Zoom Communications, Inc. (NASDAQ:ZM) shares are trading higher Friday after the company reported better-than-expected second quarter financial results, issued third quarter adjusted earnings per share above estimates, and raised its fiscal year 2026 guidance above estimates.
What To Know: The company reported adjusted earnings per share of $1.53, beating the consensus estimate of $1.37. In addition, the company reported sales of $1.21 billion, beating the consensus estimate of $1.19 billion.
Operating performance strengthened, with a GAAP operating margin of 26.4% compared with 17.4% a year earlier, and a non-GAAP operating margin of 41.3%. Net income rose to $358.6 million, up from $219 million in the prior year quarter.
Zoom also generated $508 million in free cash flow, up from $365.1 million a year earlier, and ended the quarter with $7.8 billion in cash, cash equivalents and marketable securities. The company repurchased about 6 million shares in the quarter, bringing total buybacks under its current plan to 27.4 million.
Customer momentum remained steady, with 4,274 clients contributing more than $100,000 in trailing 12-month revenue, up 8.7% from a year earlier.
Q3 Outlook: Zoom sees adjusted earnings per share from $1.42 to $1.44, versus the consensus estimate of $1.39. Furthermore, the company sees sales from $1.210 billion to $1.215 billion versus the consensus estimate of $1.211 billion.
FY26 Outlook: The company raised its adjusted earnings per share guidance from between $5.56 to $5.59 to between $5.81 to $5.84, versus the consensus estimate of $5.58. It also raised its sales guidance from between $4.80 billion to $4.81 billion to between $4.82 billion to $4.83 billion, versus the consensus estimate of $4.80 billion.
Analyst Changes: Following the earnings report, multiple analysts issued price target adjustments.
- RBC Capital analyst Rishi Jaluria maintained an Outperform rating on Zoom and raised the price target from $95 to $100.
- Keybanc analyst Jackson Ader maintained an Underweight rating on Zoom and lowered the price target from $73 to $69.
- Rosenblatt analyst Catharine Trebnick maintained a Buy rating on Zoom and raised the price target from $100 to $110.
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ZM Price Action: At the time of writing, Zoom stock is trading 10.47% higher at $80.83, according to data from Benzinga Pro.
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