Zoom falls on earnings miss and weak profit guidance

Investing.com -- Zoom Video Communications Inc (NASDAQ: ZM) reported fourth quarter results that missed earnings expectations and issued weaker-than-expected profit guidance, sending shares down 1.7% in after-hours trading Wednesday.

The video communications company posted adjusted EPS of $1.44 for the fourth quarter, missing the analyst consensus of $1.49 by $0.05. Revenue reached $1.25 billion, beating the estimate of $1.23 billion and representing a 5.3% increase YoY. Enterprise revenue climbed 7.1% YoY to $757.3 million, while the company added customers contributing more than $100,000 in trailing 12-month revenue, up 9.3% YoY to 4,468 customers.

For the first quarter of fiscal 2027, Zoom projected adjusted EPS of $1.40 to $1.42, with a midpoint of $1.41 that falls below the analyst consensus of $1.45. The company expects first quarter revenue of $1.220 billion to $1.225 billion, with a midpoint of $1.223 billion slightly above the consensus of $1.221 billion.

"In FY26, revenue growth accelerated 130 basis points to 4.4%, reflecting the growing adoption of Zoom as a system of action for modern work," said Eric S. Yuan, Zoom’s founder and CEO. "As we enter FY27, we expect to surpass the $5 billion revenue milestone and remain focused on delivering durable, profitable growth and long-term shareholder returns."

For the full fiscal year 2027, Zoom guided adjusted EPS to $5.77 to $5.81, with a midpoint of $5.79 significantly below the consensus of $5.97. However, the company’s revenue guidance of $5.065 billion to $5.075 billion, with a midpoint of $5.070 billion, exceeded the analyst consensus of $4.838 billion.

The company reported adjusted operating margin of 39.3% for the fourth quarter and generated free cash flow of $338.4 million. Zoom repurchased approximately 3.8 million shares during the quarter.

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