Amid rising expectations, Zoom Video Communications reported third-quarter earnings and revenue that topped estimates as enterprise sales growth beat views. Preliminary fiscal 2026 revenue guidance for Zoom stock came in in-line amid a recent rally.
The software maker reported October-ended quarter earnings for ZM stock after the market close on Monday. The company changed its corporate name to Zoom Communications. The stock ticker remains ZM.
"Management said the 2.7% year-over-year fiscal Q4 2025 revenue growth guidance is a good starting point for fiscal 2026," said Jefferies analyst Samad Samana in a report. "This implies about $4.783 billion in revenue, in-line with consensus on a dollar basis, but slightly below from a growth rate standpoint. With a new CFO at the helm, we believe it makes sense that Zoom chose to keep expectations in check."
Zoom earnings for the third quarter were $1.38 per share on an adjusted basis, up 7% from a year earlier. Revenue rose 3.6% to $1.178 billion.
ZM stock analysts had projected earnings of $1.31 a share on sales of $1.163 billion.
ZM Stock: Enterprise A Bright Spot
In the enterprise market for business customers, revenue rose 6% to $699 million, topping estimates of $683 million.
On the stock market today, Zoom stock fell 7.2% to 82.66 in early trading. In 2024, ZM stock had gained 19%, with most of the advance coming after the company reported Q2 earnings.
For the October quarter, Zoom said it expects revenue in a range of $1.175 billion to $1.18, slightly ahead of estimates of $1.17 billion.
Zoom's cloud-based software sets up video calls, with chat tools available. Zoom Video aims to morph into a broader communications platform for business customers. Zoom Video has been integrating artificial intelligence into more products. Many software companies are shifting to AI agents.
Also, Zoom Video holds $7.5 billion in cash on its balance sheet.
Zoom Stock: Post-Covid Blues
Meanwhile, Zoom Video sales growth slowed as the in the post-coronavirus era. During the Covid-19 emergency, demand for Zoom videoconferencing software surged as businesses told employees to work from home and consumers contacted friends and family.
Heading into the Zoom earnings report, shares owned an IBD Relative Strength Rating of 86 out of a best possible 99, according to IBD Stock Checkup.
ZM stock is extended and trades above a buy zone. Meanwhile, Microsoft and its Teams communication platform is a big competitor.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
