TenQ

The Zoom story

Zoom provides workplace communications and customer service software, with its expansion beyond meetings depending on whether AI, phone, and contact center products can deepen spending by existing customers.

Zoom stock reportTenQ Score 26/36 · every chart and check from its filings
  • $94.19share price, last close
  • $27.5Bmarket value
  • 26/36TenQ Score checks passed
  • 5.8%growth a year the price assumes

The story in brief

  • Enterprise leads growth. In the quarter to July 2026, Enterprise revenue grew 7.8% to $787.5 million, while Online revenue grew 0.6% to $489.7 million.
  • Earnings outpaced operations. In the quarter to July 2026, GAAP net income reached $1,542.4 million, supported by strategic investment gains, while operating income declined to $314.3 million from $321.7 million a year earlier.
  • Cash supports flexibility. Zoom held $7.2 billion in cash and short-term investments with $0 total debt, alongside $1.9 billion of free cash flow over the last twelve months.

What drives the business

  • Zoom is expanding beyond meetings through Zoom Workplace, which combines communications and productivity tools, and Zoom Business Services, which includes Contact Center, Revenue Accelerator, and Events.
  • AI Companion connects these products through summaries, task assistance, and customer support tools, and is included at no additional cost with eligible paid services as well as offered separately.
  • Enterprise customers reached through direct sales, partners, and distribution channels generated $787.5 million of the $1,277.2 million in total revenue in the quarter to July 2026, making their adoption of additional products central to growth.
  • Customers contributing more than $100,000 in trailing 12 months revenue increased 8.2% to 4,625, but the Enterprise net dollar expansion rate of 99% indicates that existing customer spending was still contracting slightly on that measure.
  • Zoom reported high-double-digit annual recurring revenue expansion in its AI-first Customer Experience portfolio in the quarter to July 2026, with Zoom Virtual Agent customer count up 256% and recent acquisitions including Common Room and BrightHire broadening its product reach.

What the price assumes

At $94.77, the reverse DCF implies that free cash flow after stock pay grows 6.1% a year for ten years, using a 10.3% discount rate.

That compares with delivered growth of 16.0% a year over the last 5 years and the TenQ check's 10.0% bar, which slows the historical record halfway toward 4.0%.

The implied rate is below both benchmarks, although reported free cash flow and cash flow after stock pay are different measures, with stock-based pay totaling $729 million over the last twelve months.

Value ZM on your own assumptions

What could change the story

  • Competition from bundled or lower-priced alternatives could limit renewals and adoption of additional products, particularly while Enterprise net dollar expansion remains at 99%.
  • Revenue growth of 5.0% over the last twelve months and 3.5% a year over the last three years falls short of the TenQ sector comparison bars of 17.0% and 14.9%, respectively.
  • Strategic investment gains make headline earnings less representative of operating performance, while free cash flow fell to $472.4 million in the quarter to July 2026 from $508.0 million a year earlier and Zoom failed TenQ's earnings cash-conversion check.
  • Share count rose 1.0% over 3 years despite sustained repurchases, showing that cash returned through repurchases does not necessarily translate into a matching reduction in shares.
  • Cloud hosting outages, internet infrastructure failures, or security breaches could interrupt services, trigger credits or liabilities, and damage customer relationships.

What to watch next

  • For the third quarter of fiscal year 2027, Zoom expects revenue between $1.275 billion and $1.280 billion and non-GAAP operating income between $510.0 million and $515.0 million.
  • For fiscal year 2027, its revenue guidance is between $5.085 billion and $5.095 billion, with free cash flow between $1.780 billion and $1.820 billion.
  • The next releases will show whether Enterprise net dollar expansion improves from 99%, large-customer growth continues, and Virtual Agent adoption translates into broader revenue growth.
  • Share count remains another measure to track after approximately 3.7 million shares were repurchased in the quarter to July 2026, with approximately $1.3 billion of remaining authorization excluded from EPS and share count guidance.

Sources

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