Declining Net Profit Margins

A decline in net profit margins indicates pressure on profitability, which could affect long-term financial performance and shareholder returns if not addressed.

Guided Revenue Growth

The conservative revenue growth guidance reflects potential market saturation or competitive pressures, which may hinder Zoom's ability to sustain its growth trajectory.

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 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 exhibits a strong financial position with impressive revenue growth and profitability metrics. The balance sheet is robust with low leverage, and cash flow generation remains solid. While there are some areas of concern, such as declining net profit margins and operating cash flow coverage, the overall financial health of the company is strong, positioning it well for future growth.

Income Statement

Zoom Video Communications has demonstrated strong revenue growth with a TTM growth rate of 16.4%. The company maintains healthy profitability with a gross profit margin of 76.4% and a net profit margin of 25.0% in the TTM. EBIT and EBITDA margins are also robust at 20.4% and 23.3%, respectively. These metrics indicate a solid financial performance, although the net profit margin has decreased from previous years, suggesting some pressure on net income.

Balance Sheet

The balance sheet is strong with a low debt-to-equity ratio of 0.006, indicating minimal leverage and financial risk. The return on equity (ROE) is 13.4%, reflecting efficient use of equity to generate profits. The equity ratio stands at 81.0%, showcasing a solid equity base relative to total assets. Overall, the balance sheet reflects financial stability and low risk, although ROE has seen a decline from previous highs.

Cash Flow

Zoom's cash flow performance is commendable, with a free cash flow growth rate of 8.4% in the TTM. The operating cash flow to net income ratio is 0.72, and the free cash flow to net income ratio is 0.96, indicating strong cash generation relative to net income. However, the operating cash flow coverage ratio has decreased from previous periods, suggesting a need for monitoring cash flow efficiency.

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	1.11B	935.93M	629.73M	327.75M	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	1.84B	1.81B	1.47B	1.18B	1.46B	1.39B
Operating Cash Flow	1.91B	1.95B	1.60B	1.29B	1.61B	1.47B
Investing Cash Flow	-643.09M	-1.11B	-1.18B	-318.32M	-2.86B	-1.56B
Financing Cash Flow	-1.61B	-1.03B	60.19M	-936.94M	34.07M	2.05B

Zoom Video Communications Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 82.70
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• 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 Positive. The current price of 82.7 is below the 20-day moving average (MA) of 83.12, above the 50-day MA of 79.45, and above the 200-day MA of 78.63, indicating a neutral trend. The MACD of >-0.01 indicates Positive momentum. The RSI at 53.00 is Neutral, neither overbought nor oversold. The STOCH value of 26.72 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	78 Outperform	$23.79B	21.03	13.60%	―	3.63%	36.57%
VMEO	72 Outperform	$1.29B	102.04	3.26%	―	-1.35%	-59.67%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
BL	61 Neutral	$3.13B	40.84	23.79%	―	7.99%	-28.47%
RNG	56 Neutral	$2.57B	―	16.58%	―	6.47%	90.60%
CRNC	51 Neutral	$529.37M	―	-16.63%	―	-31.20%	95.56%
LAW	49 Neutral	$365.51M	―	-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.