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Zoom Video (ZM) Q4 Earnings Preview Zoom Video (ZM) Q4 Earnings Preview

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Zoom Video Communications is set to announce its fourth-quarter fiscal 2024 results on Feb 26, and investors are eagerly anticipating the release.

Zoom Video foresees its Q4 fiscal 2024 revenues to be within the range of $1.125-$1.13 billion. The Zacks Consensus Estimate for revenue currently stands at $1.13 billion, hinting at a 0.98% growth from the same quarter in the previous year.

Non-GAAP earnings are expected to fall within the range of $1.13-$1.15 per share, with the consensus mark resting at $1.15 per share over the last 30 days, signaling a 0.93% year-over-year decline.

Zoom’s Performance

Zoom’s fiscal fourth-quarter performance is speculated to have risen due to the sustained demand for its products, including Zoom Video Webinars, Zoom Rooms, and Zoom Phones. The company’s expanding array of solutions is expected to have contributed to customer growth in the quarter under review.

The introduction of Zoom Clips, enabling users to effortlessly record, edit, and share high-quality short-form video messages, both internally and externally, is anticipated to have facilitated the growth of enterprise customers in the upcoming quarter.

New App for Apple Vision Pro

Zoom also rolled out a new app tailored for Apple Vision Pro, providing users with a native meeting experience, exceptional audio and video quality, as well as seamless meeting management and scheduling capabilities.

The consensus estimate for enterprise customers in the fiscal fourth quarter is currently projected to reach 222,590.

The company’s freemium business model, designed to attract and later convert customers into paying customers, is expected to have continued its success into this quarter. Zoom’s customers contributing over $100,000 in revenues in the trailing 12 months increased by 13.5% to 3,731 in the fiscal third quarter, and this upward trajectory is expected to persist in the upcoming quarter.

Challenges and Opportunities

While Zoom has been making significant strides, it faces stiff competition from the likes of Cisco, Microsoft, and Google Meet. This competition might have resulted in a loss of small and medium-sized business customers, which could potentially impact the company’s top-line growth.

Additionally, the company’s international expansion initiatives have led to rising costs, particularly in the form of development expenses. Research and Development spending surged 2% year over year to $105.7 million in the third quarter of fiscal 2024. This trend is likely to have persisted in the fiscal fourth quarter, driven by the company’s plan to bolster local sales support in international markets.

Analyst Projections

Zoom’s Earnings ESP stands at 0.00% alongside a Zacks Rank #3 at present, contrary to the optimal combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) for augmenting the chances of an earnings beat.

Other Stocks to Watch

Meanwhile, investors may consider companies such as The Gap, Eldorado Gold, and Booking Holdings, which have shown promising potential to outperform earnings expectations in their impending releases.

As the earnings season unfolds, it’s imperative for investors to stay informed about upcoming reports and their potential impact on the market.

Zacks Investment Research