Sequans Communications reports second quarter revenue flat at $8.1 million
Tuesday, Cantor Fitzgerald reiterated a Neutral rating and an $87.00 price target on Zoom Video Communications Inc (NASDAQ:ZM) following the company’s fourth-quarter earnings report. According to InvestingPro data, Zoom maintains a "GREAT" financial health score, backed by strong fundamentals and impressive gross margins of 75.8%. The report showed a balance of strengths and weaknesses, with a slight increase in enterprise sales but a shortfall in online revenue.
Zoom’s enterprise segment, which accounts for 60% of its revenue, saw a modest annual dip in total enterprise customers by 0.5% but experienced a 7% growth in customers generating more than $100,000 in trailing twelve-month revenue. The company attributed the enterprise growth to larger deals. With a robust current ratio of 4.6 and more cash than debt on its balance sheet, Zoom maintains strong operational flexibility. In contrast, the online segment, making up 40% of revenue, did not meet expectations. For deeper insights into Zoom’s financial metrics and growth potential, check out the comprehensive Pro Research Report available on InvestingPro.
The firm noted that Zoom’s Contact Center as a Service (CCaaS) and Workvivo products contributed to a higher average revenue per user (ARPU) in deals. However, ARPU growth for customers in the $100,000+ revenue cohort was only 1%, a decrease from the 5% growth observed last quarter.
Long-term growth is expected to be driven by artificial intelligence, with Zoom planning to introduce a customized AI Companion in the second half of fiscal year 2026. The guidance for the first quarter of fiscal year 2026 was adjusted downward, primarily due to foreign exchange rates, seasonal trends, and based on this, Cantor Fitzgerald slightly reduced their enterprise revenue estimates to align more closely with the consensus from FactSet.
The $87 price target set by Cantor Fitzgerald is based on 4 times the enterprise value to calendar year 2026 estimated revenue, which aligns with the three-year average next twelve months enterprise value to revenue multiple of their relatively unchanged estimates. InvestingPro’s Fair Value analysis suggests that Zoom’s stock is currently undervalued, with 23 analysts recently revising their earnings estimates upward for the upcoming period.
In other recent news, Zoom Video Communications Inc. reported stronger-than-expected earnings for the fourth quarter of 2025, with earnings per share (EPS) surpassing forecasts at $1.41 compared to the expected $1.30. Revenue for the quarter was $1.184 billion, aligning with predictions. Despite these positive results, the company’s stock experienced a decline in after-hours trading. Zoom’s enterprise revenue grew by 6%, now making up 60% of total revenue, and free cash flow increased by 25% year-over-year to $416 million. However, guidance for fiscal year 2026 was roughly in line with expectations, with revenue projected between $4.785 billion and $4.795 billion, representing a 2.7% growth. Analyst firms RBC Capital Markets and Piper Sandler maintained their ratings on Zoom, with RBC keeping an Outperform rating and a $95 price target, while Piper Sandler confirmed a Neutral rating with an $89 price target. Piper Sandler noted that Zoom’s revenue growth is driven by newer products and partnerships, although they expressed a preference for other companies in the sector. These developments reflect Zoom’s current market position and potential for growth as it continues to focus on enterprise customers and AI advancements.
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