Zoom Communications Stock Is Falling Tuesday: Here's Why

Zoom Communications Inc ZM shares are trading lower Tuesday after the company reported fourth-quarter financial results and issued weak guidance.

• Q4 Revenue: $1.18 billion, versus estimates of $1.18 billion

• Q4 EPS: $1.41, versus estimates of $1.30

Revenue was up 3.3% on a year-over-year basis. Enterprise revenue was up 5.9% year-over-year, while online revenue fell 0.4% year-over-year. Zoom noted online monthly average churn was down 20 basis points to 2.8% in the quarter. Zoom ended the quarter with approximately 192,600 enterprise customers.

Net cash provided by operating activities was $424.6 million in the fourth quarter, up 20.9% year-over-year. Free cash flow came in at $416.2 million, up 25.1% year-over-year. Zoom ended the quarter with $7.8 billion in cash, cash equivalents and marketable securities.

"In FY25, Zoom AI Companion emerged as the driving force behind our transformation into an AI-first company, enabling our customers to discover enhanced productivity opportunities,” said Eric Yuan, founder and CEO of Zoom.

“As Zoom AI Companion becomes increasingly agentic, we look forward to continuing to help our customers fully realize the benefits of AI and discover what's possible with AI agents.”

See Also: Home Depot Lifts Annual Dividend After Strong Q4, But Soft 2025 Outlook Weighs On Stock

Guidance: Zoom sees first-quarter revenue in the range of $1.162 billion to $1.167 billion versus estimates of $1.175 billion. The company expects first-quarter adjusted earnings to be between $1.29 and $1.31 per share versus estimates of $1.35 per share.

Zoom expects full-year 2026 revenue to be in the range of $7.785 billion to $4.795 billion versus estimates of $4.81 billion. The company expects full-year adjusted earnings to be between $5.34 and $5.37 per share versus estimates of $5.36 per share.

Analyst Changes:

• Needham analyst Ryan Koontz reiterated Zoom with a Hold rating.

• Stifel analyst Parker Lane maintained a Hold and lowered the price target from $90 to $85.

• Rosenblatt analyst Catharine Trebnick maintained a Buy rating and price target of $95.

• Cantor Fitzgerald analyst Thomas Blakey reiterated a Neutral rating and price target of $87.

• Benchmark analyst Matthew Harrigan reiterated a Buy rating and price target of $97.

ZM Price Action: Zoom shares were down 9.08% at $73.74 at the time of publication Tuesday, according to Benzinga Pro.

Photo: courtesy of Zoom.