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Zoom (ZM) Up 1% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Zoom Communications (ZM - Free Report) . Shares have added about 1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Zoom due for a pullback? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent catalysts for Zoom Communications, Inc. before we dive into how investors and analysts have reacted as of late.
Zoom Q3 Earnings & Revenues Surpass Estimates, Both Increase Y/Y
Zoom Communications’ third-quarter fiscal 2026 adjusted earnings of $1.52 per share beat the Zacks Consensus Estimate by 6.29% and increased 10.1% year over year.
Revenues of $1.23 billion beat the consensus mark by 1.4% and increased 4.4% year over year. Adjusting for the impact of foreign currency, revenues in constant currency were $1.23 billion, up 4.2% year over year.
Q3 Details of ZM
Enterprise revenues, which account for 60.3% of total revenues, increased 6.1% year over year to $741.4 million. Online revenues, which account for 39.7% of total revenues, increased 2% year over year to $488.4 million.
Customers contributing more than $100,000 in revenues in the trailing 12 months grew 9.2% to 4,363. These customers accounted for 32% of revenues.
The number of Enterprise customers at the end of the fiscal third quarter was approximately 185,100. In the fiscal third quarter, the percentage of total Online MRR pertaining to Online customers with a continued term of service of at least 16 months was 74.4%, which increased 30 basis points (bps) year over year.
The company reported a trailing 12-month net dollar expansion rate for Enterprise customers of 98% and an Online average monthly churn of 2.7%, flat year over year.
Zoom witnessed traction with Workvivo, where customers grew 70% year over year.
Non-GAAP Operating Details of ZM
Non-GAAP gross margin in the fiscal third quarter was 80% compared with 78.9% in the year-ago period and expanded 110 bps.
On a year-over-year basis, Research and development expenses increased 5.6% to $137 million. Sales and marketing expenses increased 0.1% to $278.1 million, while general and administrative expenses decreased 1.7% to $62.4 million.
Non-GAAP operating income rose 10.7% to $507 million year over year. The operating margin came in at 41.2% compared with the year-ago quarter’s operating margin of 38.9%.
ZM’s Balance Sheet & Cash Flow
Total cash, cash equivalents and marketable securities as of Oct. 31, 2025, were $7.9 billion, compared with $7.8 billion as of July 31, 2025.
Net cash provided by operating activities was $629.3 million for the fiscal third quarter, compared with $515.9 million in the previous quarter. Free cash flow was $614.3 million, compared with $508 million in the prior quarter.
ZM’s Q4 & FY26 Guidance
Zoom expects its fourth-quarter fiscal 2026 revenues to be between $1.230 billion and $1.235 billion. Revenues on a constant currency basis are expected to be between $1.224 billion and $1.229 billion.
Non-GAAP income from operations is expected to be between $477.0 million and $482.0 million.
Non-GAAP earnings per share are expected in the range of $1.48-$1.49.
For fiscal 2026, Zoom expects revenues in the range of $4.852-$4.857 billion. Revenues on a constant currency basis are expected to be between $4.844 billion and $4.849 billion.
Non-GAAP income from operations is expected to be between $1.955 billion and $1.960 billion.
Non-GAAP earnings per share are expected in the band of $5.95-$5.97.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a upward trend in estimates revision.
The consensus estimate has shifted 10.37% due to these changes.
VGM Scores
Currently, Zoom has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock has a score of C on the value side, putting it in the middle 20% for value investors.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Zoom has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Zoom is part of the Zacks Internet - Software industry. Over the past month, Nice (NICE - Free Report) , a stock from the same industry, has gained 8%. The company reported its results for the quarter ended September 2025 more than a month ago.
Nice reported revenues of $732 million in the last reported quarter, representing a year-over-year change of +6.1%. EPS of $3.18 for the same period compares with $2.88 a year ago.
