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Zoom Video Communications (ZM)
NASDAQ:ZM
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Zoom Video Communications
(NASDAQ:ZM)73Outperform
Positive Factors
Customer Engagement
The number of $100K customers grew 100% year over year, indicating strong customer engagement and sales growth.
Strategic Investments
There is a strategic investment in a unified communications platform for longer-term growth.
Negative Factors
Competition
Intensifying competition could create downward pressure on product pricing.
Revenue Guidance
Revenue projections for fiscal 2026 are approximately $100 million below consensus, indicating potential challenges in meeting market expectations.
Zoom Video Communications (ZM) vs. S&P 500 (SPY)
Market Cap
$22.64B
Dividend YieldN/A
Average Volume (3M)2.95M
Price to Earnings (P/E)23.4
Beta (1Y)1.07
Revenue Growth3.05%
EPS Growth55.96%
CountryUS
Employees7,420
SectorTechnology
Sector Strength48
IndustrySoftware
Share Statistics
EPS (TTM)3.20
Shares Outstanding262,100,100
10 Day Avg. Volume4,352,229
30 Day Avg. Volume2,947,027
Financial Highlights & Ratios
PEG Ratio0.42
Price to Book (P/B)N/A
Price to Sales (P/S)4.86
Price to Cash Flow (P/CF)13.40
P/FCF Ratio13.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$92.09Price Target Upside22.90% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering25
Zoom Video Communications Business Overview & Revenue Model
Company DescriptionFounded in 2011, Zoom Video Communications, Inc. is a cloud-based peer-to-peer software platform that connects people through videotelephony and online chat services. Its video-first communications platform is used for teleconferencing, telecommuting, distance education, and social relations.
How the Company Makes MoneyZoom Video Communications generates revenue primarily through a subscription-based model. Its key revenue streams include the sale of subscription plans for its core product, Zoom Meetings, which is offered in various tiers, catering to different customer needs from individuals to large enterprises. Additional revenue is derived from Zoom Phone, a cloud-based phone system, Zoom Webinars, which allows hosting of large-scale online events, and Zoom Rooms, a software-based conference room system. The company also offers Zoom Chat for team messaging and collaboration. Significant partnerships and integrations with platforms like Slack, Microsoft Teams, and Salesforce enhance its ecosystem, driving further adoption and revenue growth. Zoom's business model focuses on expanding its user base and increasing the adoption of its various service offerings among existing customers to boost recurring revenue.
Zoom Video Communications Financial Statement Overview
Summary
Zoom Video Communications exhibits a strong financial standing, characterized by impressive revenue growth, high profitability margins, and robust cash flow generation. The company's minimal debt levels and strong equity base enhance its financial stability, positioning it well for future growth and resilience against market fluctuations.Income Statement
Zoom has demonstrated strong revenue growth over the years, with a robust revenue growth rate of 3.05% in TTM (Trailing-Twelve-Months). The gross profit margin stands at an impressive 74.46%, indicating efficient cost management. The net profit margin improved significantly to 21.65% in the TTM period, showcasing strong profitability. EBIT and EBITDA margins are solid at 18.99% and 18.63%, respectively, reflecting strong operational efficiency.88
Very Positive
Balance Sheet
Zoom maintains a strong balance sheet with a low debt-to-equity ratio of 0.0042, highlighting minimal leverage and financial risk. The return on equity (ROE) is a healthy 11.31%, indicating effective use of shareholder funds. An equity ratio of 81.32% underlines a strong equity base, enhancing financial stability.85
Very Positive
Cash Flow
Zoom's cash flow is robust, with a free cash flow growth rate of 22.85% illustrating strong cash generation capabilities. The operating cash flow to net income ratio of 1.93 indicates efficient conversion of profits to cash. The free cash flow to net income ratio stands at 1.79, further emphasizing strong cash flow dynamics.92
Very Positive
| 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 | EBIT |
| 813.29M | 525.28M | 245.43M | 1.06B | 659.85M | EBITDA |
| 813.29M | 629.73M | 245.43M | 1.11B | 688.71M | Net Income Common Stockholders |
