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1. Company Snapshot

1.a. Company Description

Zoom Video Communications, Inc.provides unified communications platform in the Americas, the Asia Pacific, Europe, the Middle East, and Africa.The company offers Zoom Meetings that offers HD video, voice, chat, and content sharing through mobile devices, desktops, laptops, telephones, and conference room systems; Zoom Phone, an enterprise cloud phone system; and Zoom Chat enables users to share messages, images, audio files, and content in desktop, laptop, tablet, and mobile devices.


It also provides Zoom Rooms, a software-based conference room system; Zoom Hardware-as-a-Service allows users to access video communication technology from third party equipment; Zoom Conference Room Connector, a gateway for SIP/H.323 endpoints to join Zoom meetings; Zoom Events, which enables users to manage and host internal and external virtual events; OnZoom, a prosumer-focused virtual event platform and marketplace for Zoom users to create, host, and monetize online events; and Zoom Webinars to provide video presentations to large audiences from many devices.In addition, the company offers Zoom Developer Platform that enables developers, platform integrators, service providers, and customers to build apps and integrations using Zoom's video-based communications solutions, as well as integrate Zoom's technology into their products and services; Zoom App Marketplace, which helps developers to publish their apps, as well as third-party integrations of Zoom; and Zoom Contact Center, an omnichannel contact center solution.It serves individuals; and education, entertainment/media, enterprise infrastructure, finance, government, healthcare, manufacturing, non-profit/not for profit and social impact, retail/consumer products, and software/Internet industries.


The company was formerly known as Zoom Communications, Inc.and changed its name to Zoom Video Communications, Inc.in May 2012.


The company was incorporated in 2011 and is headquartered in San Jose, California.

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1.b. Last Insights on ZM

Zoom's recent performance is driven by its Q3 results, which surpassed estimates with earnings of $1.52 per share and revenue growth fueled by Enterprise gains and expanding margins. The company's AI-driven solutions, such as Zoom Workplace and Zoom Phone, position it as a technology disruptor in the modern workplace. Analysts have boosted their forecasts, citing modest revenue growth, stabilization in enterprise, and strong margin expansion. Additionally, Zoom's aggressive share repurchases and attractive valuation around 10x forward earnings net of cash provide downside support. (Source: Zoom Q3 Earnings & Revenues Surpass Estimates)

1.c. Company Highlights

2. Zoom's Q3 FY26 Earnings: A Strong Quarter with AI-Driven Growth

Zoom's Q3 FY26 earnings release showed a robust financial performance, with total revenue growing 4.4% year over year to $1,230,000,000. Enterprise revenue, which accounts for 60% of total revenue, grew 6.1% year over year. The company's non-GAAP gross margin was 80%, up 117 basis points from Q3 of last year, and non-GAAP operating margin was 41.2%, up 234 basis points. Earnings per share (EPS) came in at $1.52, beating estimates of $1.43.

Publication Date: Nov -25

📋 Highlights
  • Total Revenue Growth:: Zoom reported $1,230M in revenue for Q3 FY26, a 4.4% YoY increase, with enterprise revenue accounting for 60% and growing 6.1% YoY.
  • High-Value Customer Growth:: 9% YoY growth in customers with >$100K TTM revenue, contributing 32% of total revenue, reflecting strong enterprise adoption.
  • Margin Expansion:: Non-GAAP gross margin rose 117 bps to 80%, while non-GAAP operating margin increased 234 bps to 41.2%, driven by cost discipline.
  • Guidance & Share Repurchase:: Raised FY26 revenue guidance to $4.852B–$4.857B (4.1% growth midpoint) and announced a $1B incremental share repurchase.

Revenue Growth and Customer Expansion

The company saw a 9% year-over-year growth in customers contributing more than $100,000 in trailing twelve-month revenue, making up 32% of total revenue. This growth is a testament to Zoom's expanding customer base and increasing average revenue per user. As CEO Eric Yuan mentioned, the mid-market segment is a "sweet spot" for Zoom due to its emphasis on employee experience and total cost of ownership.

AI-Driven Innovation and Expansion

Zoom's AI-led innovation is a key driver of its growth, with AI Companion adoption surging more than four times year over year. The company is prioritizing elevating core products with AI, driving growth of new AI products, and scaling AI-first customer experience. The acquisition of BrightHire, an AI-powered hiring intelligence platform, is part of this strategy, and is expected to expand Zoom's total addressable market in the HR and recruitment space.

Valuation and Outlook

Zoom's current valuation metrics, including a P/E Ratio of 14.88 and P/S Ratio of 4.99, suggest that the market is pricing in moderate growth expectations. With analysts estimating revenue growth at 3.9% next year, it remains to be seen whether Zoom can continue to exceed expectations. The company's free cash flow margin hit 50%, with durable results and a one-time benefit from changes in the collections process, providing a solid foundation for future growth.

