Analyst on Zoom (ZM): ‘This Is Not a Growth Story’

Core Viewpoint - Zoom Communications Inc (NASDAQ:ZM) is facing significant challenges post-pandemic, with analysts indicating that it is no longer a growth story and has experienced disappointing growth metrics [1][2]. Group 1: Analyst Perspectives - Joseph Terranova from Virtus Investment Partners expressed a bearish outlook on ZM, stating that the stock has not performed well since its peak in 2024, with low single-digit revenue growth expected [1]. - The company has transitioned from a speculative growth stock during the pandemic to a more mature growth company, but growth expectations have diminished significantly [2]. Group 2: Financial Performance - Since its purchase, ZM has returned -34%, while the MSCI World Index has increased by 28%, indicating underperformance relative to the broader market [2]. - The Enterprise segment of ZM has seen decelerating growth, with customer growth slowing from 25% year-over-year to an estimated 3.6% by Q1 2024 [2]. - The Net Dollar Expansion rate has also decreased, currently at 101% in Q1 2024 compared to approximately 123% at the time of purchase [2]. Group 3: Market Position and Brand Strength - Despite the challenges, ZM has a strong brand presence and a best-in-class product, which had initially positioned it well for growth in a hybrid working environment [2]. - The company holds a robust balance sheet with $5 billion in cash, providing potential for future growth investments [2].