Zoom Communications (NASDAQ:ZM) Posts Earnings Results, Beats Estimates By $0.07 EPS

Zoom Communications (NASDAQ:ZM) released its earnings results on Tuesday. The company reported $1.55 EPS for the quarter, beating analysts’ consensus estimates of $1.48 by $0.07, FiscalAI reports. Zoom Communications had a return on equity of 11.31% and a net margin of 65.19%.The company had revenue of $1.28 billion during the quarter, compared to analysts’ expectations of $1.27 billion. During the same quarter last year, the business posted $1.53 EPS. The firm’s revenue for the quarter was up 4.9% compared to the same quarter last year. Zoom Communications updated its FY 2027 guidance to 6.080-6.120 EPS and its Q3 2027 guidance to 1.460-1.480 EPS.

Here are the key takeaways from Zoom Communications’ conference call:

• Zoom reported Q2 revenue of $1.28 billion, up 4.9% year over year and $7 million above the high end of guidance. Enterprise revenue grew 7.8%, its strongest rate in three years, while enterprise customers generating more than $100,000 in annual revenue increased 8%.
• AI monetization continued to gain traction: licensed monthly active users of Workplace AI features rose 125%, Zoom Virtual Agent customers increased more than 250%, and paid AI was included in nine of the 10 largest Zoom CX deals. Zoom CX ARR grew at a high-double-digit rate, while Zoom Revenue Accelerator paid customers grew 41%.
• Zoom raised its FY27 revenue outlook to $5.085 billion-$5.095 billion, EPS guidance to $6.08-$6.12, and free cash flow guidance to $1.78 billion-$1.82 billion. The company cited stronger-than-expected enterprise growth, lower planned capital expenditures, and continued share repurchases.
• Phone ARR continued to grow in the teens, with all 10 of the quarter’s largest Phone deals involving vendor takeouts and roughly half including Contact Center. RPO increased 14% to approximately $4.5 billion, reflecting larger, longer-term, multi-product enterprise contracts.
• Profitability metrics softened as Zoom invested in AI infrastructure and product expansion: non-GAAP gross margin declined to 79.1% from 79.8%, and operating margin fell to 40.0% from 41.3%. Management also tempered the full-year online-business outlook to flat growth because of weaker top-of-funnel trends, despite stable 2.9% monthly churn.

Zoom Communications Stock Down 7.0%

NASDAQ:ZM opened at $93.83 on Thursday. The stock has a market cap of $27.51 billion, a price-to-earnings ratio of 8.69, a PEG ratio of 5.45 and a beta of 1.00. The company’s 50 day moving average price is $94.13 and its 200-day moving average price is $91.33. Zoom Communications has a 52 week low of $70.70 and a 52 week high of $114.74.

Insider Activity

In other Zoom Communications news, insider Velchamy Sankarlingam sold 7,644 shares of Zoom Communications stock in a transaction on Wednesday, July 15th. The stock was sold at an average price of $91.98, for a total value of $703,095.12. Following the completion of the sale, the insider owned 148,403 shares of the company’s stock, valued at approximately $13,650,107.94. This trade represents a 4.90% decrease in their position. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is accessible through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CEO Eric S. Yuan sold 12,100 shares of the company’s stock in a transaction on Wednesday, August 5th. The shares were sold at an average price of $100.17, for a total value of $1,212,057.00. Following the transaction, the chief executive officer directly owned 22,998 shares in the company, valued at approximately $2,303,709.66. The trade was a 34.47% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders have sold 56,155 shares of company stock valued at $5,654,761 in the last quarter. Insiders own 8.83% of the company’s stock.

