Core Insights - Zoom's stock has increased by 18.5% since the last analysis, indicating a positive market response [1] - Despite the stock price increase, the company is considered significantly overvalued [1] Company Analysis - Zoom is recognized as a leading communications platform that facilitates video, audio, phone, and chat connections [1] - The analysis emphasizes the importance of resilient management and competitive advantages in evaluating technology companies [1] Analyst Background - The analyst specializes in the technology sector, focusing on areas such as AI, semiconductors, software, and renewable energy [1] - The analyst combines traditional fundamental analysis with modern proprietary tools to identify value-driven growth investments [1]

Core Viewpoint - Zoom Video Communications reported financial results for its fiscal third quarter of 2025, which beat expectations but led to a decline in stock price as investors took profits after a significant rise in stock value [1][2][3]. Financial Performance - Zoom's Q3 revenue increased by 3.6% year over year, and the company raised its full-year revenue guidance from $4.630 billion to $4.640 billion to a new range of $4.656 billion to $4.661 billion [3][4]. - The adjusted earnings per share (EPS) guidance was also raised from a previous range of $5.29 to $5.31 to a new range of $5.41 to $5.43 [4]. Cash Position and Shareholder Returns - The company holds $7.7 billion in cash, cash equivalents, and marketable securities, and is projected to generate approximately $1.6 billion in full-year free cash flow [5]. - Zoom has initiated a total buyback plan of about $2 billion, having already repurchased 4.4 million shares in Q3 [5][6]. Stock-Based Compensation Impact - Despite the buyback efforts, the outstanding share count increased due to stock-based compensation, which is a factor affecting the stock's performance [6].

Financial Performance - The company reported a revenue of $X million for the three months ended October 31, 2024, representing a Y% increase compared to the same period in 2023[7] - The company anticipates a revenue growth rate of B% for the next quarter, driven by the launch of new products and enhancements to existing services[9] - The gross profit margin improved to H%, reflecting better cost management and operational efficiencies[13] - Cash flow from operations for the nine months ended October 31, 2024, was J million, providing a solid foundation for future investments[15] - The company has experienced fluctuations in revenue growth rates, which may continue to decline in future periods[12] - The company has incurred net losses in the past, with no assurances of maintaining or increasing profitability in the future[12] User Engagement and Growth - User growth reached Z million, with a retention rate of A%, indicating strong customer loyalty and engagement[8] - The company is focusing on enhancing the security and privacy of its platform, which is critical for customer retention and attraction[12] Market Expansion and Strategy - The company plans to expand its market presence in regions D and E, targeting a market share increase of F% by the end of the fiscal year[11] - A strategic acquisition was completed, expected to contribute an additional G million in annual revenue starting next quarter[12] - The company has identified new market opportunities in the collaboration technology sector, projecting a potential revenue increase of I million over the next two years[14] Research and Development - Investment in R&D increased by C%, focusing on the development of an enhanced version of the AI Companion technology[10] - The company is investing in new technology, including an enhanced version of AI Companion, to improve its product offerings[9] Risk Management and Compliance - The company is actively addressing cybersecurity risks, with a budget increase of K% allocated to enhance security measures and compliance[16] - The company is subject to various regulatory requirements, and any failure to comply could result in significant fines and liabilities[12] - The company utilizes generative AI in its products, which may introduce operational challenges and regulatory concerns[15] Competitive Landscape - The company faces significant competition in the market, with competitors having advantages such as greater name recognition and larger marketing budgets[12] - The company generates revenue primarily from subscription sales, and any decline in demand for its platform could adversely affect its business[12] - The company is experiencing longer sales cycles as it increases sales to large organizations, which may lead to deployment challenges[12] International Operations - The company is expanding its operations outside the United States, which may expose it to increased business and regulatory risks[12]

Zoom Stock Falls After Earnings. Now Might Be the Time to Buy. ...

