Zoom Video Gears Up to Report Q4 Earnings: How to Play the Stock

Core Insights - Zoom Video Communications (ZM) is expected to report fourth-quarter fiscal 2026 results on February 25, with projected revenues between $1.23 billion and $1.235 billion, indicating a year-over-year growth of 4.08% [1] - Non-GAAP earnings per share are anticipated to be in the range of $1.48 to $1.49, reflecting a year-over-year increase of 4.96% [2] - The company has maintained a steady consensus estimate for earnings at $1.48 per share, with an average surprise of 8.9% over the last four quarters [2] Revenue and Earnings Expectations - The Zacks Consensus Estimate for revenue is currently pegged at $1.23 billion, aligning with the company's expectations [1] - The Earnings ESP for ZM is 0.00%, and it currently holds a Zacks Rank of 3 (Hold), indicating a neutral outlook for earnings performance [3] Business Environment and Growth Factors - Zoom is navigating a mature growth phase, leading to cautious optimism among investors [4] - The launch of AI Companion 3.0 in December 2025 and new agentic tools are expected to drive enterprise upsell activity [5] - Strategic partnerships with Oracle and NVIDIA are seen as potential growth levers, enhancing customer engagement and enterprise AI capabilities [6] Competitive Landscape and Challenges - The competitive environment remains challenging, with Microsoft Teams, RingCentral, and Cisco Webex aggressively targeting enterprise collaboration budgets [7] - ZM's net dollar expansion rate is at 98%, but online segment growth is only 2%, indicating constraints in expanding within the existing customer base [7] - The projected non-GAAP operating margin for Q4 is 38.9%, slightly down from 41.2% in the previous quarter, suggesting near-term profitability pressure [7] Investor Sentiment - Given the modest growth trajectory and limited near-term catalysts, investors may consider holding existing positions or waiting for a more favorable entry point before increasing exposure [8][9]