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Zoom expects fourth-quarter fiscal 2025 revenues between $1.175 billion and $1.18 billion. For the fiscal fourth quarter, the Zacks Consensus Estimate for revenues is pegged at $1.18 billion, suggesting a 2.77% rise from the year-ago quarter’s reported figure.
Non-GAAP earnings per share are expected in the range of $1.29-$1.30. The Zacks Consensus Estimate for earnings is pinned at $1.31 per share, indicating a decline of 7.75% from the prior-year quarter’s reported figure. The figure has remained unchanged over the past 30 days.
Image Source: Zacks Investment Research
Find the latest earnings estimates and surprises on Zacks Earnings Calendar.
Zoom Video has a positive earnings surprise history. In the last reported quarter, the company delivered an earnings surprise of 5.34%. Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 14.29%.
Zoom Communications, Inc. Stock Price and EPS Surprise
Our proven model does not conclusively predict an earnings beat for Zoom Video this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
As Zoom prepares to report its fourth-quarter fiscal 2025 earnings, investors may want to consider holding their positions or waiting for a more attractive entry point. The company showed modest improvement in the fiscal third quarter with revenue growth of 3.6% year over year, ending the prolonged deceleration that began following the pandemic boom. This gradual stabilization suggests Zoom's transformation from a video meeting provider to an AI-first work platform is gaining traction, albeit slowly.
For fourth-quarter fiscal 2025, management guided approximately 2.7% year-over-year revenue growth at the midpoint. This modest growth forecast indicates that the company continues to navigate a challenging environment where enterprise customers remain cautious with spending. Investors should monitor enterprise customer metrics, particularly the number of customers contributing more than $100,000 in trailing 12-month revenues, which grew 7.1% year over year in the fiscal third quarter.
Zoom's strategic initiatives might have influenced fourth-quarter performance. The December introduction of Zoom Workplace for Education could strengthen its position in the education sector while making the Video SDK available to resale partners might have expanded its developer ecosystem. However, these initiatives are likely to impact Q4 results given their late-quarter timing.
The company's AI investments represent both opportunity and risk. AI Companion 2.0 and upcoming paid add-ons for healthcare and education could eventually drive growth, but continued AI development has impacted gross margins, which declined to 78.9% in the fiscal third quarter from 79.7% in the previous year. Zoom's Contact Center and Workvivo offerings showed promising growth in the fiscal third quarter and warrant attention in the upcoming report. The Contact Center business surpassed 1,250 customers (up 82% year over year) and secured its largest-ever deal exceeding 20,000 seats, demonstrating enterprise penetration.
The company's strong balance sheet ($7.7 billion in cash and investments) and share repurchase program ($2 billion authorized) provide downside protection. However, with a trailing 12-month net dollar expansion rate of 98% for Enterprise customers, Zoom still faces challenges in fully monetizing its existing customer base during uncertain economic conditions. Given these mixed signals, investors might consider maintaining current positions or waiting for a more compelling entry point following the earnings report.
ZM Stock Price Performance & Valuation
Zoom has emerged as one of the strongest performers with its stock rallying 41.3% in the past six months compared with the broader Zacks Computer and Technology sector’s growth of 7.7%. The company still faces significant challenges, including intense competition from Microsoft (MSFT - Free Report) Teams, RingCentral (RNG - Free Report) and Cisco (CSCO - Free Report) Webex, which have been aggressively pushing its collaboration tools.
6-Month ZM Stock Price Performance Comparison
Image Source: Zacks Investment Research
Zoom's premium valuation is reflected in its 3-year forward 12-month price-to-sales ratio of 5.44, higher than the Zacks Internet - Software industry average of 5.1, which suggests high growth expectations but also implies elevated risk. Zoom will need to maintain its technological edge and continue delivering value to its customers to stay ahead of the curve.
ZM’s P/S Ratio Depicts Stretched Valuation
Image Source: Zacks Investment Research
Investment Thesis for Zoom Video
ZM presents a balanced investment case heading into fourth-quarter fiscal 2025 earnings. While showing early signs of stabilization with 3.6% revenue growth in the fiscal third quarter, the company continues navigating premium competition and cautious enterprise spending. Its transformation into an AI-first work platform shows promise, with Contact Center and Workvivo gaining traction, but AI investments are pressuring margins.
Strong financials ($7.7 billion cash, ongoing share repurchases) provide downside protection, but a 98% enterprise net dollar expansion rate signals growth challenges. Given the mixed outlook amid economic uncertainty, investors may consider holding existing positions or awaiting a more attractive entry point following the earnings report.
Conclusion
Zoom's measured recovery warrants a cautious approach ahead of fourth-quarter fiscal 2025 results. With modest growth projections, ongoing AI investments, and strong competition, current shareholders may benefit from holding while monitoring the execution of the AI-first strategy. New investors might find better entry points post earnings when there's greater clarity on adoption rates for AI Companion add-ons and emerging products like Contact Center and Workvivo.
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Zoom Video Q4 Earnings Preview: Buy, Sell or Hold the Stock?
Zoom Video (ZM - Free Report) is scheduled to report fourth-quarter fiscal 2025 results on Feb. 24.