Guidance and Future Plans

Zoom raised its revenue and profitability guidance for the full year of FY26, now expecting revenue to be in the range of $4,852,000,000 to $4,857,000,000, representing 4.1% year-over-year growth at the midpoint. The company is confident in its ability to continue driving growth through AI innovation and expansion into new markets, and is committed to delivering strong profitability and cash flow while investing for long-term growth.

3. NewsRoom

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"The Next Verse" Global Music Movement Invites the World to Add Their Voice and Help End Hunger

Dec -02

Source: prnewswire.com

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3 Reasons Growth Investors Will Love Zoom (ZM)

Dec -01

Source: zacks.com

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Is Zoom an Undervalued Stock to Buy Right Now?

Dec -01

Source: fool.com

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Zoom: The Software Stock That Escaped The Crash

Nov -30

Source: seekingalpha.com

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Brent little changed as investors zoom in on Russia-Ukraine talks, OPEC+

Nov -28

Source: reuters.com

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Small Caps, Pharma Surge As AI Rotation Broadens, Nvidia Tumbles: What's Moving Markets Tuesday?

Nov -25

Source: feeds.benzinga.com

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Stocks on the move and Calls of the Day: Zoom, Applied Materials, Snowflake, Live Nation and more

Nov -25

Source: youtube.com

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Top Stock Movers Now: Nvidia, Coinbase, Kohl's, and More

Nov -25

Source: investopedia.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.00%)

6. Segments

Unified Communications and Collaboration Platform

Expected Growth: 4.0%

Zoom's Unified Communications and Collaboration Platform growth is driven by increasing remote work adoption, demand for seamless video conferencing, and integration with popular productivity tools. Additionally, its user-friendly interface, high-quality video, and robust security features contribute to its rapid expansion.

7. Detailed Products

Zoom Meetings

A video conferencing platform that enables users to hold virtual meetings, training sessions, and webinars

Zoom Phone

A cloud phone system that enables users to make and receive phone calls, send texts, and fax documents

Zoom Rooms

A software-based conference room solution that enables users to hold virtual meetings and collaborate

Zoom Webinar

A webinar platform that enables users to host virtual events, conferences, and training sessions

Zoom Chat

A messaging platform that enables users to send messages, files, and images

Zoom API and SDK

A set of APIs and SDKs that enable developers to integrate Zoom's video conferencing capabilities into their applications

Zoom Marketplace

A marketplace that enables developers to build and publish integrations with Zoom

8. Zoom Video Communications, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Zoom's video conferencing services have few substitutes, as they offer a unique combination of high-quality video, ease of use, and reliability. While there are other video conferencing platforms, they are not perfect substitutes, and Zoom's strong brand recognition and customer loyalty reduce the threat of substitutes.

Bargaining Power Of Customers

Zoom's customers have some bargaining power, as they can choose from a range of video conferencing platforms. However, Zoom's strong brand recognition, high-quality service, and competitive pricing reduce the bargaining power of customers.

Bargaining Power Of Suppliers

Zoom's suppliers, such as data center providers and bandwidth suppliers, have limited bargaining power. Zoom's large scale and strong financial position give it significant negotiating power over its suppliers.

Threat Of New Entrants

While there are barriers to entry in the video conferencing market, such as the need for significant investment in infrastructure and technology, new entrants can still pose a threat to Zoom. However, Zoom's strong brand recognition, high-quality service, and large customer base make it difficult for new entrants to gain traction.

Intensity Of Rivalry

The video conferencing market is highly competitive, with several established players and new entrants vying for market share. Zoom faces intense competition from rivals such as Microsoft Teams, Google Meet, and Cisco Webex, which can lead to pricing pressure and increased marketing expenses.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 0.90%
Debt Cost 3.95%
Equity Weight 99.10%
Equity Cost 3.68%
WACC 3.69%
Leverage 0.91%

11. Quality Control: Zoom Video Communications, Inc. passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Zoom Video

A-Score: 5.7/10

Value: 3.2

Growth: 8.1

Quality: 8.5

Yield: 0.0

Momentum: 7.5

Volatility: 6.7

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A-Score: 5.1/10

Value: 3.8

Growth: 8.3

Quality: 6.8

Yield: 0.0

Momentum: 4.0

Volatility: 7.7

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PTC

A-Score: 5.0/10

Value: 1.5

Growth: 6.9

Quality: 8.3

Yield: 0.0

Momentum: 6.0

Volatility: 7.3

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Elastic

A-Score: 4.2/10

Value: 2.5

Growth: 8.0

Quality: 4.9

Yield: 0.0

Momentum: 6.0

Volatility: 4.0

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Progress Software

A-Score: 4.2/10

Value: 4.4

Growth: 6.4

Quality: 6.0

Yield: 1.0

Momentum: 1.0

Volatility: 6.3

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Alkami Technology

A-Score: 3.4/10

Value: 4.4

Growth: 7.1

Quality: 3.8

Yield: 0.0

Momentum: 0.5

Volatility: 4.3

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

86.58$

Current Price

86.58$

Potential

-0.00%

Expected Cash-Flows