To The Moon

$Zoom(ZM)$ is scheduled to report earnings on Monday, November 24, 2025 (post-market).

Current Sentiment: Cautiously Neutral. The stock has effectively been "dead money" for months, drifting sideways. The market is waiting for proof that AI features can actually re-accelerate revenue growth rather than just retain customers.

Consensus Estimates vs. Guidance

Investors focus heavily on Non-GAAP numbers for Zoom. Be careful not to confuse the two, as headlines often mix them up.

Note: Zoom has a strong history of beating conservative EPS guidance. A "beat" of $0.05–$0.10 is often already priced in. The stock will likely move based on revenue guidance for FY2027 or comments on AI monetization, not just a simple Q3 earnings beat.

Summary: Q2 Fiscal 2026 Performance

Zoom delivered a "beat and raise" quarter that reassured investors the business is stable, highly profitable, and successfully pivoting to AI, even if top-line growth remains modest.

Revenue: $1.22 Billion (+4.7% YoY). This was the fastest growth rate in 11 quarters, signaling a stabilization after the post-pandemic slowdown.

Non-GAAP EPS: $1.53 (vs. estimated ~$1.37). A significant beat driven by disciplined cost management.

Stock Reaction: The stock rallied ~6-12% immediately following the report, breaking above key technical resistance levels (50-day and 200-day moving averages).

Key Metrics Breakdown

Guidance Provided (The "Look Ahead")

During the Q2 call, management provided the following outlook, which was viewed as conservative but constructive:

Q3 FY26 Revenue Guidance: $1.210 – $1.215 Billion (implied ~3% growth).

Full Year FY26 Revenue: Raised to $4.825 – $4.835 Billion.

Full Year Non-GAAP EPS: Raised to $5.81 – $5.84.

Lessons Learned from the Guidance

The market’s positive reaction to this guidance offers three distinct lessons for investors analyzing Zoom right now:

Lesson #1: Margins Matter More Than Growth (For Now)

The "Lesson": Investors have stopped valuing Zoom as a hyper-growth stock and are now valuing it as a "Value Tech" cash cow.

Evidence: Despite revenue growing only ~4.7%, earnings per share (EPS) grew much faster (+10% Non-GAAP). The market rewarded the company for operational efficiency (high margins) and massive free cash flow ($508M in one quarter) rather than punishing it for single-digit revenue growth.

Lesson #2: The "AI Call Option" is Keeping the Story Alive

The "Lesson": Guidance was well-received because management successfully sold the narrative that AI monetization is coming, even if it's not in the numbers yet.

Evidence: Management highlighted that AI Companion users grew 4x. They introduced "Custom AI Companion", a paid add-on. The lesson here is that the market is willing to be patient with slow revenue growth as long as there is a credible roadmap for AI to re-accelerate growth in FY2027.

Lesson #3: "Under-Promise, Over-Deliver" is Back

The "Lesson": Management has reset expectations low enough that they can consistently beat them.

Evidence: The Q3 guidance ($1.21B) is essentially flat quarter-over-quarter relative to Q2 results. This suggests management is "sandbagging" (intentionally guiding low) to set up another "beat" in November. Investors have learned to add a premium to Zoom's official guidance numbers.

Summary Takeaway

The Q2 earnings proved that Zoom is not a "dying" pandemic stock but a stable, cash-rich utility with a free "call option" on AI success. The guidance taught us that stability + profitability is currently enough to support the stock price, provided the "Online" segment doesn't start bleeding customers again.

Key Metrics to Watch (The "Real" Story)

The headline numbers matter less than the underlying health of the business pivot. Watch these four specific metrics:

A. Enterprise vs. Online Revenue Shift

The Metric: Enterprise revenue growth vs. Online (individual/small biz) churn.

What to Watch: Enterprise revenue grew 7% YoY last quarter. You want to see this accelerate or at least hold firm.

Churn Check: Online average monthly churn has stabilized around 2.9%. If this spikes above 3.0%, it signals that small businesses are leaving for cheaper alternatives (Google Meet/Teams), which is a major red flag.

B. Net Dollar Expansion Rate (NDER)

The Metric: How much more existing enterprise customers are spending (upselling phones, contact center, etc.).

Target: This has dropped and stabilized at 98% for Enterprise customers.

Bull Case: Any uptick back toward 100% would be a massive bullish signal that cross-selling (Zoom Phone, Zoom Contact Center) is finally working.

C. AI Companion Monetization

The Narrative: Zoom has "millions" of AI Companion users, but mostly included for free to reduce churn.

The Catalyst: Look for specific commentary on "Custom AI Companion" add-ons or standalone AI revenue. If management announces a clear roadmap to charge for these features effectively, the stock could re-rate higher.

D. Customers >$100k TTM Revenue

The Metric: Large enterprise whale growth.

Trend: Grew ~9% YoY in Q2.

Why it matters: This proves Zoom is winning against Microsoft in the high-stakes large corporate market. A deceleration here suggests they are losing the "platform war" to Microsoft Teams.

Zoom (ZM) Price Target

Based on 24 analysts from Tiger Brokers app offering 12 month price targets for Zoom Video Communications in the last 3 months. The average price target is $93.35 with a high forecast of $115.00 and a low forecast of $67.00. The average price target represents a 19.04% change from the last price of $78.42.

Short-Term Trading Opportunities

Volatility & Implied Move

Implied Move: The options market is pricing in a move of roughly ±8.5% to 9% post-earnings.

Historical Reality: Zoom is volatile. Past post-earnings moves include +12.7% (Aug 2025), -1.0% (May 2025), and -8.5% (Feb 2025). The market is expecting a big swing.

Short Squeeze Potential: Low

Short Interest: ~2.5% of float.

Analysis: This is not a short squeeze candidate. If the stock rallies, it will be on fundamental buying, not shorts covering.

Trading Strategy Scenarios

The "Iron Condor" (Neutral): If you believe the "dead money" thesis and think they will beat slightly but offer boring guidance, selling volatility (selling slightly out-of-the-money calls and puts) takes advantage of the high IV crush.

The "Straddle" (Volatile): Given the history of double-digit moves (+12% or -8%), a long straddle (buying both a call and a put) pays off if the stock moves more than the implied ~9%. This is safer if you are unsure of the direction but expect a violent reaction to AI news.

Summary

Zoom (ZM) is scheduled to report earnings on Monday, November 24, 2025 (post-market). Sentiment remains cautiously neutral; the market views Zoom as a profitable "cash cow" that lacks a clear growth catalyst.

Consensus vs. Expectations

Revenue: Expected at $1.21 – $1.215 Billion (flat to low single-digit growth).

Non-GAAP EPS: Consensus is ~$1.43. Zoom typically beats conservative EPS guidance, so a "beat" alone likely won't drive the stock significantly higher.

Key Metrics to Watch The stock's direction will depend on three internal health indicators rather than the headline numbers:

Enterprise vs. Online: Enterprise revenue must show acceleration (+7% or better) to prove they are winning high-value clients, while Online churn must stay below 3.0%.

AI Monetization: Investors are tired of "free AI" announcements. Look for revenue specifically attached to "Custom AI Companion" add-ons.

Net Dollar Expansion (NDER): This metric has stalled at 98%. Any uptick toward 100% would be a major bullish signal for upsell success.

Trading Context Implied volatility suggests a potential ±9% move. However, without strong guidance for Fiscal Year 2027 or a concrete AI revenue roadmap, the stock risks remaining range-bound ("dead money") despite its strong profitability.

Appreciate if you could share your thoughts in the comment section whether you think Zoom could provide a clear growth catalyst path for upcoming earnings.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.