Zoom Reports Better-Than-Expected Q4 Earnings Results

Zoom Communications announced its fiscal Q4 2025 results, reporting an EPS of $1.41 and revenue growth of 3.3%. Strong operational performance reflects competitiveness despite modest revenue gains.

Date: 25-02-2025

AI Rating: 7

Earnings Per Share (EPS): Zoom's reported EPS of $1.41 exceeded analysts' expectations of $1.30, indicating a slightly positive performance compared to predictions.

Revenue Growth: Revenue for the quarter rose by 3.3% to $1.184 billion, surpassing projections of $1.178 billion. Such growth demonstrates reasonable operational capacity, though it is described as modest, possibly signaling competitive challenges in the sector.

Operating Cash Flow and Free Cash Flow: Operating cash flow increased significantly by 20.9% year-over-year to $424.6 million, and free cash flow surged by 25.1%. These figures suggest a solid cash generation capability, which is critical for investment and operational flexibility.

Profit Margins: The company saw an improvement in its GAAP operating margin, rising by 430 basis points to 19%. This uptick indicates enhanced operational efficiency and possibly reflects the benefits of recent restructuring efforts.

Looking to the future, Zoom has guided revenues for fiscal 2026 to be between $4.785 billion and $4.795 billion, which indicates moderate growth expectations. Additionally, the focus on AI integration aims to maintain competitiveness and address customer needs more effectively. However, attention to customer retention, particularly the near-100% net dollar expansion rate, suggests that there are some challenges in upselling existing customers.

Stocks: ZM