| 1.01B | 637.46M | 103.71M | 1.38B | 672.32M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 7.79B | 6.96B | 5.41B | 5.42B | 4.24B | Total Assets |
| 10.99B | 9.93B | 8.13B | 7.55B | 5.30B | Total Debt |
| 37.41M | 72.95M | 96.48M | 105.72M | 90.42M | Net Debt |
| -1.31B | -1.49B | -990.35M | -957.11M | -2.15B | 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
Negative
74.93
Price Trends
82.11
Negative
80.41
Negative
71.35
Positive
Market Momentum
-2.54
Positive
32.99
Neutral
14.98
Positive
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 74.93 is below the 20-day moving average (MA) of 81.54, below the 50-day MA of 82.11, and above the 200-day MA of 71.35, indicating a neutral trend. The MACD of -2.54 indicates Positive momentum. The RSI at 32.99 is Neutral, neither overbought nor oversold. The STOCH value of 14.98 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $2.89T | 31.30 | 30.64% | 0.81% | 15.04% | 12.38% | |
78 Outperform | $193.98B | 35.94 | 39.42% | ― | 11.02% | 4.96% | |
74 Outperform | $251.67B | 27.72 | 20.18% | 2.52% | -5.34% | -30.57% | |
74 Outperform | $2.09T | 21.17 | 30.80% | 0.36% | 13.89% | 38.99% | |
73 Outperform | $274.98B | 45.18 | 10.13% | 0.55% | 8.72% | 51.47% | |
73 Outperform | $22.64B | 23.40 | 11.31% | ― | 3.05% | 55.96% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% |
* Technology Sector Average
Performance Comparison
ZM
Zoom Video Communications
74.93
8.51
12.81%
ADBE
Adobe
451.24
-91.85
-16.91%
CSCO
Cisco Systems
63.26
15.60
32.73%
GOOGL
Alphabet Class A
170.92
40.00
30.55%
MSFT
Microsoft
388.61
-10.43
-2.61%
CRM
Salesforce
287.34
-14.74
-4.88%
Zoom Video Communications Earnings Call Summary
Earnings Call Date: Feb 24, 2025 | % Change Since: -7.61% | Next Earnings Date: May 26, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong growth in AI adoption and enterprise segments, significant partnerships, and financial outperformance. However, there are concerns about slower revenue growth and challenges in the Online business segment. Overall, the sentiment is cautiously optimistic.Highlights
Strong AI Adoption and Innovation
Zoom's AI Companion monthly active users grew by 68% quarter-over-quarter, and the company launched AI Companion 2.0 with advanced capabilities. Zoom is focusing on building agentic AI to enhance productivity and customer engagement.
Growth in Enterprise and Contact Center
Enterprise revenue grew by 6% year-over-year, making up 60% of total revenue. The number of Contact Center customers with over $100,000 in ARR grew over 100% year-over-year, showcasing strong adoption of higher-tier packages.
Financial Outperformance
Zoom beat its top-line and profitability guidance with Q4 revenue growing by 3% year-over-year to $1.184 billion, and non-GAAP income from operations growing by 5% year-over-year to $468 million.
Significant Wins and Partnerships
Zoom secured major deals with Amazon and Delta Airlines, reinforcing its strategic partnerships. The Mitel partnership opens access to 70 million global end users.
Lowlights
Slower Revenue Growth Outlook
Guidance for FY26 anticipates revenue growth of approximately 2.7% year-over-year, indicating slower growth compared to previous years.
Challenges in Online Business
While Enterprise revenue grew, the Online business showed signs of stabilization, but still facing challenges with flat to slightly down expectations.
Company Guidance
During Zoom's earnings release webinar for the fiscal year 2025, the company provided guidance for the upcoming fiscal year 2026. Zoom anticipates total revenue to range between $4.785 billion and $4.795 billion, representing approximately 2.7% year-over-year growth, or 3.1% on a constant currency basis. For the first quarter of FY26, revenue is expected to be between $1.162 billion and $1.167 billion, indicating around 2% growth year-over-year. Non-GAAP operating income is forecasted to be between $1.85 billion and $1.86 billion for FY26, with an operating margin of about 39%. The company also projects free cash flow to be in the range of $1.68 billion to $1.72 billion. Zoom highlighted its focus on expanding AI capabilities and enhancing its product offerings, including the introduction of a Custom AI Companion add-on and enhancements in Zoom Workplace for Clinicians. The company aims to drive growth through its enterprise segment, with enterprise revenue making up 60% of total revenue and a 7% year-over-year increase in customers contributing more than $100,000 in trailing twelve-month revenue.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.