Zoom's Beat-And-Raise Quarter: Mixed Reactions From 5 Key Analysts

Zinger Key Points
  • Zoom Video Communications reported strong FQ2 results, driven by upbeat Enterprise revenues, one analyst said.
  • The company’s full-year guidance reflects softness in Online and unchanged Enterprise expectations, another analyst added.

Shares of Zoom Video Communications Inc ZM were bouncing back after an initial drop in Tuesday's early trading. The company reported upbeat second-quarter results and lifted its guidance.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the earnings release.

Mizuho Securities On Zoom Video Communications

Analyst Siti Panigrahi maintained a Buy rating and price target of $100.

Zoom Video Communications reported a “strong revenue and operating profit beat versus consensus” for the second quarter, driven by better-than-expected Enterprise revenues, “which reflects a reversal from last quarter's commentary around modest Enterprise growth deceleration,” Panigrahi said in a note.

“In our view, the implied H2 guidance is appropriately conservative given lower visibility into ZM's Online segment (where expectations were reduced), positioning the company well to outperform in FQ3/FQ4,” he added.

RBC Capital Markets On Zoom Video Communications

Analyst Rishi Jaluria reiterated an Outperform rating and price target of $95.

“Zoom reported a decent beat-and-raise against a low bar,” Jaluria wrote in a note. “Revenue upside was driven by better-than-feared Enterprise growth, as Phone/ZoomOne cross-sell momentum continues, partially offsetting ongoing pressure on core seats and international,” he added.

Management’s full-year guidance was “raised by less than the beat, as Online expectations were tempered (on softness in top of funnel) and Enterprise expectations were unchanged (given macro),” the analyst further stated.

Check out other analyst stock ratings.

Needham On Zoom Video Communications

Analyst Ryan Koontz reaffirmed a Hold rating on the stock.

The second quarter marked the eighth straight quarter of low single-digit year-over-year revenue growth, Koontz said. “With top-line growth stalled, we are cautious on meaningful re-acceleration until product diversification improves,” he added.

“Management noted strong R&D investments in Contact Center and AI products and expects these products to become key growth drivers in 1-2 years,” the analyst further wrote.

William Blair On Zoom Video Communications

Analyst Matt Stotler maintained an Outperform rating.

Zoom Video Communications reported upbeat results “across the board, primarily driven by improved margins and growth in Enterprise revenue,” Stotler wrote.

“Updated guidance implies a more tempered view of the Online segment, offset by continued adoption of Zoom One, Zoom Contact Center, and Zoom Phone in the Enterprise segment,” he added.

KeyBanc Capital Markets On Zoom Video Communications

Analyst Thomas Blakey reiterated a Sector Weight rating on the stock.

“Zoom continues to benefit from upsells including bundles (Zoom One, Phone), which appear to partially offset seat-related downsells, which are continuing relatively late in FY24 due to the timing of Enterprise contract renewals,” Blakey said in a note.

“Zoom Phone reached ~$500M ARR in F2Q and CCaaS continues to ramp, now at 500 customers, but pressure from Enterprise downsells ($100K+ customer ARPU flat to down for four straight quarters despite new product rollouts) and limited visibility into a bottom in Online along with likely peaked OM support our SW rating,” he added.

ZM Price Action: Shares of Zoom Video Communications were down 0.87% to $66.68 at the time of publication Tuesday.

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Posted In: Analyst ColorEarningsNewsPrice TargetReiterationAnalyst RatingsMoversTrading IdeasExpert IdeasKeyBanc Capital MarketsMatt StotlerMizuho SecuritiesNeedhamRBC Capital MarketsRishi JaluriaRyan KoontzSiti PanigrahiThomas BlakeyWilliam Blair
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