ZM: Moderately Bullish Outlook for Zoom Video. Time to Buy Calls?

Zoom Communications provides an 'AI-first' work platform designed for human connection, offering a suite of communication and collaboration tools. Core offerings include 'Zoom Workplace' with products like 'Zoom Meetings', 'Zoom Phone', 'Zoom Team Chat', and 'Zoom Docs', facilitating seamless teamwork and productivity. 'Zoom Business Services', including 'Zoom Contact Center' and 'Zoom Revenue Accelerator', strengthen customer relationships. The company also offers 'Workvivo', an employee experience platform. Zoom serves businesses of all sizes and individuals across diverse industries such as education, finance, government, and healthcare. Zoom differentiates itself through its AI-first approach, enterprise readiness, focus on flexible work, ease of use, and an open platform that enables customer choice via its developer ecosystem and integrations.

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ZM's technical outlook is moderately bullish, although recent price action suggests some caution. The price closed at $83.84 on 2025-11-04, slightly below its 50-day SMA of $82.83, and well above the 200-day SMA of $78.68, indicating short-term consolidation but longer-term strength. The EMA_21 is $83.32. The MACD at 1.12 is positive and above its signal line (0.61), suggesting bullish momentum, although the MACDh has been decreasing, indicating a possible weakening of the upward trend. The RSI_14 is at 60.77, indicating moderate buying pressure but not yet overbought conditions. Stochastic Oscillator shows the %K line at 82.49 and %D line at 77.03, indicating it is approaching overbought conditions. The ADX is 20.77, suggesting the presence of a trend, but not an exceptionally strong one. Recent price movement shows a decline from a high of $87.23 on 2025-10-31, with the price struggling to maintain upward momentum. Given the mixed signals, including positive MACD and RSI but recent price declines, a moderately bullish outlook is warranted, contingent on the stock's ability to maintain levels above its 50-day SMA and 200-day SMA.

Zoom's MD&A presents a mixed but slightly positive picture. `Net Sales` for the three months ended July 31, 2025, increased by 4.7% to $1,217.2 million compared to $1,162.5 million in the prior year. The growth in revenue from Enterprise customers was 7.0%, while revenue from Online customers increased by 1.4%. The gross profit margin also improved, rising to 77.6% from 75.5% in the same period last year, primarily due to a decrease in 'stock-based compensation' and 'hosting costs'. For the six months ended July 31, 2025, `Net cash provided by operating activities` was $1,005.2 million, a slight decrease compared to $1,037.5 million for the same period in 2024, attributed to 'payment timing differences in various working capital accounts'. Management acknowledges that 'macroeconomic environment...continues to create uncertainty in demand'. However, they express confidence that existing cash, cash equivalents, and marketable securities of $7.8 billion, along with operating cash flow, will be sufficient to meet needs for at least the next 12 months. The company is also actively investing in AI innovation and expanding its platform, which could drive future growth.

Zoom's Q2 FY '26 earnings call projects a moderately bullish outlook, driven by strong performance in the Enterprise segment and AI adoption. Michelle Chang highlighted that total revenue grew 4.7% year-over-year to $1.217 billion, exceeding the high end of guidance by $17 million, and they are 'excited to raise both our revenue and profitability guidance' for the full year. Eric Yuan emphasized the rapid innovation in Zoom Workplace, particularly with AI Companion, noting that monthly active users have grown over 4x year-over-year. The company is seeing increased customer investment in AI, exemplified by a Fortune 200 company deploying Zoom Custom AI Companion for nearly 60,000 employees. Zoom Phone also delivered another strong quarter, sustaining mid-teens ARR growth. While the online business is stabilizing, the Enterprise business remains a key strength, growing 7% year-over-year. Management's tone is optimistic, focusing on innovation, customer value, and strategic priorities, suggesting continued positive momentum for the stock in the near term. They are also focused on efficiencies, with non-GAAP gross margin up 128 basis points and a long-term goal of 80%.

ZM's financial performance presents a generally stable picture with some nuances. Revenue has increased from $1,136.7M in Q3 2023 to $1,217.2M in Q2 2025, indicating a positive growth trend. The gross profit ratio has remained relatively consistent, fluctuating between 0.707 in Q1 2024 and 0.776 in Q2 2025, suggesting stable profitability. Operating cash flow has varied, with Q1 2024 showing $588.2M while the most recent quarter, Q2 2025, shows 0. Total debt decreased from $79.3M in Q3 2023 to $32.0M in Q2 2025, indicating improved solvency and reduced financial risk. Net income has fluctuated, but generally trends upward. Overall, ZM demonstrates steady revenue growth, consistent profitability, and a strengthened balance sheet with lower debt. The lack of operating cash flow data for Q2 2025 is a concern, however, the consistent positive cash flow in prior quarters suggests this may be an anomaly. The company's large investment portfolio also provides a strong liquidity cushion.

The company demonstrates a moderately bullish profile, characterized by solid revenue growth and improving profitability. Revenue has consistently increased, indicating strong market demand. The gross margin exhibits stability, suggesting efficient cost management. Return on Equity (ROE) has shown positive movement, signaling enhanced profitability and efficient use of shareholder equity. The Price-to-Earnings (P/E) ratio, while elevated, might be justifiable given the growth trajectory and positive ROE trend. The Debt-to-Equity ratio shows a slight increase, which warrants monitoring, but is counterbalanced by a healthy Current Ratio, implying sufficient liquidity to meet short-term obligations. Overall, the company presents a favorable picture with growth and profitability, though the leverage should be watched closely. The combination of growth and profitability suggests potential for continued positive performance over the next 12 months.