Key Highlights
- Zoom’s fiscal Q1 earnings release scheduled for Thursday, May 21 after market hours
- Wall Street consensus calls for $1.42 earnings per share with revenue reaching $1.22 billion, reflecting 4.3% annual growth
- Shares advanced 2.1% Wednesday, closing at $99.42 before the earnings announcement
- Baird upgraded price target to $105; Citigroup boosted forecast to $122
- Average analyst price target of $98.52 suggests minimal upside potential from present trading levels
Zoom Communications (ZM) is set to unveil its fiscal first-quarter financial performance following Thursday’s market close, with investors paying close attention. Shares finished Wednesday’s session at $99.42, gaining 2.1% during trading hours.
The Street is projecting earnings per share of $1.42 alongside revenue totaling $1.22 billion. These numbers would represent a 4.3% year-over-year revenue increase, though earnings per share would slip marginally from the $1.43 posted during the comparable quarter previously.
Notably, both metrics would represent quarter-over-quarter declines compared to the previous period’s $1.44 EPS and $1.25 billion revenue performance.
Zoom’s explosive growth during the pandemic era is firmly in the rearview mirror. The critical question facing investors is whether the company’s expanding product portfolio can compensate for slowing core business growth.
Street Analysts Update Their Views
Several Wall Street firms adjusted their positions before the earnings release. William Power from Baird elevated his price objective from $95 to $105 on May 19, expressing confidence in Zoom’s enterprise platform diversification strategy. Power maintains an 83% accuracy rating, positioning him among the most trusted analysts covering the stock.
Tyler Radke at Citigroup demonstrated even stronger conviction, increasing his target from $106 to $122 on May 15 while reaffirming his Buy recommendation. Joshua Reilly from Needham maintained his Buy stance with a $100 price objective.
Some analysts remain less optimistic. Patrick Walravens at Citizens maintained a Market Perform rating, while Bernstein’s Peter Weed reduced his target from $90 to $88 earlier in February.
The broader Wall Street picture shows 16 out of 29 analysts advising a Buy rating, though the $98.52 consensus price target suggests essentially flat performance from current price levels. This creates somewhat conflicting signals for investors.
Earnings per share projections have remained relatively stable over the past 60 days. Analysts appear to be taking a wait-and-see approach before making significant forecast adjustments.
Critical Factors for Thursday’s Report
The legacy video conferencing segment has reached maturity. Revenue expansion has decelerated to low-to-mid single-digit percentages, placing pressure on emerging product lines to demonstrate stronger traction.
Zoom Phone has surpassed 10 million seats while the Contact Center solution continues its development phase. Market participants will scrutinize enterprise adoption metrics — the previous quarter saw 105 new customers committing over $100,000 in annual spending.
AI Companion capabilities are drawing increased attention. Zoom has aggressively incorporated artificial intelligence features, though questions persist about whether these enhancements are genuinely driving customer upgrades or merely maintaining competitive parity with rivals like Microsoft Teams.
Forward guidance will likely dominate Thursday’s conference call discussion. During February’s report, Zoom exceeded revenue expectations with $1.25 billion but disappointed on earnings at $1.44 versus the $1.49 Street consensus. Annual EPS guidance also came in below analyst projections.
With a forward price-to-earnings ratio of 16.09 and gross profit margins approaching 77%, the profitability profile remains robust. Current market capitalization stands at $29.3 billion.
Russell Dicker assumed the chief product officer position on April 15. His inaugural earnings call in this role adds an additional dimension of interest to Thursday’s proceedings.
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