Dear Zoom Stock Fans, Mark Your Calendars for August 25

Zoom Communications (ZM) once meant video calls, virtual meetings, and the occasional “Can everyone see my screen?” moment. Since then, the company has spent the years building a much broader business around the way modern teams communicate and work. Zoom now presents itself as an artificial intelligence (AI)-first work platform, and investors are noticing the change.

The excitement really showed up after Zoom delivered its Q1 FY2027 results, wherein the biggest eyebrow-raiser came from Zoom's AI adoption story. Paid AI Companion users surged 184% year-over-year (YOY) during the quarter, while My Notes reached 1.5 million licensed users within just four months of launch. 

Furthermore, Zoom is on track to cross $5 billion in revenue this year, alongside keeping profitability in view while rewarding shareholders. Nevertheless, the numbers were strong enough to push several less exciting details into the background. 

The company did slow its pace of landing new large enterprise customers. However, investors did not seem overly concerned because the rest of the quarter gave them enough good news to keep the bigger picture intact.

That sets up Tuesday, Aug. 25 as a rather important date. Zoom is scheduled to report its Q2 FY2027 results after the closing bell, which would give investors their next chance to judge whether the company's AI push can produce lasting growth. A strong report could give the comeback story another leg to stand on. A weaker one could make that story look a little too polished for its own good.

About Zoom Stock

The San Jose, California-based Zoom Communications is an AI-first work platform that connects people and organizations. With a market cap of $31.1 billion, the company now offers far more than its familiar video meeting service, with cloud calling, chat, collaboration tools, contact centers, events, employee experience solutions, conference rooms, and developer integrations all forming part of its broader platform. 

The stock has already enjoyed a pretty lively run. Zoom’s shares climbed 49.23% during the last 52 weeks, while it gained 21% year-to-date (YTD). The recent momentum looks strong too, with shares up 16.3% over the past month.

Investors still have valuation to consider after that run. ZM stock is trading at 17.45 times forward adjusted price-to-earnings. The figure sits below the industry average and its own five-year average multiple, suggesting the stock trades at a discount despite its recent run.

Zoom Surpasses Q1 Earnings

Zoom gave investors their first major clue on May 21 when the company unveiled its Q1 FY2027 earnings results. The market liked what it saw as shares jumped 9.2% the next day. Total revenue grew 5.5% YOY to $1.24 billion, beating the high end of management's guidance by $14 million and topping the $1.22 billion analyst estimate. 

The performance ranked among Zoom's best growth rates in recent years and highlighted the increasing value of its system of action for modern work. The Enterprise business provided much of that support as revenue grew 7.2% YOY and accounted for 61% of total revenue, up 1 point YOY. 

Zoom also increased the number of Enterprise customers contributing more than $100,000 in trailing twelve-month revenue by 8% YOY. Those customers now account for 33% of total revenue, which represents another 1-point YOY increase.

The Online business delivered a less encouraging figure, with Q1 Average Monthly Churn reaching 3% compared with 2.8% in Q1 of FY26. The increase deserves attention because Zoom needs to keep its broader customer base engaged while it pushes deeper into the Enterprise market.

Zoom made up for that wrinkle with stronger profitability. Non-GAAP gross margin reached 79.9% in Q1, up 70 basis points from Q1 of last year, as continued cost optimization efforts moved the company closer to its long-term target of 80%. Non-GAAP income from operations grew 8.9% YOY to $508.7 million, beating the high end of management's guidance by $17 million.

The bottom line delivered another beat. Non-GAAP diluted net income per share increased 8.4% to $1.55, above the $1.42 analyst estimate and $0.13 above the high end of management's guidance. Strong business performance drove the EPS growth, with effective cost management, anti-dilution efforts across the buyback program, and stock compensation management adding further support.

The balance sheet held up well too, with deferred revenue growing 5.5% YOY to $1.49 billion at the end of Q1. That result came in above the high end of the company's previously provided range of 1 to 2%. For Q2, Zoom expects deferred revenue to increase 2 to 3% YOY.

Also, management expects Q2 total revenue between $1.265 billion and $1.270 billion, with the midpoint representing 4.1% YOY growth. Non-GAAP EPS is projected to come in between $1.45 and $1.47.

Furthermore, the company has raised its full-year FY27 revenue and profitability guidance. Zoom now expects revenue between $5.08 billion and $5.09 billion, with the midpoint representing 4.4% YOY growth. The company also raised its FY27 non-GAAP EPS outlook to $5.96 to $6

Analysts have set a somewhat different earnings path. They expect Q2 FY2027 EPS to rise 2% YOY to $1.01. For full year FY2027, analysts expect EPS to grow 26.8% YOY to $4.21 before rising 5.46% from the previous year to $4.44 in FY2028.

What Do Analysts Expect for Zoom Stock?

Following the latest earnings release, RBC Capital reiterated its “Outperform” rating, with analyst Rishi Jaluria keeping his price target at $130. The call reflects confidence in Zoom's ability to maintain its competitive edge in the technology sector as the company expands its platform.

The broader analyst community also leans bullish, assigning the stock an overall rating of “Moderate Buy.” Among 27 analysts covering the stock, 11 recommend a "Strong Buy," three assign a "Moderate Buy," and the remaining 13 suggest investors "Hold."

To that end, the average price target stands at $115.23, implying potential upside of 10.9%. Meanwhile, the Street-High target sits at $135 and points to a possible gain of 30% from current levels.