Here's Why Zoom Video Communications Stock Dropped Today

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].