Zoom Shares Dip 8% After Q4 Earnings, Soft Guidance

Zoom Communications (NASDAQ: ZM) shares fell by approximately 8% in after-hours trading on Monday, February 24, following the company's release of its fourth-quarter fiscal 2025 earnings report. Although the company reported better-than-expected results for the quarter, its guidance for the first quarter of FY26 was slightly lower than analysts' estimates, contributing to the share price decline.

Zoom reported fourth-quarter revenue of $1.18 billion, in line with analyst estimates, and adjusted earnings of $1.41 per share, beating expectations of $1.30 per share. The company's total revenue grew by 3.3% year-over-year, with enterprise revenue up 5.9% and online revenue down 0.4%. Zoom ended the quarter with approximately 192,600 enterprise customers.



However, Zoom's guidance for the first quarter of FY26 was softer than expected. The company expects revenue to be in the range of $1.162 billion to $1.167 billion, while analysts had expected $1.17 billion. Zoom also expects adjusted earnings of $1.29 to $1.31 per share for the first quarter.



Zoom's full-year fiscal 2026 guidance was largely in line with analysts' expectations. The company sees revenue in the range of $7.785 billion to $4.795 billion and adjusted earnings between $5.34 and $5.37 per share.

Zoom's shares have been volatile in recent months, with the stock price fluctuating between $70 and $90 per share. The company's focus on AI initiatives, such as Zoom AI Companion and Custom AI Companion add-on, has been well-received by customers, with monthly active users of Zoom AI Companion accelerating to 68% quarter-over-quarter. However, some investors may be concerned about the company's ability to successfully integrate AI into its products and maintain its competitive edge.



In conclusion, Zoom's shares fell by approximately 8% following the Q4 earnings report due to softer-than-expected guidance for the first quarter of FY26. Despite the share price decline, the company's long-term growth prospects remain strong, driven by its AI-first strategy and consistent performance. As Zoom continues to innovate and expand its AI capabilities, it is well-positioned to capitalize on the growing demand for AI-driven work platforms and maintain its competitive edge in the market.