Zoom Video Stock Headed Toward One-Month Low As Lackluster Guidance Takes Sheen Off Q4 Beat: Retail Mood Mixed

The company ended the quarter with 192,600 enterprise customers, up slightly from 192,400 in the previous quarter.

Zoom Video Communications, Inc. (ZM) shares pulled back sharply in Tuesday’s premarket trading after the video conferencing app provider announced fiscal year 2025 fourth-quarter results that exceeded expectations. However, key user metrics remained soft, and the forward guidance was lackluster.

The San Jose, California-based company reported fourth-quarter (Q4) adjusted earnings per share (EPS) of $1.41, compared to $1.42 a year ago and the consensus of $1.30. The bottom line also bettered the guidance range of $1.29-$1.30.

Revenue climbed 3.3% year over year (YoY) to $1.18 billion, above the $1.17 billion consensus and in line with the $1.175 billion to $1.180 billion guidance.

The nearly 6% growth in enterprise revenue ($706.8 million) helped offset the 0.4% drop in online revenue.

Zoom founder and CEO Eric Yuan said, “In FY25, Zoom [artificial intelligence] AI Companion emerged as the driving force behind our transformation into an AI-first company, enabling our customers to discover enhanced productivity opportunities.”

He noted that the annual reported operating margin expanded by a robust 5.8 points, thanks to the focus on prioritizing investments and controlling share-based compensation. 

Operating cash flow for the year climbed nearly 22% to $2 billion, translating to an operating cash flow margin of 41.7%.

Among user metrics, Zoom Video ended the quarter with 192,600 enterprise customers, up slightly from 192,400 in the previous quarter. The trailing 12-month net dollar expansion rate for enterprise customers was steady at 98% versus the third quarter.

The number of customers contributing revenue of more than $100,000 in the trailing 12 months was 4,088, up from 3,995 in the third quarter.

The online average monthly churn fell 20 basis points YoY  to 2.8%.

Zoom Video expects first-quarter adjusted EPS of $1.29 to $1.31 and revenue of $1.162 billion to $1.167 billion. Analysts, on average, expect earnings of $1.31 on a revenue of $1.17 billion.

The company has projected fiscal year 2026 adjusted EPS of $5.34 to $5.37 and a revenue of $4.785 billion to $4.795 billion. These trailed the consensus estimates of $5.39 and $4.81 billion, respectively.

Retail sentiment on Stocktwits stayed ‘neutral’ (54/100), but the message volume perked to ‘extremely high’ levels amid the earnings announcement.

A bullish user said the soft guidance was a strategy.

Another user said the daily price chart did not evince much confidence.

In premarket trading, Zoom Video stock fell 3.82% to $78, headed toward a one-month low. The stock has lost nearly a percent for the year.