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Zoom Communications Inc
(NASDAQ:ZM)
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Rating:81Outperform
Price Target:
$105.00
▲(4.04% Upside)
Action:Reiterated
Date:09/06/26
ZM scores well due to very strong fundamentals (high profitability, fortress balance sheet, and solid cash generation) and an attractive earnings valuation (low P/E). The earnings call adds support via raised FY27 guidance and strong enterprise/AI momentum, while the score is held back by mixed near-term technical momentum and operational watch items (modest top-line growth outlook, NDR below 100%, and some margin pressure from AI/product investments).
Positive Factors
Enterprise Expansion
Enterprise acceleration strengthens Zoom’s revenue mix because larger organizations tend to adopt multiple products and sign broader contracts. Rising enterprise contribution, supported by stronger bookings and multi-product demand, can improve retention and create a more durable foundation for growth.
Negative Factors
Modest Revenue Growth
The outlook points to only modest near-term top-line expansion despite stronger enterprise bookings and product initiatives. This limits operating leverage from future growth and increases the importance of successful AI monetization, online stabilization, and cross-selling to sustain durable revenue momentum.
Read all positive and negative factors
Positive Factors
Negative Factors
Enterprise Expansion
Enterprise acceleration strengthens Zoom’s revenue mix because larger organizations tend to adopt multiple products and sign broader contracts. Rising enterprise contribution, supported by stronger bookings and multi-product demand, can improve retention and create a more durable foundation for growth.
Read all positive factors
Zoom Communications Inc 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.
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The Fly
The FlyZoom Communications Inc (ZM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$28.44B
Dividend YieldN/A
Average Volume (3M)2.84M
Price to Earnings (P/E)9.0
Beta (1Y)1.00
Revenue Growth5.04%
EPS Growth183.28%
CountryUS
Employees7,438
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)11.00
Shares Outstanding263,233,150
10 Day Avg. Volume2,787,592
30 Day Avg. Volume2,838,145
Financial Highlights & Ratios
PEG Ratio0.16
Price to Book (P/B)2.82
Price to Sales (P/S)5.68
P/FCF Ratio14.38
Enterprise Value/Market Cap0.76
Enterprise Value/Revenue4.32
Enterprise Value/Gross Profit5.59
Enterprise Value/Ebitda4.98
Forecast
1Y Price Target
$119.72Price Target Upside18.63% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering22
EPS Forecast (FY)6.15
Revenue Forecast (FY)$5.09B
Zoom Communications Inc Business Overview & Revenue Model
Company Description
Zoom Communications, Inc. provides a robust platform for enhancing communication and fostering collaboration. The company's global reach is organized into three primary operational regions: the Americas, the Asia Pacific, and Europe, the Middle Ea...
How the Company Makes Money
Zoom primarily makes money by selling subscriptions to its cloud communications products on monthly and annual terms. The company’s largest revenue stream is paid customer subscriptions for tiers that provide higher meeting capacities and duration...
Zoom Communications Inc Earnings Call Summary
Earnings Call Date:Aug 25, 2026
(Q2-2027)
| Next Earnings Date:Nov 23, 2026
Earnings Call Sentiment Positive
The call conveyed solid, constructive momentum driven by Enterprise acceleration, strong AI adoption and durable bookings (RPO and deferred revenue growth), alongside robust cash generation and active share repurchases. Offsetting items included modest margin compression from higher AI usage and early-stage product costs, an Enterprise NDR just below 100%, and a tempered online outlook with conservative near-term guidance. Overall, the positives around platform expansion, AI monetization, and cash/return-of-capital progress materially outweighed the headline challenges.Positive Updates
Top-line Revenue Growth
Total revenue grew 4.9% year-over-year to $1.28 billion ($1.275–$1.28B guidance beat by $7M). Full-year FY27 revenue guidance was raised to $5.085B–$5.095B (≈4.5% YoY at midpoint).
Negative Updates
Modest Margin Compression
Non-GAAP gross margin declined to 79.1% from 79.8% a year ago. Non-GAAP operating margin fell to 40.0% from 41.3% YoY, with management attributing some pressure to increased AI usage and early-stage product costs.
Read all updates
Q2-2027 Updates
Positive
Negative
Top-line Revenue Growth
Total revenue grew 4.9% year-over-year to $1.28 billion ($1.275–$1.28B guidance beat by $7M). Full-year FY27 revenue guidance was raised to $5.085B–$5.095B (≈4.5% YoY at midpoint).
