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Zoom Video Up 20% in 3 Months: Should Investors Buy the Stock?
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Zoom Video Communications (ZM - Free Report) shares have gained 19.9% over the past three months, outperforming the broader Zacks Computer and Technology sector’s decline of 4.9%.
Over the same time frame, Cisco has returned 14.7%, while Microsoft and Alphabet have declined 10.8% and 13.8%, respectively. The industry has appreciated 5.3% over the past three months.
ZM’s outperformance can be attributed to an expanding international clientele, enhanced Workplace offering, and ease in deploying and scaling AI in its software.
Zoom Video Communications, Inc. Price and Consensus
Zoom Video is focusing on new add-ons and enhancements in its software to strengthen its portfolio for Zoom Platform. These enhancements are expected to boost clientele.
In the second quarter of fiscal 2025, ZM had 39333 customers, contributing to more than $100,000 of trailing 12 months revenues, reflecting a loyal customer base. These customers accounted for 31% of revenues, up from 29% reported in the year-ago quarter.
Zoom Video is enhancing its user interface to add and develop capabilities of Zoom Meetings and Zoom Team Chat.
ZM’s enterprise offering aids businesses to utilize tools like Zoom Workplace, Zoom Events, and Zoom Contact Center to enhance collaborative infrastructure in organizations and Zoom Docs that penetrate through additional touchpoints in data analysis in the productivity lifecycle.
It recently announced a new Zoom Webinar feature that can host up to 1 million attendees, demonstrating scalability advantage of Zoom’s infrastructure.
Zoom Video’s AI-integrated Contact Center is being increasingly adopted as it aids in utilizing AI capabilities to enhance performance.
ZM’s AI Companion Drives Prospects
On Aug. 8, Zoom announced new Zoom AI Companion capabilities, including enhancements to meeting summaries and generative AI built into Zoom Clips. Zoom’s federated approach to AI, which makes it accessible and affordable, is aiding in increased market reach.
Zoom’s AI Companion offering aids seamless integration of customer and employee experience and is enabled in over 1.2 million accounts. The company’s freemium business model helps it win customers rapidly, which it can later convert into paying customers.
AI Companion uses GenAI to enhance productivity through meeting summary, chat composition, image generation, and live translation. It will operate across all collaboration platforms to ensure productivity and simplify routine tasks.
Zoom Video’s 2025 Guidance Positive
For fiscal 2025, ZM expects revenues to be in the range of $4.63 billion to $4.64 billion and its non-GAAP operating income to be in the range of $1.79 billion to $1.8 billion.
For fiscal 2025, the Zacks Consensus Estimate for revenues is pegged at $4.64 billion, indicating a year-over-year increase of 2.42%.
For fiscal 2025, Zoom Videos also expects non-GAAP earnings to be in the range of $5.29 to $5.32 per share.
Free cash flow is expected to be in the range of $1.58 billion to $1.62 billion for the fiscal year.
The consensus mark for fiscal 2025 earnings is pegged at $5.31 per share, indicating a 0.5% increase in the past 30 days and a 1.92% increase year-over-year.
ZM’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 17.81%.
Image: Bigstock
Zoom Video Up 20% in 3 Months: Should Investors Buy the Stock?
Zoom Video Communications (ZM - Free Report) shares have gained 19.9% over the past three months, outperforming the broader Zacks Computer and Technology sector’s decline of 4.9%.
ZM shares have also outperformed the Zacks Internet – Software industry and peers like Cisco Systems (CSCO - Free Report) , Microsoft (MSFT - Free Report) and Alphabet (GOOGL - Free Report) .
Over the same time frame, Cisco has returned 14.7%, while Microsoft and Alphabet have declined 10.8% and 13.8%, respectively. The industry has appreciated 5.3% over the past three months.
ZM’s outperformance can be attributed to an expanding international clientele, enhanced Workplace offering, and ease in deploying and scaling AI in its software.
Zoom Video Communications, Inc. Price and Consensus
Zoom Video Communications, Inc. price-consensus-chart | Zoom Video Communications, Inc. Quote
ZM’s Expanding Workplace Offering Aids Prospects
Zoom Video is focusing on new add-ons and enhancements in its software to strengthen its portfolio for Zoom Platform. These enhancements are expected to boost clientele.
In the second quarter of fiscal 2025, ZM had 39333 customers, contributing to more than $100,000 of trailing 12 months revenues, reflecting a loyal customer base. These customers accounted for 31% of revenues, up from 29% reported in the year-ago quarter.
Zoom Video is enhancing its user interface to add and develop capabilities of Zoom Meetings and Zoom Team Chat.
ZM’s enterprise offering aids businesses to utilize tools like Zoom Workplace, Zoom Events, and Zoom Contact Center to enhance collaborative infrastructure in organizations and Zoom Docs that penetrate through additional touchpoints in data analysis in the productivity lifecycle.
It recently announced a new Zoom Webinar feature that can host up to 1 million attendees, demonstrating scalability advantage of Zoom’s infrastructure.
Zoom Video’s AI-integrated Contact Center is being increasingly adopted as it aids in utilizing AI capabilities to enhance performance.
ZM’s AI Companion Drives Prospects
On Aug. 8, Zoom announced new Zoom AI Companion capabilities, including enhancements to meeting summaries and generative AI built into Zoom Clips. Zoom’s federated approach to AI, which makes it accessible and affordable, is aiding in increased market reach.
Zoom’s AI Companion offering aids seamless integration of customer and employee experience and is enabled in over 1.2 million accounts. The company’s freemium business model helps it win customers rapidly, which it can later convert into paying customers.
AI Companion uses GenAI to enhance productivity through meeting summary, chat composition, image generation, and live translation. It will operate across all collaboration platforms to ensure productivity and simplify routine tasks.
Zoom Video’s 2025 Guidance Positive
For fiscal 2025, ZM expects revenues to be in the range of $4.63 billion to $4.64 billion and its non-GAAP operating income to be in the range of $1.79 billion to $1.8 billion.
For fiscal 2025, the Zacks Consensus Estimate for revenues is pegged at $4.64 billion, indicating a year-over-year increase of 2.42%.
For fiscal 2025, Zoom Videos also expects non-GAAP earnings to be in the range of $5.29 to $5.32 per share.
Free cash flow is expected to be in the range of $1.58 billion to $1.62 billion for the fiscal year.
The consensus mark for fiscal 2025 earnings is pegged at $5.31 per share, indicating a 0.5% increase in the past 30 days and a 1.92% increase year-over-year.
ZM’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 17.81%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Here’s Why ZM Shares Are a Buy
Zoom Video Communication shares are overvalued, as suggested by a Value Score of C.
However, expanding product portfolio, scalable AI integration, and increasing international presence aid ZM’s prospects.
Zoom Video currently has a Zacks Rank #2 (Buy), which implies that it is the right time for investors to buy ZM shares. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.