Zoom Reports Q4 2025 Earnings, Stock Plummets 8%

Zoom's Q4 fiscal 2025 results reveal adjusted earnings of $1.41 per share on $1.18 billion revenue, exceeding EPS estimates but missing revenue targets. Amid declining enterprise customers and market concerns, ZM stock dropped 8%.

Date: 03-03-2025

AI Rating: 5

Earnings Per Share (EPS): Zoom reported adjusted earnings of $1.41 per share, exceeding analysts' expectations of $1.35. This is a positive sign for investors, though it reflects a decline of one cent from the previous year, leading to a neutral sentiment regarding this metric.

Revenue Growth: The company reported revenue growth of 3.3% year-over-year, driven by a 5.9% increase in enterprise revenue. This growth indicates some positive momentum; however, Zoom's overall online sales saw a slight decline of 0.4%.

Profit Margins: An improvement in operating margin was noted, rising by 80 basis points to reach 39.5%. This suggests better cost management, which could bolster investor confidence despite other declining aspects.

While the earnings report initially showed promise, several issues cast a shadow on its outlook. A 13% year-over-year decrease in enterprise customers raises concerns about sustainability in demand for video conferencing solutions. Furthermore, the forecast for the next quarter falls short of market expectations with anticipated sales of $1.16 billion against expected $1.17 billion.

Stock Performance: Following the earnings announcement, ZM stock suffered an 8% drop, reflecting investors' concerns about the company's ability to maintain growth. The historical stock performance has shown a downward trend, with losses in previous years, indicating the potential for further declines.

Valuation Perspective: Despite current challenges, the stock's valuation at $75 places it at 5.1x trailing revenues, lower than its average price-to-sales ratio of 7.2x. This suggests a potential for recovery, but the declining enterprise customer base and increasing competition remains a risk.

Stocks: ZM