Zoom Video Communications Inc (NASDAQ: ZM), widely known for its video communications platform, will be reporting its third-quarter earnings on Monday. The markets are expecting Zoom to announce $1.08 in EPS and $1.12 billion in revenue as it releases its report after the market closes.
Here's what analysts will be focusing on, and how the stock currently maps against Wall Street estimates.
Business & Fundamentals: Zoom's financials sport a huge 8.7% free cash flow yield, and its multiple rapidly-expanding business lines should continue to provide a reliable source of free cash flow.
Zoom's enterprise business is growing at a faster rate than its stable and profitable legacy business. Zoom Phone is now growing between 30% and 50% annually with an ARR of $500 million. Zoom Contact Center is expanding quickly as well.
The latest addition to its offerings, Zoom AI Companion, which was unveiled at Zoomtopia 2023 (Oct. 3 - 4), hit the one million meeting summaries milestone on Oct. 30.
The company's financial health is evident in its strong balance sheet, highlighted by $6 billion in cash reserves and the absence of long-term debt.
Q3 Analysts' Focus: Analysts will be focusing on growth metrics for Zoom Phone, Contact Center, and Zoom One, as well as a return to Zoom Meetings. Although the markets have not factored in significant growth for the stock, any unexpected positive performance in these metrics could potentially enhance Zoom's valuation multiple.
Ratings & Consensus Estimates: Consensus analyst ratings currently rate the stock at Neutral with a price target of $89.81. The stock recently got an upgrade from Citigroup, from Sell to Neutral with a price target of $66.
Price Action: Shares of Zoom up 1.8% to $65.32 at the time of publication Monday.