Results: Zoom Video Communications, Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates

It's been a pretty great week for Zoom Video Communications, Inc. (NASDAQ:ZM) shareholders, with its shares surging 11% to US$68.17 in the week since its latest yearly results. Revenues were US$4.5b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$2.07, an impressive 56% ahead of estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Zoom Video Communications

Taking into account the latest results, the most recent consensus for Zoom Video Communications from 29 analysts is for revenues of US$4.62b in 2025. If met, it would imply an okay 2.1% increase on its revenue over the past 12 months. Statutory earnings per share are expected to shrink 3.0% to US$2.03 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$4.66b and earnings per share (EPS) of US$1.48 in 2025. Although the revenue estimates have not really changed, we can see there's been a very substantial lift in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.

The consensus price target was unchanged at US$79.01, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Zoom Video Communications, with the most bullish analyst valuing it at US$95.00 and the most bearish at US$57.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Zoom Video Communications' revenue growth is expected to slow, with the forecast 2.1% annualised growth rate until the end of 2025 being well below the historical 37% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 12% annually. Factoring in the forecast slowdown in growth, it seems obvious that Zoom Video Communications is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Zoom Video Communications' earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Zoom Video Communications going out to 2027, and you can see them free on our platform here..

Before you take the next step you should know about the 1 warning sign for Zoom Video Communications that we have uncovered.

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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.