ZM Stock Rises as Customer Base Sees Post-Pandemic Expansion

Zoom Video Communications Inc. NASDAQ:ZM tried to navigate normalization after the monstrous pandemic surge in 2021. In the post-COVID years, Zoom Video has struggled to stabilize its business and stock price, attempting to find a baseline so it can resume growth .

Critics have argued that Zoom was a fad during the pandemic and that its usefulness will be minimized as people return to work. Its fiscal fourth-quarter 2025 earnings report illustrates that normalization may finally be complete and growth is picking up again. More importantly, it continues to demonstrate that Zoom Video is not a fad but a critical component in the new era of hybrid and remote work. It competes with IT and technology giants such as Adobe Inc. NASDAQ: ADBE, Salesforce Inc. New York Stock Exchange: CRM AND Microsoft Co. NASDAQ: MSFT for corporate dollars.

Drive growth for enterprise customers

While Zoom Video has seen social engagement decline as social distancing mandates have been lifted, the company has been able to grow its enterprise customers. The communications platform has evolved with enterprise-facing features with hundreds of features added. Zoom has built-in artificial intelligence (AI) features such as AI-based meeting transcription and summaries, as well as speaker identification and nonverbal signal detection. Major customers include Broadcom Inc. NASDAQ: AVGO, Diageo plc NYSE:DEO and Convera. The company’s revenue increased 5% year-over-year in its recent earnings report. Check the heat map of the sector on MarketBeat.

Proof that growth is returning

Zoom Video reported fiscal fourth-quarter 2024 earnings per share of $1.42, beating analysts’ estimates by 27 cents. Revenue increased 2.6% year-over-year to $1.15 billion versus consensus estimates of $1.13 billion. GAAP income from operations was $168.5 million compared to a loss of $129.9 million in the same period a year earlier. Non-GAAP revenue was $443.7 million, compared to $404.8 million in the prior-year period. GAAP operating margin was 14.7% and non-GAAP margin was 38.7%. As of January 31, 2024, total cash, cash equivalents and marketable securities were $7 billion. Zoom Video has authorized a $1.5 billion stock buyback of its Class A common stock.

The company is showing impressive growth metrics

At the end of the year, Zoom Video had 220,400 enterprise customers. The trailing 12-month net dollar expansion rate for corporate clients was 101%. The average monthly online churn rate was 3% in the fourth quarter, down 40 basis points year over year. Zoom saw 3,810 customers contribute more than $100,000 in 12-month revenue growth, up 9.8% year over year. Obtain AI-powered insights on MarketBeat.

The zoom increases its guidance

Zoom Video raised guidance for the fiscal first quarter of 2025 to EPS of $1.18 to $1.20 versus consensus analyst estimates of $1.13. Revenues are expected to be around $1.125 billion versus consensus estimates of $1.13. Full-year fiscal 2025 EPS is expected to be between $4.85 and $4.88 versus consensus estimates of $4.66. Revenues are expected to be around $4.60 billion versus $4.64 billion.

Eric Yuan, CEO of Zoom Video, commented: “In fiscal 2024, we introduced Zoom AI Companion, our generative AI digital assistant, aimed at increasing productivity, improving team effectiveness and promoting skill development through Zoom platform. We are committed to democratizing the accessibility of AI by offering it to all our customers regardless of company size, including at no additional cost with a paid license.”

Yuan concluded, “Our team is dedicated to innovation at the platform level, introducing hundreds of new features, including those for Zoom Contact Center, that redefine the gold standard for customer experience.”

Zoom Video Communications analyst ratings and price targets I’m on MarketBeat. Zoom Video Communications peers and competitor actions can be found with MarketBeat Stock Screener.

Daily descending triangle Breakout

The daily candlestick chart on ZM illustrates a descending triangle breakout pattern. The descending trend line began at the high of $71.50 on January 12, 2024. From there on ZM proceeded to sell off, with any rebound attempts limited to lower highs. The flat-bottomed lower trendline is located at $60.14. The daily breakout of the market structure low (MSL) triggered the trigger break of $62.18. ZM closed at $64.32, focusing on fiscal Q4 2024 earnings, which led to a gap to the $65.06 level, and continued buying, taking it towards the high of $71.50. The daily relative strength index (RSI) bounced towards the 70 band, where it stopped. The pullback support levels are at $67.14, $64.32, $62.18, and $60.14.

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