ZM · Zoom Communications
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $110
Updated ·
Price against the kill line
9.3% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $110.00, set on 12 November 2026. The shares are down 5.5% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $110, over the 13 August 2026 close of $109.84, which would show the shares leading again; or a 23 November 2026 report with Enterprise revenue growth above the second quarter's 7.8% and a raised fiscal 2027 outlook.
Research onlyNot in the portfolio.
Catalyst
Key figures from the filings · Technology
Quarter to 31 July 2026, filed 26 August 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 1,277
- Revenue, change on a year (%)
- +4.9
- Gross margin (%)
- 77.2
- Operating margin (%)
- 24.6
- Free cash flow, four quarters ($M)
- 1,926
- Net cash, cash less debt ($M)
- 7,250
- Price to earnings (×)
- 9.2
- Enterprise value to sales (×)
- 4.5
All filed numbers
What Zoom Communications reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| filed | 1,277 | +4.9 | 77.2 | 24.6 |
| filed | 1,239 | +5.5 | 77.9 | 25.1 |
| filed | 1,247 | +5.3 | 76.3 | 20.0 |
| filed | 1,230 | +4.4 | 77.9 | 25.2 |
| filed | 1,217 | +4.7 | 77.6 | 26.4 |
| filed | 1,175 | +2.9 | 76.3 | 20.6 |
| Pre-tax income ($M) | 1,995 |
| Net income ($M) four quarters: 3,255 | 1,542 |
| Diluted shares, change on a year (%) against the quarter to 31 July 2025 | −2.8 |
| Operating cash flow ($M) | 2,000 |
| Capital spending ($M) | 74.6 |
| Free cash flow ($M) | 1,926 |
| Cash and short-term investments ($M) | 7,250 |
| Debt ($M) | None reported |
| Net cash, cash less debt ($M) no debt reported | 7,250 |
| Deferred revenue ($M) +5.6% on a year | 1,562 |
| Backlog, orders not yet delivered ($M) +14.1% on a year | 4,536 |
| Receivables ($M) | 533 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 11,304 |
| Market value ($M) | 29,915 |
| Enterprise value, market value plus net debt ($M) no debt reported | 22,665 |
| Enterprise value to sales (×) no debt reported | 4.5 |
| Enterprise value to operating income (×) no debt reported | 19.1 |
| Price to earnings (×) | 9.2 |
| Price to book value (×) | 2.6 |
| Free-cash-flow yield (%) | 6.4 |
Short interest (FINRA, settled 15 October 2026, published 13 November 2026): 2.1% of shares outstanding sold short, 2.3 days of average trading to cover, −0.4% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $11.5M |
| 12 monthsfrom | $0 | $73.9M |
The thesis
Zoom Communications is more likely to lag the S&P 500 over the next three months than to lead it. Its enterprise business is improving, but total revenue grows about 5% a year, and the shares fell after the last beat-and-raise. The third-quarter fiscal 2027 report on 23 November 2026 settles it: the shares need a bigger raise than the market already expects.
The rating is Low because the business facts are steady rather than accelerating. On 25 August 2026 Zoom reported second-quarter revenue of $1,277.2 million, up 4.9% year over year, and lifted its fiscal 2027 revenue outlook to $5.085–$5.095 billion. The shares still closed at $98.08 on 11 November 2026, below the $109.84 close of 13 August 2026. That close is 14.5% under the 52-week intraday high of $114.74 set on 1 June 2026. The market is pricing a company that grows in the low single digits and returns cash. It is not yet pricing an AI-led reacceleration.
The 11 November 2026 session moved the shares from $90.91 to $98.08. Investing.com tied the move to Mizuho, which reiterated its Outperform rating and $120 target that day and called second-half guidance conservative. That run-up raises the bar for the 23 November 2026 report.
Bullish and bearish views on Zoom Communications, Inc.
The bull case on Zoom Communications, Inc. (ZM), in brief: Enterprise growth is the fastest in three years. The bear case: the consumer side is flat.
Bull case
- Enterprise growth is the fastest in three years. Enterprise revenue was $787.5 million in the quarter ended 31 July 2026, up 7.8% year over year. Chief Executive Eric Yuan called it the strongest growth rate in three years (company release, 25 August 2026).
- AI customer-experience products are scaling. Zoom said on 25 August 2026 that its AI-first Customer Experience portfolio is growing at a "high-double-digit" annual recurring revenue rate. Zoom Virtual Agent customers rose 256% year over year.
- Large customers and retention are edging up. Customers above $100,000 of trailing-12-month revenue reached 4,625, up 8.2%. The enterprise net dollar expansion rate rose to 99% from 98% (Q2 FY27 release, 25 August 2026).
- Cash generation funds steady buybacks. Second-quarter free cash flow was $472.4 million. Zoom spent about $360.5 million repurchasing roughly 3.7 million shares, held $7.2 billion of cash and marketable securities, and had about $1.3 billion of authorization left at 31 July 2026.
