KeyBanc analyst Jackson Ader has begun coverage on Zoom Communications, assigning an Underweight rating to the stock. Ader has also set a price target of $73 for Zoom (ZM, Financial), indicating a cautious perspective on the company's performance in the current market environment.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 25 analysts, the average target price for Zoom Communications Inc (ZM, Financial) is $91.04 with a high estimate of $115.00 and a low estimate of $65.00. The average target implies an upside of 11.94% from the current price of $81.33. More detailed estimate data can be found on the Zoom Communications Inc (ZM) Forecast page.
Based on the consensus recommendation from 33 brokerage firms, Zoom Communications Inc's (ZM, Financial) average brokerage recommendation is currently 2.5, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Zoom Communications Inc (ZM, Financial) in one year is $75.24, suggesting a downside of 7.49% from the current price of $81.33. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Zoom Communications Inc (ZM) Summary page.
ZM Key Business Developments
Release Date: May 21, 2025
- Total Revenue: $1.175 billion, a 3% year-over-year increase.
- Enterprise Revenue: Grew approximately 6% year-over-year, representing 60% of total revenue.
- Average Monthly Churn: 2.8%, a 40 basis point improvement year-over-year.
- Non-GAAP Gross Margin: 79.2%, slightly lower than the previous year.
- Non-GAAP Income from Operations: $467 million, a 2% year-over-year increase.
- Non-GAAP Operating Margin: 39.8%, down 23 basis points from the previous year.
- Non-GAAP Diluted Net Income per Share: $1.43, $0.12 above guidance.
- Deferred Revenue: $1.43 billion, a 5% year-over-year increase.
- Operating Cash Flow: $489 million, with a margin of 41.6%.
- Free Cash Flow: $463 million, with a margin of 39.4%.
- Cash, Cash Equivalents, and Marketable Securities: Approximately $7.8 billion.
- Share Buyback: 5.6 million shares purchased for $418 million.
- Full Year Revenue Guidance: Raised to $4.8 billion to $4.81 billion.
- Full Year Non-GAAP Operating Income Guidance: $1.865 billion to $1.875 billion.
- Full Year Non-GAAP EPS Guidance: Raised to $5.56 to $5.59.
- Q2 Revenue Guidance: $1.195 billion to $1.2 billion.
- Q2 Non-GAAP Operating Income Guidance: $460 million to $465 million.
- Q2 Non-GAAP EPS Guidance: $1.36 to $1.37.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Zoom Communications Inc (ZM, Financial) reported a 3% year-over-year revenue growth to $1.175 billion, exceeding guidance by $8 million.
- The company saw a 40% quarter-over-quarter increase in monthly active users for its AI Companion, indicating strong adoption.
- Zoom Phone revenue grew in the mid-teens, outperforming industry growth rates and suggesting market share gains.
- The Zoom Contact Center customer base grew 65% year-over-year, with significant upsell opportunities for Zoom Virtual Agent.
- The company accelerated its share buyback plan, purchasing 5.6 million shares for $418 million, demonstrating confidence in its financial position.
Negative Points
- Zoom Communications Inc (ZM) noted a more cautious outlook for its enterprise business due to a challenging macroeconomic environment.
- There was an observed elongation in sales cycles and increased scrutiny on deal terms for larger U.S. enterprise customers.
- Non-GAAP gross margin slightly decreased to 79.2% due to investments in AI, with a long-term goal of reaching 80%.
- The company reported a decline in non-GAAP operating margin to 39.8%, attributed to changes in bonus structure and AI investments.
- Despite strong AI Companion adoption, the monetization of custom AI Companion features is still in early stages, with limited immediate revenue impact.
