Zoom stock exceeded expectations for Q4 but saw a decline in enterprise customers, leading to stock drop.

From Nasdaq: 2025-03-02 23:57:03

Zoom Communications (NASDAQ:ZM) exceeded Q4 fiscal year 2025 expectations with $1.41 EPS on $1.18 billion revenue. Enterprise revenue grew 5.9% to $707 million, but online sales fell 0.4% to $477 million. The company saw a 13% decline in enterprise customers to 192,600, raising concerns about future demand.

Despite improved operating margins and revenue growth, Zoom forecasts $1.16 billion in sales and $1.30 EPS for the next quarter, slightly below market predictions. ZM stock dropped 8% post-earnings, underperforming the market for the last four years. In contrast, Trefis’ High Quality Portfolio has outperformed the S&P 500 consistently.

Zoom’s current valuation at $75 is 5.1x trailing revenues, below its historical average of 7.2x. While revenue growth and customer base decline may justify some reduction, the valuation gap suggests room for share price appreciation. Trefis’ Reinforced Value Portfolio offers a comprehensive comparison of industry peers for informed investment decisions.

In terms of returns, ZM posted -15% MTD in Feb 2025, 3% since the start of 2024, and 9% from 2017-25. Comparatively, the S&P 500 saw 1%, 28%, and 173% returns in the same periods, while Trefis Reinforced Value Portfolio showed -7%, 15%, and 677% returns. For market-beating portfolios and price estimates, explore Trefis for valuable insights.



Read more at Nasdaq: What’s Next For Zoom Stock?