Zoom Communications (NASDAQ:ZM) Releases Earnings Results, Beats Expectations By $0.07 EPS

Zoom Communications (NASDAQ:ZM) released its earnings results on Tuesday. The company reported $1.55 earnings per share for the quarter, beating analysts’ consensus estimates of $1.48 by $0.07, FiscalAI reports. The company had revenue of $1.28 billion during the quarter, compared to analyst estimates of $1.27 billion. Zoom Communications had a return on equity of 11.87% and a net margin of 41.99%.Zoom Communications’s revenue for the quarter was up 4.9% on a year-over-year basis. During the same quarter in the previous year, the company posted $1.53 EPS. 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 3.7%

NASDAQ:ZM opened at $100.92 on Wednesday. The stock has a market cap of $29.59 billion, a P/E ratio of 14.82, a price-to-earnings-growth ratio of 5.53 and a beta of 1.00. The firm’s fifty day simple moving average is $94.00 and its 200 day simple moving average is $91.30. Zoom Communications has a twelve month low of $70.70 and a twelve month high of $114.74.

Insider Activity at Zoom Communications

In other news, CEO Eric S. Yuan sold 12,100 shares of Zoom Communications stock in a transaction dated Wednesday, August 5th. The shares were sold at an average price of $100.17, for a total transaction of $1,212,057.00. Following the sale, the chief executive officer owned 22,998 shares of the company’s stock, valued at approximately $2,303,709.66. The trade was a 34.47% decrease in their position. The sale was disclosed in a document filed with the SEC, which is accessible through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CFO Michelle Chang sold 8,489 shares of the business’s stock in a transaction dated Friday, July 10th. The shares were sold at an average price of $90.80, for a total transaction of $770,801.20. Following the transaction, the chief financial officer owned 35,452 shares in the company, valued at $3,219,041.60. This represents a 19.32% decrease in their position. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Insiders have sold a total of 56,155 shares of company stock valued at $5,654,761 over the last quarter. Company insiders own 8.83% of the company’s stock.

Institutional Trading of Zoom Communications

Several institutional investors and hedge funds have recently bought and sold shares of the stock. AQR Capital Management LLC boosted its position in Zoom Communications by 43.9% during the 4th quarter. AQR Capital Management LLC now owns 12,195,243 shares of the company’s stock valued at $1,052,328,000 after acquiring an additional 3,718,186 shares in the last quarter. State Street Corp raised its position in shares of Zoom Communications by 5.0% in the 4th quarter. State Street Corp now owns 7,582,924 shares of the company’s stock worth $654,331,000 after acquiring an additional 363,776 shares in the last quarter. FIL Ltd raised its position in shares of Zoom Communications by 0.4% in the 4th quarter. FIL Ltd now owns 3,284,861 shares of the company’s stock worth $283,451,000 after acquiring an additional 11,849 shares in the last quarter. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC lifted its stake in shares of Zoom Communications by 9.5% in 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 purchasing an additional 248,640 shares during the period. Finally, Arrowstreet Capital Limited Partnership lifted 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 valued at $218,282,000 after purchasing an additional 836,594 shares during the period. 66.54% of the stock is currently owned by hedge funds and other institutional investors.

Analyst Ratings Changes

A number of equities analysts have commented on ZM shares. HSBC lifted their price target on Zoom Communications from $107.00 to $133.00 and gave the stock a “buy” rating in a research note on Tuesday, June 2nd. Morgan Stanley raised their target price on shares of Zoom Communications from $92.00 to $105.00 and gave the stock an “equal weight” rating in a report on Friday, May 22nd. KeyCorp raised shares of Zoom Communications from an “underweight” rating to a “sector weight” rating in a research note on Friday, May 22nd. Citizens Jmp reaffirmed a “market perform” rating on shares of Zoom Communications in a research note on Wednesday, May 20th. Finally, Bank of America assumed coverage on shares of Zoom Communications in a report on Wednesday, August 19th. They set a “buy” rating and a $130.00 price target for the company. Sixteen equities research analysts have rated the stock with a Buy rating and twelve have assigned a Hold rating to the stock. According to MarketBeat, the stock currently has an average rating of “Moderate Buy” and an average target price of $111.55.

Trending Headlines about Zoom Communications

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

• Positive Sentiment: Zoom reported adjusted earnings of $1.55 per share and revenue of $1.28 billion, exceeding analyst estimates of $1.48 and $1.27 billion, respectively. Revenue increased 4.9% year over year, while enterprise revenue rose 7.8% to $787.5 million. Zoom Communications Reports Financial Results
• Positive Sentiment: Management raised fiscal 2027 adjusted EPS guidance to $6.08-$6.12, above the roughly $5.71 consensus cited in company updates. AI-powered deals, record contact-center bookings and larger enterprise wins were highlighted as drivers of future growth. Zoom Q2 2027 Earnings Call Highlights
• Neutral Sentiment: Analyst opinion remains divided. BTIG reaffirmed a Buy rating with a $125 price target, while Cantor Fitzgerald maintained a Neutral rating with a $104 target, reflecting uncertainty over the pace of Zoom’s growth and AI monetization. BTIG Buy Rating
• Negative Sentiment: Zoom’s third-quarter profit outlook came in below Wall Street expectations, despite revenue guidance near consensus. The forecast suggests that competition is pressuring margins and that AI investments have not yet produced enough incremental growth to satisfy investors. Zoom Forecasts Quarterly Profit Below Estimates
• Negative Sentiment: The earnings beat was relatively modest, with revenue growth remaining in the mid-single digits and online growth described as tempered. Reports characterized the outlook as flat or soft, causing the near-term guidance to overshadow the quarter’s better-than-expected results. Zoom’s Soft Q3 Guidance Overshadows Q2 Double Beat

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.