It has been about a month since the last earnings report for Zoom Communications (ZM). Shares have added about 5% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Zoom due for a pullback? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent catalysts for Zoom Communications, Inc. before we dive into how investors and analysts have reacted as of late.
Zoom Q4 Earnings Miss Estimates, Revenues Increase Y/Y
Zoom Communications reported fourth-quarter fiscal 2026 adjusted earnings of $1.44 per share, which missed the Zacks Consensus Estimate by 2.7% and increased 2.1% year over year.
Revenues of $1.25 billion beat the consensus mark by 1.18% and increased 5.3% year over year. Adjusting for foreign currency impact, revenues in constant currency were $1.24 billion, up 4.8% year over year.
ZM’s Q4 Details
Enterprise revenues, which account for 60.7% of total revenues, increased 7.1% year over year to $757.3 million. Online revenues, which represent 39.3% of total revenues, increased 2.6% year over year to $489.7 million.
Customers contributing more than $100,000 in revenues in the trailing 12 months grew 9.3% to 4,468. These customers accounted for 33% of revenues.
The number of enterprise customers at the end of the fiscal fourth quarter was 186,400. In the fourth quarter, 74.9% of total Online MRR came from Online customers with a continued term of service of at least 16 months, down 20 basis points year over year.
The company reported a trailing 12-month net dollar expansion rate for Enterprise customers of 98% and an Online average monthly churn of 2.9%, flat year over year.
ZM’s Non-GAAP Operating Details
Non-GAAP gross margin in the fiscal fourth quarter was 79.8% compared with 78.8% in the year-ago period, expanding 100 bps.
On a year-over-year basis, Research and development expenses increased 10.8% to $147.4 million. Sales and marketing expenses rose 5.5% to $291.9 million, and general and administrative expenses increased 18.9% to $66.2 million.
Non-GAAP operating income rose 4.6% to $489.7 million year over year. The operating margin was 39.3% compared with 39.5% in the year-ago quarter.
ZM’s Balance Sheet & Cash Flow
Total cash, cash equivalents and marketable securities as of Jan. 31, 2025, were $7.8 billion compared with $7.9 billion as of Oct. 31, 2025.
Net cash provided by operating activities was $354.5 million for the fiscal fourth quarter compared with $629.3 million in the previous quarter.
Free cash flow was $338.4 million compared with $614.3 million in the prior quarter.
ZM’s Q1 & FY27 Guidance
Zoom expects its first-quarter fiscal 2027 revenues to be between $1.22 billion and $1.225 billion. Revenues on a constant currency basis are expected to be between $1.212 billion and $1.217 billion.
Non-GAAP income from operations is expected to be between $487 million and $492 million.
Non-GAAP earnings per share (EPS) are expected to be in the range of $1.4-$1.42.
For fiscal 2027, Zoom expects revenues in the range of $5.065-$5.075 billion. Revenues on a constant currency basis are expected to be between $5.054 billion and $5.064 billion.
Non-GAAP income from operations is expected to be between $2.05 billion and $2.06 billion.
Non-GAAP EPS are expected to be in the band of $5.77-$5.81.
The company expects free cash flow between $1.7 billion and $1.74 billion.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
At this time, Zoom has a subpar Growth Score of D, a score with the same score on the momentum front. Charting a somewhat similar path, the stock has a score of C on the value side, putting it in the middle 20% for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Zoom has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Zoom is part of the Zacks Internet - Software industry. Over the past month, Pinterest (PINS), a stock from the same industry, has gained 0.8%. The company reported its results for the quarter ended December 2025 more than a month ago.
Pinterest reported revenues of $1.32 billion in the last reported quarter, representing a year-over-year change of +14.3%. EPS of $0.67 for the same period compares with $0.56 a year ago.
Pinterest is expected to post earnings of $0.22 per share for the current quarter, representing a year-over-year change of -4.4%. Over the last 30 days, the Zacks Consensus Estimate has changed -33.2%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Pinterest. Also, the stock has a VGM Score of B.
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This article originally published on Zacks Investment Research (zacks.com).