Zoom Video Communications, Inc. (NASDAQ: ZM) Quarterly Earnings Preview

• Zoom Video Communications, Inc. (NASDAQ:ZM) is set to release its quarterly earnings with an expected EPS of $1.31 and projected revenue of $1.19 billion.
• The company forecasts Q4 fiscal 2025 revenues between $1.175 billion and $1.18 billion, with a Zacks Consensus Estimate at the higher end.
• Despite a projected decrease in EPS, Zoom's strong financial health and innovative strides in AI position it as a potentially undervalued investment.

Zoom Video Communications, Inc. (NASDAQ:ZM) is a prominent player in the video conferencing industry, known for its user-friendly platform that gained immense popularity during the COVID-19 pandemic. As the company prepares to release its quarterly earnings on February 24, 2025, Wall Street analysts have set expectations for an earnings per share (EPS) of $1.31 and projected revenue of approximately $1.19 billion.

Zoom anticipates its fourth-quarter fiscal 2025 revenues to be between $1.175 billion and $1.18 billion. The Zacks Consensus Estimate aligns with the higher end of this range at $1.18 billion, marking a 2.77% increase from the same quarter last year. However, the expected non-GAAP EPS is projected to be between $1.29 and $1.30, with the consensus estimate at $1.31, reflecting a 7.75% decrease from the previous year's quarter.

Despite the anticipated decrease in EPS, Zoom has a history of exceeding expectations, having surpassed the Zacks Consensus Estimate by 5.34% in the last reported quarter. The company's stock has experienced a significant decline, dropping approximately 85% from its pandemic peak. However, it now appears undervalued, presenting potential for gains as it approaches its Q4 earnings release.

Zoom's financial health is underscored by improved net margins and a strong cash balance. The company maintains a low debt-to-equity ratio of 0.0043, indicating minimal reliance on debt financing, and a robust current ratio of approximately 4.60, suggesting strong liquidity. These factors, along with favorable valuation metrics, highlight its promising investment potential despite past volatility.

Zoom is also making strides in AI, with tools like AI Companion 2.0 and Workvivo experiencing robust growth. These innovations are tapping into markets such as healthcare, education, and frontline worker sectors. As the company approaches its earnings report, investors are considering whether it is the right time to buy Zoom stock, given its consolidation phase and fluctuating stock price between $58.65 and $95.30.