Group 1 - Michael Wiggins De Oliveira is an inflection investor, focusing on buying undervalued companies at pivotal moments when their profitability is expected to increase significantly over the next year [1] - The investment strategy emphasizes technology and the Great Energy Transition, including uranium, with a concentrated portfolio of approximately 15 to 20 stocks and an average holding period of 18 months [1] - Michael has over 10 years of experience analyzing companies in the tech and energy sectors, and has built a following of over 40,000 on Seeking Alpha [2] Group 2 - Michael leads the investing group Deep Value Returns, which offers insights through a concentrated portfolio of value stocks, timely updates on stock picks, and a weekly webinar for live advice [3] - The Deep Value Returns community is described as active, vibrant, and supportive, providing accessible chat options for both new and experienced investors [3]

Financial Data and Key Metrics - Total revenue grew approximately 4% YoY to $1.178 billion, exceeding guidance by $13 million [24] - Enterprise revenue grew 6% YoY, now representing 59% of total revenue, up 1 point YoY [24] - Average Monthly Churn decreased to 2.7%, down 30 basis points YoY, the lowest ever reported [25] - Non-GAAP gross margin was 78.9%, down from 79.7% YoY, primarily due to AI investments [27] - Non-GAAP operating income was $458 million, exceeding guidance, with a 38.9% operating margin [28] - Non-GAAP diluted EPS was $1.38, $0.07 above guidance and $0.09 higher than Q3 last year [29] - Deferred revenue grew 5% YoY to $1.38 billion, with RPO increasing 5% YoY to $3.74 billion [30] Business Line Performance - Zoom AI Companion Monthly Active Users grew 59% QoQ [23] - Workvivo customers grew 72% YoY, driven by the Meta partnership [23] - Zoom Contact Center customers surpassed 1,250, up 82% YoY [23] - Enterprise customers contributing over $100,000 in TTM revenue grew 7% YoY, now representing 31% of revenue [25] Market Performance - Americas revenue grew 4% YoY, EMEA grew 5%, and APAC was flat [26] - On a constant currency basis, EMEA grew 3% and APAC grew 2% YoY [26] Strategy and Industry Competition - The company unveiled its new vision as an AI-first Work Platform for Human Connection, extending its strengths in unified communication and collaboration [7] - AI Companion 2.0 was released, showcasing innovation and customer obsession, with features like Meeting Summary and Smart Compose [9] - Custom AI Companion add-ons for Healthcare and Education were announced, aiming to meet specific industry needs [13] - Zoom Workplace for Frontline was introduced, targeting industries like retail, healthcare, and manufacturing [14] - Contact Center and Workvivo are key pillars of the strategy, with significant traction in both areas [15] Management Commentary on Operating Environment and Future Outlook - The company expects Q4 revenue to be in the range of $1.175 billion to $1.18 billion, representing approximately 2.7% YoY growth [31] - Full-year FY25 revenue is expected to be in the range of $4.656 billion to $4.661 billion, representing approximately 2.9% YoY growth [32] - The company raised its top-line and profitability outlook for FY25, with non-GAAP operating income expected to be in the range of $1.813 billion to $1.818 billion [32] - The Board authorized an incremental $1.2 billion share repurchase, bringing total unexecuted buy-back to approximately $2 billion [33] Other Important Information - The company announced a new corporate name: Zoom Communications, Inc., reflecting its evolution into an AI-first work platform [21] - The company highlighted significant customer wins, including a 20,000-seat Contact Center deal with Spain's national revenue service [17] - Integration with ServiceNow's Now Assist was deepened to bolster Generative AI product offerings [18] Q&A Session Question: Customer interest in AI and roadmap - Customers are highly interested in AI, with over 4 million accounts already enabled with AI Companion [37] - Feedback on AI Companion 2.0 was extremely positive, with customers appreciating the innovation and no additional cost [37] Question: Budget allocation for AI and macroeconomic outlook - Companies are allocating budgets for AI differently, with some consolidating into existing vendors and others shifting budgets from other areas [43] - The macroeconomic environment is improving, but it is too early to tell the full impact on spending [46] Question: Factors driving the 20,000-seat Contact Center deal - The deal was driven by trust in Zoom's scalable architecture, feature set, and pace of innovation [51] - The company's ability to support large deployments from day one was a key differentiator [52] Question: CFO's perspective on the job and future outlook - The CFO is focused on accelerating top-line growth, managing margins, and capital allocation [61] - The company will provide FY26 guidance in the next earnings call [61] Question: AI investments and impact on gross margins - AI investments are focused on back-end infrastructure, Workplace platform, and Contact Center features [66] - The company expects to monetize AI through customized AI Companion and Contact Center offerings [67] Question: Monetization opportunities for AI - AI monetization is already happening through Contact Center and Revenue Accelerator, with more opportunities expected in the second half of next year [76] - Customized AI Companion and AI Companion Studio will be available in the first half of next year, offering monetization potential [77] Question: Growth drivers for next year - The foundation of Zoom's growth is the meetings platform, with emerging products like Contact Center and Workvivo driving future growth [84] - International growth, channel expansion, and up-market opportunities are additional growth vectors [86] Question: Deferred revenue growth and conservatism in guidance - Deferred revenue growth was driven by tightening discounting and lengthening billing terms, with similar dynamics expected in Q4 [90] - Revenue is considered a better measure of business performance than deferred revenue [93] Question: Market strategy and importance of price - The company's strategy is based on better product, better price, and better service, with a focus on building long-term trust [96] - The platform approach and AI at no additional cost are key differentiators [98] Question: Workvivo growth and Meta partnership - Workvivo growth is driven by the Meta partnership, with strong pipeline and momentum [105] - The company is focused on innovating and growing the Workvivo business [106] Question: Path to long-term operating margins - The company is investing in AI, emerging growth businesses, and the platform, with a disciplined approach to expenses [112] - Long-term margin guidance is lower than current levels due to these investments [113] Question: Customer interest in integrating data into AI Companion - Customers are showing strong interest in integrating internal data into AI Companion, driving monetization and product stickiness [120] - The company's open platform approach and competitive pricing are key differentiators [123]

