TLDR
- Zoom reports Q1 fiscal earnings after market close Thursday, May 21
- Analysts expect EPS of $1.42 and revenue of $1.22 billion, up 4.3% year over year
- ZM stock rose 2.1% to $99.42 on Wednesday ahead of the print
- Baird raised its price target to $105; Citigroup lifted its target to $122
- Wall Street consensus price target of $98.52 implies little upside from current levels
Zoom Communications (ZM) reports its fiscal first-quarter results after Thursday’s closing bell, and the street is watching closely. The stock closed at $99.42 on Wednesday, up 2.1% on the day.
Analysts are expecting earnings of $1.42 per share on revenue of $1.22 billion. That would be a 4.3% revenue jump year over year, but a slight dip from the $1.43 EPS reported in the same period last year.
It’s also worth noting that both figures would mark sequential declines from last quarter’s $1.44 EPS and $1.25 billion in revenue.
Zoom’s pandemic-era growth story is well behind it. The question now is whether its newer product lines can pick up the slack.
Analyst Targets Heading In
A handful of analysts made moves ahead of the print. Baird’s William Power raised his price target from $95 to $105 on May 19, citing optimism around Zoom’s enterprise platform expansion. Power carries an accuracy rate of 83%, making him one of the more reliable voices on the name.
Citigroup’s Tyler Radke was even more bullish, lifting his target from $106 to $122 on May 15, while maintaining a Buy rating. Needham’s Joshua Reilly held his Buy with a $100 target.
Not everyone is enthusiastic. Citizens’ Patrick Walravens kept a Market Perform, and Bernstein’s Peter Weed actually lowered his target from $90 to $88 back in February.
The overall Wall Street consensus sits at 16 of 29 analysts recommending a Buy, but the consensus price target of $98.52 implies virtually no upside from current levels. That’s a bit of a mixed message.
EPS estimates have barely moved over the past two months. Analysts have landed in a cautious holding pattern ahead of the print.
What to Watch in the Results
The core meetings business is mature. Growth is now in the low-to-mid single digits, and Zoom needs its newer offerings to carry more weight.
Zoom Phone crossed 10 million seats and the Contact Center product is still finding its footing. Investors will want to see enterprise momentum continue — last quarter the company added 105 customers spending more than $100,000 annually.
AI Companion features are also under scrutiny. Zoom has leaned into AI integrations, but whether those tools are actually driving upgrades or just keeping pace with competitors like Microsoft Teams remains an open question.
Guidance will likely be the most important part of Thursday’s call. Last time out in February, Zoom beat on revenue at $1.25 billion but missed on EPS at $1.44 versus the $1.49 consensus. Full-year EPS guidance also fell short of expectations.
At a forward P/E of 16.09 and gross margins near 77%, the profitability story is solid. Market cap sits at $29.3 billion.
Russell Dicker was named chief product officer on April 15. His first earnings call as CPO adds another layer of interest to Thursday’s event.
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