Zoom Video Communications Inc - Class A NASDAQ:ZM Price, Chart, News & Insight

NASDAQ:ZM

# Zoom Stock Drops 5.5% Premarket as Soft Growth and Cash Flow Overshadow Enterprise Momentum

Zoom Communications (NASDAQ: ZM) shares fell about 5.5% in premarket trading Wednesday after the company reported fiscal second-quarter 2027 results that showed improving enterprise momentum but continued relatively slow overall growth and weaker cash generation.

Total revenue increased 4.9% year over year to $1.28 billion. Enterprise revenue was considerably stronger, rising 7.8% to $787.5 million — its fastest growth rate in three years — while Online revenue increased just 0.6% to $489.7 million.

## Why Is Zoom Stock Falling?

Despite the headline revenue growth, several underlying figures may be weighing on investor sentiment.

GAAP operating income declined to $314.3 million from $321.7 million a year earlier. Operating cash flow also fell to $494.8 million from $515.9 million, while free cash flow decreased to $472.4 million from $508.0 million.

Growth also remains modest for a technology company positioning itself as an AI-driven enterprise platform. Zoom expects third-quarter revenue of $1.275 billion to $1.280 billion, effectively little changed sequentially from Q2's $1.277 billion.

For the full fiscal year, Zoom expects revenue of $5.085 billion to $5.095 billion and non-GAAP EPS of $6.08 to $6.12. The outlook appears to have offered investors little evidence of a near-term acceleration sufficient to justify stronger expectations.

There were nevertheless important positives. Enterprise net dollar expansion improved to 99% from 98%, customers generating more than $100,000 annually increased 8.2%, and Zoom said its AI-first Customer Experience portfolio is delivering high-double-digit ARR growth. Zoom Virtual Agent customers surged 256% year over year.

Zoom also maintained an exceptionally strong balance sheet with $7.2 billion in cash and marketable securities and approximately $1.3 billion remaining under its share-repurchase authorization.

The 5.5% premarket decline therefore appears less about a weak quarter and more about the quality and pace of future growth. Strong enterprise and AI adoption were offset by near-flat Online growth, declining cash flow and a Q3 revenue outlook suggesting that Zoom's broader growth reacceleration remains gradual.

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Global Finance News 08-26-26

Zoom Communications Surges 9.2% as AI Monetization Accelerates and Margins Expand Sharply

Zoom Communications jumped 9.2% on Friday after the video and enterprise communications platform delivered a first quarter that beat the high end of its own guidance, showed accelerating AI adoption and demonstrated that its transformation from a pandemic-era video tool into a broader AI-first platform for modern work is gaining genuine commercial traction.

Total revenue for Q1 fiscal 2027 grew 5.5% to $1,239.0 million, exceeding the high end of guidance. Enterprise revenue, the higher-quality segment, grew 7.2% to $755.7 million. The profitability improvement was the more striking story — GAAP operating margin expanded 450 basis points to 25.1%, and non-GAAP operating margin grew 130 basis points to 41.1%. GAAP net income nearly doubled to $425.7 million, or $1.42 per share, from $254.6 million, or $0.81 per share, a year ago. Non-GAAP EPS grew to $1.55 from $1.43. Free cash flow reached $500.5 million, up from $463.4 million, and total cash and marketable securities stood at $7.7 billion.

The AI metrics were the headline catalyst. AI Companion paid users grew 184% year over year, and My Notes reached 1.5 million licensed users within just four months of launch — a remarkably rapid adoption curve for a new product. Zoom Customer Experience continued to show accelerating high double-digit growth. The number of customers contributing more than $100,000 in trailing twelve-month revenue grew 8.2% to 4,534, and the net dollar expansion rate for enterprise customers ticked up to 99% from 98% — a sign that existing customers are spending modestly more even in a cautious enterprise spending environment.

For the full fiscal year 2027, Zoom guided for revenue of $5.080 billion to $5.090 billion, non-GAAP operating income of $2.065 billion to $2.075 billion and non-GAAP diluted EPS of $5.96 to $6.00, with free cash flow of $1.700 billion to $1.740 billion. The board also authorized an additional $1.0 billion in share repurchases on top of the $625 million already remaining.

The 9.2% surge reflects a market that had written off Zoom as a mature, ex-growth business and found instead a company that is monetizing AI faster than expected, expanding margins aggressively and generating substantial free cash flow — a combination that demands a meaningful reassessment of the company's long-term trajectory.

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Global Finance News 05-23-26

Bell and Zoom Launch Exclusive AI-Powered Collaboration Platform for Canadian Businesses

Bell Canada and Zoom have announced the launch of *Workplace from Bell and Zoom*, a new collaboration platform designed specifically for Canadian enterprises. Available exclusively through Bell, the platform integrates Zoom's AI Companion and includes communication tools such as calling, video conferencing, messaging, and file sharing.

Key benefits include:

* AI-first functionality embedded across all features.
* Seamless support for hybrid and remote work models.
* Enterprise-grade security.
* Simplified deployment for businesses of all technical skill levels.

Executives from both companies highlighted the partnership’s focus on addressing the growing need for flexible, secure, and fully integrated collaboration tools. The solution is set to launch nationally in 2025 and is backed by Bell’s robust Canadian network infrastructure.

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WS Investor 05-26-25

Shane Crehan, Chief Accounting Officer, will resign effective May 2, 2025, to join another company.

His departure is not due to any disagreement with Zoom. CFO Michelle Chang will assume the role of principal accounting officer in the interim. A successor search is underway.

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WS News 04-17-25

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