Zoom beats Q4 profit estimates, revenue in-line; shares down on guidance

Investing.com -- Zoom Video Communications Inc (NASDAQ:ZM) reported better-than-expected fourth-quarter earnings of fiscal 2025, but shares were down around 3% in premarket trading Tuesday as its guidance came in below analysts' estimates.

The video conferencing company posted adjusted earnings per share (EPS) of $1.41 for the quarter ended Jan. 31, exceeding analysts' estimates of $1.30. Revenue was up 3.3%, in line with expectations at $1.18 billion.

Zoom expects adjusted earnings per share between $1.29 and $1.31 for the first quarter, compared with the consensus estimate of $1.31.

While its revenue forecast, which is in the range of $1.162 billion to $1.167 billion, was below analysts' expectations of $1.175 billion.

For the fiscal year 2026 (FY26), the company projected earnings of $5.34 to $5.37 per share, missing the average estimate of $5.56.

It sees revenue for the year of $4.785 billion to $4.795 billion versus the consensus forecast of $4.84 billion.

In terms of its M&A strategy, management indicated a preference for smaller, growth-focused acquisitions, similar in scale to Workvivo, rather than pursuing large, transformative, or highly dilutive deals.

Wolfe Research analysts said the company's FY26 guide was "prudent" and highlighted the company's M&A plans as "the most positive call-out" of the report. 

"We also believe the company can and will be more aggressive on the share buyback front," analysts added.

Separately, Bank of America (NYSE:BAC) analysts said questions linger over Zoom's "timing and magnitude of revenue acceleration."

"Top line acceleration to mid-single digits as previously discussed by management remains a governor to multiple expansion, in our view," they said. "Public sector exposure is limited, but ongoing macro headwinds are likely to limit revenue acceleration in the near term."

Pratyush Thakur contributed to this report.