Zoom (ZM) Up 1% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Zoom Communications reported strong Q3 fiscal 2026 earnings and revenues, surpassing estimates and showing year-over-year growth, indicating positive momentum for the company [2][10][11]. Financial Performance - Adjusted earnings per share for Q3 fiscal 2026 were $1.52, exceeding the Zacks Consensus Estimate by 6.29% and increasing 10.1% year over year [2]. - Revenues reached $1.23 billion, beating the consensus mark by 1.4% and reflecting a 4.4% year-over-year increase [2]. - Enterprise revenues, which constitute 60.3% of total revenues, grew 6.1% year over year to $741.4 million, while online revenues increased 2% to $488.4 million [3]. Customer Metrics - The number of customers contributing over $100,000 in revenues over the trailing 12 months grew by 9.2% to 4,363, accounting for 32% of total revenues [3]. - The total number of Enterprise customers was approximately 185,100, with a net dollar expansion rate of 98% for Enterprise customers [4]. Operating Metrics - Non-GAAP gross margin improved to 80% from 78.9% year over year, with non-GAAP operating income rising 10.7% to $507 million [6][7]. - Operating margin increased to 41.2% compared to 38.9% in the previous year [7]. Cash Flow and Balance Sheet - Total cash, cash equivalents, and marketable securities as of October 31, 2025, were $7.9 billion, up from $7.8 billion as of July 31, 2025 [8]. - Net cash provided by operating activities was $629.3 million for Q3, compared to $515.9 million in the previous quarter [8]. Guidance - For Q4 fiscal 2026, Zoom expects revenues between $1.230 billion and $1.235 billion, with non-GAAP earnings per share projected in the range of $1.48 to $1.49 [10]. - For the full fiscal year 2026, revenues are expected to be between $4.852 billion and $4.857 billion, with non-GAAP earnings per share anticipated in the band of $5.95 to $5.97 [11]. Market Sentiment - Since the earnings release, there has been a 10.37% upward trend in consensus estimates, reflecting positive investor sentiment [12]. - Zoom holds a Zacks Rank 2 (Buy), indicating expectations for above-average returns in the coming months [14].