Core Insights - Zoom Video Communications reported $1.18 billion in revenue for the quarter ended October 2024, a year-over-year increase of 3.6% [1] - The EPS for the same period was $1.38, compared to $1.29 a year ago, with a surprise of +5.34% against the consensus estimate of $1.31 [1] Financial Performance Metrics - The number of enterprise customers was 192,400, slightly below the average estimate of 196,459 [3] - Customers generating over $100K in TTM revenue totaled 3,995, compared to the average estimate of 4,042 [3] - Remaining Performance Obligations (RPO) stood at $3.74 billion, slightly below the estimated $3.76 billion [3] - Current RPO was reported at $2.28 billion, exceeding the average estimate of $2.19 billion [3] - Non-Current RPO was $1.46 billion, below the average estimate of $1.55 billion [3] Stock Performance - Shares of Zoom Video have returned +18.2% over the past month, outperforming the Zacks S&P 500 composite's +2.1% change [4] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [4]

Zoom Communications Q3 FY25 Earnings November 25, 2024 | --- | --- | |-----------------------------|-------| | | | | | | | Use of non-GAAP financial | | | measures | | In addition to the financials presented in accordance with U.S. generally accepted accounting principles ("GAAP"), this presentation includes the following non-GAAP metrics: Revenue in Constant Currency, non-GAAP gross profit, non-GAAP gross margin, non-GAAP R&D expense, non-GAAP S&M expense, non-GAAP G&A expense, non-GAAP operating margin, n ...

Eric Yuan, founder and CEO of Zoom Video Communications, speaks at Concordia Annual Summit in New York on Sept. 25, 2024.Zoom shares were down about 1% in extended trading on Monday after the video calling software maker announced strong fiscal third-quarter results and gave guidance in line with expectations.Here's how the company did in comparison with LSEG consensus:Earnings per share: $1.38 adjusted vs. $1.31 expectedRevenue: $1.18 billion vs. $1.16 billion expectedZoom's revenue grew about 4% year over ...

Financial Performance - Total revenue for Q3 2025 was $1,177.5 million, reflecting a year-over-year increase of 3.6% [1][3] - Enterprise revenue reached $698.9 million, up 5.8% year-over-year [1][3] - GAAP operating margin was 15.5%, while non-GAAP operating margin stood at 38.9% [3][34] - GAAP net income for the quarter was $207.1 million, or $0.66 per share, compared to $141.2 million, or $0.45 per share, in the same quarter last year [3][34] Customer Metrics - The number of customers contributing more than $100,000 in trailing 12 months revenue increased by 7.1% year-over-year, totaling 3,995 [4] - Zoom had approximately 192,400 Enterprise customers, with a trailing 12-month net dollar expansion rate of 98% [4] Cash Flow and Stock Repurchase - Net cash provided by operating activities was $483.2 million, down 2.0% year-over-year [3][35] - Free cash flow for the quarter was $457.7 million, up 1.0% year-over-year [3][35] - The company repurchased approximately 4.4 million shares of common stock in Q3 and increased total common stock repurchase authorization by $1.2 billion, with approximately $2.0 billion remaining to be repurchased [1][9] Future Guidance - For Q4 2025, total revenue is expected to be between $1.175 billion and $1.180 billion, with non-GAAP income from operations projected between $443.0 million and $448.0 million [6] - For the full fiscal year 2025, total revenue is anticipated to be between $4.656 billion and $4.661 billion, with non-GAAP income from operations expected between $1.813 billion and $1.818 billion [6]