Upgraded Outlook and Major Buyback Could Be A Game Changer For Zoom Communications (ZM)

• In late November 2025, Zoom Communications Inc. reported third-quarter fiscal 2026 results showing higher sales and net income than a year earlier, raised its full-year 2026 revenue guidance to about US$4.85 billion, issued fourth-quarter revenue guidance of roughly US$1.23 billion, and disclosed completing a share repurchase of over 32.50 million shares for about US$2.38 billion.
• An interesting element is how Zoom combined earnings growth with a sizeable buyback, which can lift earnings per share by spreading profits over fewer shares.
• With that in mind, we'll now examine how Zoom's upgraded full-year guidance may influence its existing investment narrative and outlook.

Find companies with promising cash flow potential yet trading below their fair value.

Zoom Communications Investment Narrative Recap

To own Zoom today, you generally need to believe it can shift from a mostly video meetings tool to a broader, AI enabled communications platform, while defending its position against large suite competitors. The latest quarter’s higher earnings, raised full year revenue guidance to about US$4.85 billion, and continued buybacks support that thesis in the near term, but do not remove the key short term risk around slow revenue growth versus larger, bundled rivals.

The completion of a buyback covering just over 32.5 million shares, or roughly 10.6% of shares outstanding, is particularly relevant here. Combined with rising net income, this reduces the share count and has already helped lift earnings per share, but it also puts more weight on Zoom’s ability to reignite top line growth through products like AI Companion, Contact Center and Zoom Phone if it wants that EPS strength to be sustainable.

Yet investors should also weigh how intensifying competition from bundled platforms could quietly affect Zoom’s pricing power and long term revenue potential...

Read the full narrative on Zoom Communications (it's free!)

Zoom Communications' narrative projects $5.3 billion revenue and $1.2 billion earnings by 2028. This requires 3.4% yearly revenue growth and no change in earnings from $1.2 billion today.

Uncover how Zoom Communications' forecasts yield a $94.58 fair value, a 12% upside to its current price.

Exploring Other Perspectives

Eight fair value estimates from the Simply Wall St Community span roughly US$90 to US$123 per share, showing how far opinions can diverge even on the same numbers. Against that backdrop, Zoom’s modest revenue guidance upgrade and heavy use of buybacks invite you to weigh whether slower expected top line growth can support the kind of long term earnings profile you personally want to see.

Explore 8 other fair value estimates on Zoom Communications - why the stock might be worth just $90.00!

Build Your Own Zoom Communications Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Zoom Communications research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.
• Our free Zoom Communications research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Zoom Communications' overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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