Zoom expects fourth-quarter fiscal 2025 revenues between $1.175 billion and $1.18 billion. For the fiscal fourth quarter, the Zacks Consensus Estimate for revenues is pegged at $1.18 billion, suggesting a 2.77% rise from the year-ago quarter’s reported figure.
Non-GAAP earnings per share are expected in the range of $1.29-$1.30. The Zacks Consensus Estimate for earnings is pinned at $1.31 per share, indicating a decline of 7.75% from the prior-year quarter’s reported figure. The figure has remained unchanged over the past 30 days.
Image Source: Zacks Investment Research
Find the latest earnings estimates and surprises on Zacks Earnings Calendar.
Zoom Video has a positive earnings surprise history. In the last reported quarter, the company delivered an earnings surprise of 5.34%. Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 14.29%.
Zoom Communications, Inc. Stock Price and EPS Surprise
Zoom Communications, Inc. price-eps-surprise | Zoom Communications, Inc. Quote
Earnings Whispers for ZM Shares
Our proven model does not conclusively predict an earnings beat for Zoom Video this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
ZM has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors to Note for ZM Ahead of Fiscal Q4 Results
As Zoom prepares to report its fourth-quarter fiscal 2025 earnings, investors may want to consider holding their positions or waiting for a more attractive entry point. The company showed modest improvement in the fiscal third quarter with revenue growth of 3.6% year over year, ending the prolonged deceleration that began following the pandemic boom. This gradual stabilization suggests Zoom's transformation from a video meeting provider to an AI-first work platform is gaining traction, albeit slowly.
For fourth-quarter fiscal 2025, management guided approximately 2.7% year-over-year revenue growth at the midpoint. This modest growth forecast indicates that the company continues to navigate a challenging environment where enterprise customers remain cautious with spending. Investors should monitor enterprise customer metrics, particularly the number of customers contributing more than $100,000 in trailing 12-month revenues, which grew 7.1% year over year in the fiscal third quarter.
Zoom's strategic initiatives might have influenced fourth-quarter performance. The December introduction of Zoom Workplace for Education could strengthen its position in the education sector while making the Video SDK available to resale partners might have expanded its developer ecosystem. However, these initiatives are likely to impact Q4 results given their late-quarter timing.
The company's AI investments represent both opportunity and risk. AI Companion 2.0 and upcoming paid add-ons for healthcare and education could eventually drive growth, but continued AI development has impacted gross margins, which declined to 78.9% in the fiscal third quarter from 79.7% in the previous year. Zoom's Contact Center and Workvivo offerings showed promising growth in the fiscal third quarter and warrant attention in the upcoming report. The Contact Center business surpassed 1,250 customers (up 82% year over year) and secured its largest-ever deal exceeding 20,000 seats, demonstrating enterprise penetration.
The company's strong balance sheet ($7.7 billion in cash and investments) and share repurchase program ($2 billion authorized) provide downside protection. However, with a trailing 12-month net dollar expansion rate of 98% for Enterprise customers, Zoom still faces challenges in fully monetizing its existing customer base during uncertain economic conditions. Given these mixed signals, investors might consider maintaining current positions or waiting for a more compelling entry point following the earnings report.
ZM Stock Price Performance & Valuation
Zoom has emerged as one of the strongest performers with its stock rallying 41.3% in the past six months compared with the broader Zacks Computer and Technology sector’s growth of 7.7%. The company still faces significant challenges, including intense competition from Microsoft (MSFT - Free Report) Teams, RingCentral (RNG - Free Report) and Cisco (CSCO - Free Report) Webex, which have been aggressively pushing its collaboration tools.
6-Month ZM Stock Price Performance Comparison
Image Source: Zacks Investment Research
Zoom's premium valuation is reflected in its 3-year forward 12-month price-to-sales ratio of 5.44, higher than the Zacks Internet - Software industry average of 5.1, which suggests high growth expectations but also implies elevated risk. Zoom will need to maintain its technological edge and continue delivering value to its customers to stay ahead of the curve.
ZM’s P/S Ratio Depicts Stretched Valuation
Image Source: Zacks Investment Research
Investment Thesis for Zoom Video
ZM presents a balanced investment case heading into fourth-quarter fiscal 2025 earnings. While showing early signs of stabilization with 3.6% revenue growth in the fiscal third quarter, the company continues navigating premium competition and cautious enterprise spending. Its transformation into an AI-first work platform shows promise, with Contact Center and Workvivo gaining traction, but AI investments are pressuring margins.
Strong financials ($7.7 billion cash, ongoing share repurchases) provide downside protection, but a 98% enterprise net dollar expansion rate signals growth challenges. Given the mixed outlook amid economic uncertainty, investors may consider holding existing positions or awaiting a more attractive entry point following the earnings report.
Conclusion
Zoom's measured recovery warrants a cautious approach ahead of fourth-quarter fiscal 2025 results. With modest growth projections, ongoing AI investments, and strong competition, current shareholders may benefit from holding while monitoring the execution of the AI-first strategy. New investors might find better entry points post earnings when there's greater clarity on adoption rates for AI Companion add-ons and emerging products like Contact Center and Workvivo.