To The Moon

$Zoom(ZM)$ is scheduled to release its fiscal year 2026 first-quarter earnings on Wednesday, 21 May 2025, after the market closes. A live webinar to discuss the results will be held at 5:00 PM ET.

Revenue : Zoom's guidance for Q1 FY26 revenue is between $1.162 billion and $1.167 billion. Analysts' consensus estimate is around $1.17 billion.

Earnings per Share (EPS) : The company expects non-GAAP diluted EPS to be between $1.29 and $1.31. The Zacks Consensus Estimate for Q1 FY26 earnings per share is $1.30, which represents a year-over-year decline of 3.7%.

Full Fiscal Year 2026 Guidance : Zoom anticipates full-year revenue between $4.785 billion and $4.795 billion and non-GAAP diluted EPS between $5.34 and $5.37.

Zoom (ZM) Last Positive Earnings Call Saw Share Price Gain Modest 2.68%

Zoom had a positive earnings call on 24 Feb 2025 which saw its share price gain a modest 2.68% since.

The earnings call highlighted strong growth in AI adoption and enterprise segments, significant partnerships, and financial outperformance. However, there are concerns about slower revenue growth and challenges in the Online business segment. Overall, the sentiment is cautiously optimistic.

Zoom (ZM) Guidance

During Zoom's earnings release webinar for the fiscal year 2025, the company provided guidance for the upcoming fiscal year 2026. Zoom anticipates total revenue to range between $4.785 billion and $4.795 billion, representing approximately 2.7% year-over-year growth, or 3.1% on a constant currency basis. For the first quarter of FY26, revenue is expected to be between $1.162 billion and $1.167 billion, indicating around 2% growth year-over-year. Non-GAAP operating income is forecasted to be between $1.85 billion and $1.86 billion for FY26, with an operating margin of about 39%.

The company also projects free cash flow to be in the range of $1.68 billion to $1.72 billion. Zoom highlighted its focus on expanding AI capabilities and enhancing its product offerings, including the introduction of a Custom AI Companion add-on and enhancements in Zoom Workplace for Clinicians. The company aims to drive growth through its enterprise segment, with enterprise revenue making up 60% of total revenue and a 7% year-over-year increase in customers contributing more than $100,000 in trailing twelve-month revenue.

Factors to Watch For Zoom (ZM) Fiscal Q1 2026 Earnings

Zoom AI Companion Adoption: The adoption rate and impact of Zoom's AI-powered features, particularly the Zoom AI Companion, will be closely monitored. In the previous quarter (Q4 FY25), monthly active users of AI Companion reportedly accelerated by 68% quarter-over-quarter.

Zoom's AI Companion monthly active users grew by 68% quarter-over-quarter, and the company launched AI Companion 2.0 with advanced capabilities. Zoom is focusing on building agentic AI to enhance productivity and customer engagement.

Enterprise vs. Online Revenue: While enterprise revenue has been a growth driver, Zoom will no longer report the number of enterprise customers as a standalone metric starting in Q1 FY26 due to increasing overlap between enterprise and online customer categories. Investors will focus on the overall revenue growth and the performance of each segment. In Q4 FY25, enterprise revenue grew by 5.9% year-over-year, while online revenue decreased by 0.4%.

Enterprise revenue grew by 6% year-over-year, making up 60% of total revenue. The number of Contact Center customers with over $100,000 in ARR grew over 100% year-over-year, showcasing strong adoption of higher-tier packages.

Customer Retention and Expansion: The net dollar expansion rate for enterprise customers will be an important indicator of Zoom's ability to retain and grow revenue from its existing customer base. The trailing-12-month net dollar expansion rate was 98% at the end of Q4 FY25.

Competition: Zoom faces strong competition from integrated platforms like Microsoft Teams and Google Workspace. Analysts will be looking for updates on how Zoom is differentiating itself through innovation, particularly in AI and expanding its product offerings (Zoom Phone, Contact Center, Workvivo).

Guidance for FY26 anticipates revenue growth of approximately 2.7% year-over-year, indicating slower growth compared to previous years.

While Enterprise revenue grew, the Online business showed signs of stabilization, but still facing challenges with flat to slightly down expectations.

Profitability: Investors will pay attention to Zoom's operating margins. In Q4 FY25, the non-GAAP operating margin was 39.5%, an increase year-over-year.

Zoom secured major deals with Amazon and Delta Airlines, reinforcing its strategic partnerships. The Mitel partnership opens access to 70 million global end users.

Zoom beat its top-line and profitability guidance with Q4 revenue growing by 3% year-over-year to $1.184 billion, and non-GAAP income from operations growing by 5% year-over-year to $468 million.

Stock Repurchase Program: Zoom has been actively repurchasing its stock. Any updates on this program could influence investor sentiment.

Zoom (ZM) Price Target

Based on 25 analysts from Tiger Brokers offering 12 month price targets for Zoom Video Communications in the last 3 months. The average price target is $88.86 with a high forecast of $115.00 and a low forecast of $65.00. The average price target represents a 6.71% change from the last price of $83.27.

Analysts have a cautious outlook on Zoom, with a consensus rating of "Hold." The median 12-month price target is around $79.59 to $85.90, with a wide range of estimates. Some analysts have recently adjusted their price targets, with Citi reducing its target to $84 while maintaining a neutral stance, citing potentially peaking margins and limited near-term growth catalysts.

Technical Analysis - Exponential Moving Average (EMA)

Zoom's stock (ZM) has shown some positive momentum recently. Over the past year, the stock has increased by over 28% to 33%. However, it is still significantly below its all-time high reached during the pandemic.

But recent performance have managed to see strong positive momentum formed, which should be continuing into its earnings and hence, I think we should be seeing some positive earnings and guidance which could push Zoom share price towards its previous highs in February 2025.

This can be confirmed by the decreased in short interest which indicate that investors might not be planning to take profits or sell off, and we should be able to see bullish trend this week and before the earnings call.

Summary

Zoom upcoming earnings call will provide crucial insights into Zoom's progress in integrating AI, its ability to navigate a competitive market, and its growth prospects for the remainder of fiscal year 2026. Investors will be keen to see if the company can exceed its own guidance and analysts' expectations, and if its AI-driven strategy is translating into tangible financial growth.

Appreciate if you could share your thoughts in the comment section whether you think Zoom would be able to report better-than-expected enterprise revenue growth.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.