For the current quarter, Nice is expected to post earnings of $3.23 per share, indicating a change of +7% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
Nice has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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Zoom (ZM) Up 1% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Zoom Communications (ZM - Free Report) . Shares have added about 1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Zoom due for a pullback? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent catalysts for Zoom Communications, Inc. before we dive into how investors and analysts have reacted as of late.
Zoom Q3 Earnings & Revenues Surpass Estimates, Both Increase Y/Y
Zoom Communications’ third-quarter fiscal 2026 adjusted earnings of $1.52 per share beat the Zacks Consensus Estimate by 6.29% and increased 10.1% year over year.
Revenues of $1.23 billion beat the consensus mark by 1.4% and increased 4.4% year over year. Adjusting for the impact of foreign currency, revenues in constant currency were $1.23 billion, up 4.2% year over year.
Q3 Details of ZM
Enterprise revenues, which account for 60.3% of total revenues, increased 6.1% year over year to $741.4 million. Online revenues, which account for 39.7% of total revenues, increased 2% year over year to $488.4 million.
Customers contributing more than $100,000 in revenues in the trailing 12 months grew 9.2% to 4,363. These customers accounted for 32% of revenues.
The number of Enterprise customers at the end of the fiscal third quarter was approximately 185,100. In the fiscal third quarter, the percentage of total Online MRR pertaining to Online customers with a continued term of service of at least 16 months was 74.4%, which increased 30 basis points (bps) year over year.
The company reported a trailing 12-month net dollar expansion rate for Enterprise customers of 98% and an Online average monthly churn of 2.7%, flat year over year.
Zoom witnessed traction with Workvivo, where customers grew 70% year over year.
Non-GAAP Operating Details of ZM
Non-GAAP gross margin in the fiscal third quarter was 80% compared with 78.9% in the year-ago period and expanded 110 bps.
On a year-over-year basis, Research and development expenses increased 5.6% to $137 million. Sales and marketing expenses increased 0.1% to $278.1 million, while general and administrative expenses decreased 1.7% to $62.4 million.
Non-GAAP operating income rose 10.7% to $507 million year over year. The operating margin came in at 41.2% compared with the year-ago quarter’s operating margin of 38.9%.
ZM’s Balance Sheet & Cash Flow
Total cash, cash equivalents and marketable securities as of Oct. 31, 2025, were $7.9 billion, compared with $7.8 billion as of July 31, 2025.
Net cash provided by operating activities was $629.3 million for the fiscal third quarter, compared with $515.9 million in the previous quarter. Free cash flow was $614.3 million, compared with $508 million in the prior quarter.
ZM’s Q4 & FY26 Guidance
Zoom expects its fourth-quarter fiscal 2026 revenues to be between $1.230 billion and $1.235 billion. Revenues on a constant currency basis are expected to be between $1.224 billion and $1.229 billion.
Non-GAAP income from operations is expected to be between $477.0 million and $482.0 million.
Non-GAAP earnings per share are expected in the range of $1.48-$1.49.
For fiscal 2026, Zoom expects revenues in the range of $4.852-$4.857 billion. Revenues on a constant currency basis are expected to be between $4.844 billion and $4.849 billion.
Non-GAAP income from operations is expected to be between $1.955 billion and $1.960 billion.
Non-GAAP earnings per share are expected in the band of $5.95-$5.97.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a upward trend in estimates revision.
The consensus estimate has shifted 10.37% due to these changes.
VGM Scores
Currently, Zoom has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock has a score of C on the value side, putting it in the middle 20% for value investors.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Zoom has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Zoom is part of the Zacks Internet - Software industry. Over the past month, Nice (NICE - Free Report) , a stock from the same industry, has gained 8%. The company reported its results for the quarter ended September 2025 more than a month ago.
Nice reported revenues of $732 million in the last reported quarter, representing a year-over-year change of +6.1%. EPS of $3.18 for the same period compares with $2.88 a year ago.
For the current quarter, Nice is expected to post earnings of $3.23 per share, indicating a change of +7% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
Nice has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.