ZM
Zoom Communications, Inc.
Technology · Software - Application · United States · Stock
Score Breakdown
Scored for Aggressive Growth profile
Sub-scores are 0–20 each; Model Score is weighted by your selected investment goal. How it works →
Why Ranked Here
- The profitability factor earned a perfect score, anchored by an operating margin of 49.8%, a net margin of 39.0%, and a return on assets of 15.9% in FY2026 — metrics well above typical thresholds.
- Growth and momentum factors contributed positively, driven by the +88.1% surge in net income and +92.5% expansion in diluted EPS, as well as broadly positive quarterly revenue trends through 2026Q4.
- The dividend and theme factors both scored zero, as Zoom is a confirmed non-payer with no current macro theme assignment, which weighed on the composite and contributed to the High risk rating.
Why Not Higher
- The notable deceleration in operating income and net income in 2027Q1 relative to the 2026Q4 peak introduced uncertainty that likely capped the momentum score, and the modest +4.4% revenue growth tempered the growth score from a higher mark.
- The zero scores on dividend and theme, combined with limited available evidence to fully explain the financial health factor, prevented the composite from reaching a higher tier despite the company's strong profitability profile.
Data Confidence
6 / 10
Medium — some data gaps
Why This Score
Grounded in figures from this company's SEC EDGAR filings — not a restatement of the score itself.
Revenue grew modestly from FY2025 to FY2026, rising +4.4% to $4,868,769,000. However, net income surged +88.1% over the same period, and diluted EPS expanded +92.5% from FY2025 to FY2026.
The model rewarded the dramatic bottom-line acceleration — nearly doubling net income and EPS from FY2025 to FY2026 — while the relatively modest top-line revenue growth of +4.4% likely tempered the score from a perfect mark.
In FY2026, Zoom reported an operating margin of 49.8%, a net margin of 39.0%, and a return on assets of 15.9%.
These figures reflect exceptional capital efficiency and pricing power; the model awarded a perfect score in recognition of margins and asset returns that are well above typical thresholds for this factor.
Filing evidence currently available does not support a more specific explanation for this factor.
Quarterly revenue showed gradual sequential growth from 2026Q2 ($1,217,227,000) through 2026Q4 ($1,246,992,000), with a slight dip in 2027Q1 ($1,239,006,000). Operating income and net income rose sharply through 2026Q4 — operating income reaching $863,649,000 and net income $674,080,000 — before pulling back in 2027Q1 to $531,620,000 and $425,677,000 respectively.
The model recognized a broadly positive trend in both revenue and profitability across the trailing four quarters, though the notable deceleration in earnings metrics in 2027Q1 relative to the 2026Q4 peak likely prevented a higher score.
Zoom Communications, Inc. does not currently pay a dividend; this is a genuine characteristic of the company, not a data limitation.
Because the model rewards dividend income as a component of total return, a confirmed non-payer receives a score of zero on this factor by design.
Zoom is not currently assigned to any of the 24 tracked macro themes in the model.
The absence of a theme assignment is a neutral classification outcome; it simply means the security does not map to one of the model's tracked macro themes at this time, and no inference about the company's prospects should be drawn from it.
Research Summary
AI-generated analysis reflects data and conditions as of the report date shown above. Verify any specific figures through primary sources before acting on this analysis.
Zoom Communications, Inc. earned a composite score of 55.2/100 with a High risk rating and a Research Further label, reflecting a company with genuinely exceptional profitability and strong bottom-line growth alongside structural gaps that weigh on the overall assessment. In FY2026, Zoom posted an operating margin of 49.8% and a net margin of 39.0%, while net income surged +88.1% and diluted EPS expanded +92.5% year-over-year, even as revenue grew a more modest +4.4% to $4,868,769,000. Quarterly momentum showed a broadly positive trend through 2026Q4, but a notable pullback in operating income and net income in 2027Q1 introduces uncertainty about the durability of that earnings acceleration. The absence of a dividend and no current macro theme assignment both scored zero, which weighed on the composite despite the company's strong underlying financial performance.
Plain English
Zoom is a highly profitable company that nearly doubled its earnings per share in one year, but its revenue growth is slow, it pays no dividend, and its most recent quarter showed a sharp drop in profits from the prior quarter's peak — so while the business looks strong on paper, there are enough question marks to warrant more research before drawing conclusions.
Bull Case vs. Bear Case
Bull Case
- Exceptional profitability stands out: Zoom reported an operating margin of 49.8% and a net margin of 39.0% in FY2026, alongside a return on assets of 15.9%, reflecting strong capital efficiency and pricing power.
- Bottom-line growth was dramatic: net income rose +88.1% and diluted EPS expanded +92.5% from FY2025 to FY2026, demonstrating that the company is converting revenue into profit at an accelerating rate.
- Quarterly revenue showed consistent, if gradual, sequential growth from 2026Q2 through 2026Q4, suggesting a stable and growing demand base over the trailing period.
Bear Case
- Top-line growth remains modest: revenue grew only +4.4% year-over-year from FY2025 to FY2026, which may limit the company's ability to sustain dramatic earnings growth over the long term.
- A sharp earnings deceleration in 2027Q1 is a concern: operating income fell to $531,620,000 and net income dropped to $425,677,000 from their respective 2026Q4 peaks of $863,649,000 and $674,080,000, raising questions about whether the prior acceleration was sustainable.
- Zoom pays no dividend, meaning investors receive no income component from holding the stock, which reduces total return potential for income-oriented strategies.
What Could Change the Picture
Bullish Triggers
- A sustained re-acceleration in quarterly net income and operating income beyond the 2026Q4 peaks would suggest the 2027Q1 pullback was temporary rather than a structural reversal.
- A meaningful step-up in revenue growth rate — moving well above the current +4.4% annual pace — would strengthen confidence that the bottom-line gains are supported by durable top-line expansion.
Bearish Triggers
- If the 2027Q1 earnings pullback deepens in subsequent quarters, it would signal that the FY2026 profitability surge was a one-time event rather than a new baseline.
- Continued absence of a dividend or macro theme assignment, combined with slowing momentum, could further pressure the composite score and the investment case.
Risk Profile
High RiskThe High risk rating reflects meaningful uncertainty: while total assets stood at $11,960,416,000 in FY2026, the financial health factor score was relatively low and the available filing evidence does not fully illuminate the underlying drivers. Compounding this, the sharp pullback in operating income to $531,620,000 and net income to $425,677,000 in 2027Q1 from their 2026Q4 peaks raises questions about earnings durability.
This report is for educational and research purposes only. It does not constitute financial, investment, legal, or tax advice — always conduct your own due diligence before making investment decisions.