Zoom (ZM) Q4 Earnings Report Preview: What To Look For

Jabin Bastian /
2024/02/25 2:00 am EST

Video conferencing platform Zoom (NASDAQ:ZM) will be reporting earnings tomorrow after the bell. Here's what to look for.

Last quarter Zoom reported revenues of $1.14 billion, up 3.2% year on year, beating analyst revenue expectations by 1.6%. It was a mixed quarter for the company, with decelerating growth in large customers. On the other hand, it narrowly topped analysts' revenue expectations during the quarter, driven by more new customer wins than projected. Its free cash flow also beat Wall Street's estimates significantly. The company added 59 enterprise customers paying more than $100,000 annually to a total of 3,731.

Is Zoom buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting Zoom's revenue to grow 1.2% year on year to $1.13 billion, slowing down from the 4.3% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $1.15 per share.

Zoom Total Revenue

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company missed Wall St's revenue estimates twice over the last two years.

Looking at Zoom's peers in the video conferencing segment, some of them have already reported Q4 earnings results, giving us a hint of what we can expect. 8x8's revenues decreased 1.8% year on year, missing analyst estimates by 1.3% and Five9 reported revenues up 14.7% year on year, exceeding estimates by 0.4%. 8x8 traded down 3% on the results, and Five9 was down 6.1%.

Read our full analysis of 8x8's results here and Five9's results here.

The fears around raising interest rates have been putting pressure on tech stocks and while some of the video conferencing stocks have fared somewhat better, they have not been spared, with share price declining 2.9% over the last month. Zoom is down 8% during the same time, and is heading into the earnings with analyst price target of $79.3, compared to share price of $63.4.

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