Zoom Video Gears Up to Report Q2 Earnings: What's in the Cards?

Zoom Video Communications ZM is slated to release second-quarter fiscal 2027 results on Aug. 25.

Zoom expects its second-quarter fiscal 2027 revenues to be between $1.265 billion and $1.270 billion. Revenues on a constant-currency basis are expected to be between $1.262 billion and $1.267 billion. 

The Zacks Consensus Estimate for the top line is currently pegged at $1.27 billion, indicating growth of 4.22% from the year-ago quarter.

Non-GAAP income from operations is expected to be between $508 million and $513 million. Non-GAAP earnings per share are expected to be in the range of $1.45-$1.47, based on approximately 304 million weighted-average shares outstanding.

The consensus mark for earnings has remained steady at $1.50 per share over the past 30 days, indicating a decline of 1.96% year over year.

ZM’s earnings beat the Zacks Consensus Estimate in three of the last four quarters while missing the same once, delivering an average surprise of 6.3%.

What Our Model Unveils

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

ZM has an Earnings ESP of 0.00% and carries a Zacks Rank #3 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Let’s see how things have shaped up for this announcement.

Factors to Consider

Several factors appeared positioned to shape Zoom Communications' second-quarter fiscal 2027 results. On the positive side, Enterprise momentum carried into the quarter, producing 7.2% year-over-year growth and a trailing 12-month net dollar expansion rate of 99% for Enterprise customers as of the fiscal first quarter, alongside an 8.2% year-over-year increase in customers contributing more than $100,000 in trailing 12-month revenues.

Expanding AI monetization is expected to support results, with paid AI Companion adoption up 184% year over year and My Notes surpassing 1.5 million licensed users within months of launch, indicating continued contributions from AI-attached seats and new AI revenue streams. 

Profitability trends heading into the quarter, including a 41.1% non-GAAP operating margin and $500.5 million in free cash flow in the prior quarter, along with the board's incremental $1 billion buyback authorization on top of $625 million remaining, further signaled capacity for continued margin discipline and capital return.

On the negative side, Online revenue growth had been comparatively soft at 2.8% year over year entering the quarter, with monthly churn ticking up to 3% from 2.8% a year earlier, a dynamic that is expected to have persisted given uneven small-business demand. Continued foreign-exchange volatility was also flagged as a headwind to reported results, though not to constant-currency results. Against this backdrop, guidance called for total revenues of $1.265 billion to $1.270 billion and non-GAAP diluted earnings per share of $1.45 to $1.47, implying continued but moderating growth relative to the first quarter's 5.5% pace.

Segment developments during the to-be-reported quarter reinforced the AI-first positioning underlying that outlook. In May, Zoom's board authorized the additional $1 billion share repurchase alongside the first-quarter release, while Contact Center and Phone SDKs were extended with real-time audio-translation capabilities.

In June, Zoom launched ZoomMate, an agentic AI work surface combining agentic search, AI-generated deliverables and automated execution across Salesforce, Jira, Slack and ServiceNow, later expanding it with AI agents and introducing Zoom AI On-Prem for regulated enterprises, while AI Companion features were folded natively into Zoom Workplace.

In July, Zoom announced its planned acquisition of Common Room to add buyer-intelligence capabilities to its AI revenue platform, expanded Zoom Virtual Agent Receptionist across telephony environments and unveiled Zoom Revenue Accelerator enhancements to drive revenue action.

Taken together, Enterprise strength, AI monetization progress and expanded buybacks are expected to support results within the guided ranges, while Online softness, elevated churn and currency headwinds remained the primary offsetting factors heading into the print.

Stocks With the Favorable Combination

Here are some stocks you may want to consider in the broader Zacks Computer and Technology sector, as our model shows that these have the right combination of elements to post an earnings beat:

Dell Technologies DELL has an Earnings ESP of +6.42% and sports a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here. 

Dell Technologies is slated to report second-quarter fiscal 2027 results on Sept. 1. The Zacks Consensus Estimate for DELL’s second-quarter earnings is pegged at $4.88 per share, down by a penny over the past 30 days, indicating a rise of 110.3% from the year-ago quarter’s reported figure. 

Hewlett Packard HPE has an Earnings ESP of +9.96% and carries a Zacks Rank #2 at present.

Hewlett Packard is set to report third-quarter fiscal 2026 results on Sept. 2. The Zacks Consensus Estimate for HPE’s third-quarter earnings is pegged at 94 cents per share, up by a penny over the past 30 days, indicating a rise of 113.6% from the year-ago quarter’s reported figure. 

Intuit INTU has an Earnings ESP of +0.08% and carries a Zacks Rank #3 at present.

Intuit is set to report fourth-quarter fiscal 2026 results on Aug. 25. The Zacks Consensus Estimate for INTU’s fourth-quarter earnings is pegged at $3.59 per share, unchanged over the past 30 days, indicating a rise of 30.6% from the year-ago quarter’s reported figure.

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This article originally published on Zacks Investment Research (zacks.com).

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