Why Zoom Communications Stock Is Rising Premarket Today
Synopsis
The company's quarterly revenue climbed 4.7% year-over-year to $1.217 billion.
Zoom Communications, Inc. (ZM) stock climbed over 5.5% in the early premarket session on Friday as investors bid up the stock following the company’s quarterly results.
The video-conferencing app provider’s earnings triggered an ‘extremely bullish’ (96/100) reaction from retail users of the Stocktwits users early Friday, an improvement from the ‘bullish mood’ seen a day ago. The message volume on the Zoom Communications stock stream also improved to ‘extremely high’ levels.
A bullish watcher said the stock could run 30%-40% on Friday, given the surprisingly strong results.
San Jose, California-based Zoom Communications reported adjusted earnings per share (EPS) of $1.53 for the second quarter of the fiscal year 2026, up from $1.39 per share for the year-ago quarter.
Revenue climbed 4.7% year-over-year (YoY) to $1.217 billion.
Analysts, on average, estimated the metrics to come in at $1.37 per share and $1.20 billion, respectively, according to Fiscal.ai.
Founder and CEO Eric Yuan said, “We delivered an across-the-board strong Q2 marked by achieving our highest year-over-year revenue growth in 11 quarters and expanding GAAP operating margin year over year by 9 percentage points.”
Among customer metrics, those contributing more than $100,000 in trailing 12-month revenue climbed 8.7% YoY to 4,274. The trailing 12-month dollar expansion rate for enterprises stood at 98%. The online average churn was at 2.9%, unchanged from a year ago.
Yuan said, “With our robust performance, we are happy to raise our full year outlook for revenue, non-GAAP operating income, as well as free cash flow, which we now expect to be in the range of $1.74 billion to $1.78 billion.” The revenue guidance of $4.825 billion to $4.835 billion was roughly in line with the consensus estimate of $4.838 billion.
The adjusted EPS guidance for the full year and the third quarter exceeded estimates.
Zoom Communications' stock is down over 10% this year, underperforming the broader market and the tech sector. This COVID-19 play peaked at $588.84 in October 2020 as the work-from-home mandate proved healthy for the company’s platform.
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