In This Article:
Zoom Video Communications ZM is transforming from a pandemic-era video conferencing tool into an AI-first work platform poised for sustainable growth. The company's recent announcements highlight a strategic pivot that should excite forward-thinking investors, especially those looking to capitalize on practical AI applications in the enterprise space.
In March 2025, Zoom unveiled a comprehensive suite of agentic AI capabilities across its platform, signaling a significant evolution in its product strategy. The company's AI Companion is becoming truly agentic, leveraging reasoning and memory to execute multi-step actions on users' behalf. This development addresses real productivity challenges faced by knowledge workers and represents a key differentiator in the competitive collaboration market.
Financial Strength Provides Foundation for AI Investments
Zoom's financial results demonstrate the company's ability to fund innovation while maintaining profitability. For fiscal 2025, Zoom reported total revenues of $4.67 billion, up 3.1% year over year, with enterprise revenues growing 5.2% to reach $2.75 billion. More impressive was the company's operating cash flow, which jumped 21.7% to $1.95 billion, representing a 41.7% margin.
The company's disciplined approach to expenses has yielded significant improvement in the GAAP operating margin, which expanded 580 basis points year over year to 17.4%. With approximately $7.8 billion in cash and marketable securities, Zoom has ample resources to pursue its AI-centric strategy while continuing its share repurchase program, which included approximately 15.9 million shares during fiscal 2025.
The Zacks Consensus Estimate for fiscal 2026 indicates 2.68% year-over-year revenue growth to $4.79 billion. The consensus estimate for earnings has moved north by 1.5% to $5.37 per share over the past 30 days.
Image Source: Zacks Investment Research
Find the latest earnings estimates and surprises on Zacks Earnings Calendar.
AI Companion 2.0: The Centerpiece of Zoom's Strategy
Zoom's AI Companion has emerged as the driving force behind the company's transformation. Monthly active users grew an impressive 68% quarter over quarter, demonstrating strong customer adoption and validating Zoom's AI-first approach.
The newly announced Custom AI Companion add-on, available in April for $12 per user per month, allows organizations to personalize the AI experience with company-specific knowledge and industry-specific terminology. This approach addresses a key limitation of generic AI solutions by incorporating organizational context, potentially increasing the stickiness of Zoom's platform.
Zoom's federated AI approach is particularly noteworthy, combining small language models with third-party large language models to deliver both performance and cost-effectiveness. This hybrid approach allows for specialized AI tasks while maintaining flexibility — a strategic advantage as AI technology continues to evolve rapidly.