Read all positive updates
Company Guidance
Zoom guided Q3 revenue of $1.275–$1.280 billion (about 3.9% year-over-year growth at the midpoint), non‑GAAP operating income of $510–$515 million (≈40.1% operating margin at the midpoint), and non‑GAAP EPS of $1.46–$1.48 on roughly 301 million diluted shares; they expect Q3 deferred revenue to be up about 3–4% year over year. For full FY‑27 they raised guidance to revenue of $5.085–$5.095 billion (≈4.5% YoY at the midpoint), non‑GAAP operating income of $2.065–$2.075 billion (≈40.7% margin at the midpoint), non‑GAAP EPS of $6.08–$6.12 on ~301 million shares, and free cash flow of $1.78–$1.82 billion (capex was revised down, supporting the higher FCF); management noted future buybacks are not included in the share count/EPS guidance.Zoom Communications Inc Financial Statement Overview
Summary
Income Statement
92
Very Positive
Balance Sheet
96
Very Positive
Cash Flow
78
Positive
| Breakdown | TTM | Jan 2026 | Jan 2025 | Jan 2024 | Jan 2023 | Jan 2022 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 4.99B | 4.87B | 4.67B | 4.53B | 4.39B | 4.10B |
| Gross Profit | 3.86B | 3.75B | 3.54B | 3.45B | 3.29B | 3.05B |
| EBITDA | 4.33B | 2.56B | 1.44B | 936.76M | 331.60M | 1.15B |
| Net Income | 3.26B | 1.90B | 1.01B | 637.46M | 103.71M | 1.38B |
Balance Sheet | ||||||
| Total Assets | 13.59B | 11.96B | 10.99B | 9.93B | 8.13B | 7.55B |
| Cash, Cash Equivalents and Short-Term Investments | 7.25B | 7.82B | 7.79B | 6.96B | 5.41B | 5.42B |
| Total Debt | 60.27M | 58.48M | 64.43M | 72.95M | 96.48M | 105.72M |
| Total Liabilities | 2.28B | 2.15B | 2.05B | 1.91B | 1.92B | 1.77B |
| Stockholders Equity | 11.30B | 9.81B | 8.94B | 8.02B | 6.21B | 5.78B |
Cash Flow | ||||||
| Free Cash Flow | 1.93B | 1.92B | 1.81B | 1.47B | 1.18B | 1.46B |
| Operating Cash Flow | 2.00B | 1.99B | 1.95B | 1.60B | 1.29B | 1.61B |
| Investing Cash Flow | -647.33M | -278.90M | -1.11B | -1.18B | -318.32M | -2.86B |
| Financing Cash Flow | -1.62B | -1.81B | -1.03B | 60.19M | -936.94M | 34.07M |
Zoom Communications Inc Technical Analysis
Positive
100.92
Price Trends
96.67
Negative
94.96
Positive
91.75
Positive
Market Momentum
0.85
Negative
51.29
Neutral
58.50
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 100.92 is above the 20-day moving average (MA) of 94.59, above the 50-day MA of 96.67, and above the 200-day MA of 91.75, indicating a neutral trend. The MACD of 0.85 indicates Negative momentum. The RSI at 51.29 is Neutral, neither overbought nor oversold. The STOCH value of 58.50 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ZM.
Zoom Communications Inc Risk Analysis
Zoom Communications Inc disclosed 61 risk factors in its most recent earnings report. Zoom Communications Inc 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 Communications Inc Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $28.44B | 9.04 | 32.25% | ― | 5.04% | 183.28% | |
72 Outperform | $6.82B | 63.89 | -20.59% | 0.33% | 5.22% | ― | |
72 Outperform | $2.56B | 46.43 | 7.49% | ― | 8.87% | 562.42% | |
62 Neutral | $306.20M | 63.03 | 3.34% | ― | 3.66% | ― | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
58 Neutral | $419.86M | 36.21 | 1.96% | ― | 13.62% | ― | |
46 Neutral | $213.57M | -15.51 | -164.67% | ― | -0.23% | 33.15% |
* Technology Sector Average
ZM
Zoom Communications Inc
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13.41
16.20%
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Zoom Communications Inc Corporate Events
Business Operations and StrategyExecutive/Board Changes
Zoom Appoints Jeff Epstein to Board of Directors
Positive
Sep 2, 2026
On August 31, 2026, Zoom appointed Jeff Epstein, former Oracle EVP and CFO and current Operating Partner at Bessemer Venture Partners, to its Board of Directors as a Class I director, with his term running through the company’s 2029 annual m...
Executive/Board Changes
Zoom Announces Resignation of Director William McDermott
Neutral
Jul 28, 2026
On July 27, 2026, Zoom Video Communications, Inc. announced that director William R. McDermott resigned from the company’s board of directors, effective immediately. The company stated that McDermott’s departure did not arise from any ...
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.