Institutional Trading of Zoom Communications

A number of institutional investors have recently made changes to their positions in the stock. AQR Capital Management LLC raised its holdings in shares of Zoom Communications by 43.9% during the fourth quarter. AQR Capital Management LLC now owns 12,195,243 shares of the company’s stock valued at $1,052,328,000 after purchasing an additional 3,718,186 shares during the last quarter. State Street Corp raised its stake in Zoom Communications by 5.0% during the 4th quarter. State Street Corp now owns 7,582,924 shares of the company’s stock valued at $654,331,000 after buying an additional 363,776 shares during the last quarter. FIL Ltd raised its stake in Zoom Communications by 0.4% during the 4th quarter. FIL Ltd now owns 3,284,861 shares of the company’s stock valued at $283,451,000 after buying an additional 11,849 shares during the last quarter. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC lifted its holdings in shares of Zoom Communications by 9.5% during the 4th quarter. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC now owns 2,852,621 shares of the company’s stock valued at $246,153,000 after buying an additional 248,640 shares during the period. Finally, Arrowstreet Capital Limited Partnership boosted its stake in shares of Zoom Communications by 46.2% in the 3rd quarter. Arrowstreet Capital Limited Partnership now owns 2,645,846 shares of the company’s stock worth $218,282,000 after buying an additional 836,594 shares during the last quarter. Hedge funds and other institutional investors own 66.54% of the company’s stock.

Analyst Ratings Changes

A number of analysts have recently commented on ZM shares. Piper Sandler boosted their target price on shares of Zoom Communications from $91.00 to $107.00 and gave the company a “neutral” rating in a report on Friday, May 22nd. HSBC increased their price target on shares of Zoom Communications from $107.00 to $133.00 and gave the stock a “buy” rating in a research note on Tuesday, June 2nd. Citigroup boosted their price objective on shares of Zoom Communications from $122.00 to $126.00 and gave the stock a “buy” rating in a research note on Tuesday, May 26th. Bank of America began coverage on shares of Zoom Communications in a report on Wednesday, August 19th. They issued a “buy” rating and a $130.00 price objective on the stock. Finally, Needham & Company LLC reissued a “buy” rating and issued a $130.00 price target on shares of Zoom Communications in a research report on Wednesday. Sixteen analysts have rated the stock with a Buy rating and twelve have given a Hold rating to the stock. Based on data from MarketBeat.com, the company has an average rating of “Moderate Buy” and a consensus target price of $112.55.

More Zoom Communications News

Here are the key news stories impacting Zoom Communications this week:

• Positive Sentiment: Zoom reported fiscal Q2 revenue of $1.28 billion, up 4.9% year over year and ahead of the $1.27 billion consensus estimate. Adjusted EPS of $1.55 also exceeded expectations of about $1.48, while enterprise revenue rose 7.8% to $787.5 million. Zoom Communications Reports Financial Results
• Positive Sentiment: The company raised its fiscal 2027 outlook, including EPS guidance of $6.08-$6.12, above the approximately $5.71 analyst consensus. Record contact-center bookings, large customer wins and AI-powered deals point to improving enterprise momentum. Zoom Q2 Earnings Call Highlights
• Positive Sentiment: Analyst sentiment remains mixed but includes bullish calls: Needham reaffirmed a Buy rating with a $130 price target, while a Seeking Alpha analysis upgraded ZM to Buy. The latter cited Zoom’s strong cash position, 24.6% GAAP operating margin and potential value from its stake in AI company Anthropic if an anticipated IPO occurs. Zoom: The Anthropic IPO May Be Coming
• Neutral Sentiment: RBC and other analysts see longer-term potential from enterprise demand, AI-enabled products and broader adoption of Zoom’s platform, but describe these opportunities as dependent on continued execution rather than immediate earnings acceleration. Zoom to Gain From AI and Enterprise Growth
• Negative Sentiment: Fiscal Q3 adjusted EPS guidance of $1.46-$1.48 came in below Wall Street expectations. The softer outlook, attributed partly to competition and slower online/consumer growth, overshadowed the Q2 earnings beat and caused shares to decline. Zoom Forecasts Quarterly Profit Below Estimates

Zoom Communications Company Profile

Zoom Video Communications, Inc (commonly referred to as Zoom) is a provider of cloud-based communications and collaboration solutions. The company’s platform supports video conferencing, voice calling, instant messaging, webinars and large-scale virtual events, and meeting room systems, marketed to businesses, educational institutions, government organizations and individual users. Zoom’s product lineup includes Zoom Meetings, Zoom Phone, Zoom Rooms, Zoom Video Webinars and Zoom Chat, and the company offers integrations and extensions through a developer marketplace and third-party apps.

Founded in 2011 by Eric S.