- An analyst sees a beat-and-raise. Mizuho on 11 November 2026 kept its Outperform rating and $120 target and pointed to conservative second-half guidance (Investing.com, 11 November 2026).
Bear case
- The consumer side is flat. Online revenue was $489.7 million in the second quarter, up 0.6% year over year. Online monthly churn held at 2.9% (Q2 FY27 release, 25 August 2026).
- The guide implies no step-up. Zoom guided third-quarter revenue to $1.275–$1.280 billion and non-GAAP earnings per share to $1.46–$1.48, below the second quarter's $1.277 billion and $1.55 (company releases, 25 August 2026).
- Beats have the price. Second-quarter non-GAAP earnings per share of $1.55 beat the $1.48 consensus (Earnings Whispers, 25 August 2026). The shares still fell from $109.84 on 13 August 2026 to $88.82 on 5 November 2026.
- Senior insiders sold into the decline. SEC Form 4 filings show Chief Executive Eric Yuan sold 24,200 shares at an average $92.20 on 3 November to 4 November 2026. Chief Financial Officer Michelle Chang sold 10,156 shares at $101.93 on 21 October 2026 and 8,489 shares at an average $99.46 on 12 October 2026. All of these sales ran under Rule 10b5-1 trading plans.
- The fiscal 2027 outlook started weak. SiliconANGLE reported on 25 February 2026 that the shares sank after an earnings miss and a weaker fiscal 2027 outlook. The 52-week closing low of $72.72 followed on 2 March 2026.
Price setup
The shares closed at $98.08 on 11 November 2026. That puts them above the 50-day moving average of $94.32 and the 200-day moving average of $92.37, both as of that close. Adjusted daily closes show a 10.7% fall over three months, from the $109.84 reference close on 13 August 2026.
The recent range runs from a $88.82 close on 5 November 2026 up to $98.08 six sessions later. The levels the case turns on are the mid-August closes near $110 and the 52-week intraday high of $114.74 from 1 June 2026. Regaining those would show the market paying for the enterprise acceleration. A return below the 200-day average would put the shares back inside the early-November range.
Catalysts ahead
- 23 November 2026: Third-quarter fiscal 2027 results, after the market close, with a webinar at 5:00 pm ET. This shows whether Enterprise growth keeps accelerating past 7.8% and whether Zoom raises the fiscal 2027 outlook by more than the market already expects after the run-up on 11 November 2026.
- ~23 February 2027 (est.): Fourth-quarter fiscal 2027 results and the first fiscal 2028 outlook. The first full-year fiscal 2028 guide shows whether AI customer-experience products lift total revenue growth above the current pace near 5%.
What would change the view
A daily close above $110, over the 13 August 2026 close of $109.84, which would show the shares leading again; or a 23 November 2026 report with Enterprise revenue growth above the second quarter's 7.8% and a raised fiscal 2027 outlook.
What it trades with
Zoom trades with large-cap application software. On 11 November 2026 the gain coincided with a Nasdaq rebound after CoreWeave's results, and the S&P 500 also rose (Investing.com, 11 November 2026). Its earnings move follows its own revenue and guidance more than any AI-hardware cycle. The $7.2 billion cash balance and buybacks make it trade more like a cash-return software name than a growth name. Small strategic investments announced in November 2026, in geniosAI on 9 November 2026 and Medaica on 12 November 2026, are too small to move the consolidated numbers.
Notes
- Zoom's fiscal year ends on 31 January; fiscal 2027 runs from February 2026 through January 2027.
- Senior executives and directors sell regularly under Rule 10b5-1 trading plans, which are set in advance; these sales appear in SEC Form 4 filings.
- Zoom's guidance excludes the effect of its remaining share-repurchase authorization.
The evidence, claim by claim (7)
- Q2 FY27 total revenue $1,277.2M, up 4.9% year over year; Enterprise revenue $787.5M, up 7.8%; Online revenue $489.7M, up 0.6% Zoom Q2 FY27 earnings release · as of
- Fiscal 2027 guidance raised to revenue of $5.085–$5.095B and non-GAAP EPS of $6.08–$6.12, from $5.080–$5.090B and $5.96–$6.00 Zoom Q2 FY27 earnings release · as of
- Q3 FY27 guidance: revenue $1.275–$1.280B, non-GAAP operating income $510–$515M, non-GAAP EPS $1.46–$1.48 Zoom Q2 FY27 earnings release · as of
- Q2 FY27 free cash flow $472.4M; about 3.7M shares repurchased for about $360.5M; cash and marketable securities $7.2B; about $1.3B of buyback authorization remaining Zoom Q2 FY27 earnings release · as of
- Zoom Virtual Agent customer count up 256% year over year; customers above $100K trailing-12-month revenue at 4,625, up 8.2% Zoom Q2 FY27 earnings release · as of
- Mizuho reiterated Outperform and a $120 price target and called second-half guidance conservative Investing.com, 11 November 2026 · as of
- CEO Eric Yuan sold 24,200 shares at an average $92.20 under a Rule 10b5-1 plan SEC Form 4 filed 5 November 2026 · as of
Sources
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