TLDR
- Zoom stock jumped over 9% after beating Q1 fiscal 2027 earnings expectations
- Revenue came in at $1.24 billion, up 5.5% year over year, with enterprise revenue growing 7.2%
- Zoom’s $51 million investment in Anthropic from 2023 is now worth nearly $1.3 billion
- Management raised full-year guidance, projecting $5.08–$5.09 billion in revenue and up to $6.00 adjusted EPS
- Multiple Wall Street analysts raised price targets, with Rosenblatt going to $130 and Benchmark to $125
Zoom stock opened sharply higher on Friday, climbing more than 9% to around $105.55, after the company posted a strong first quarter and revealed a quietly massive return on its early bet on Anthropic.
The numbers were clean across the board. Revenue hit $1.24 billion, up 5.5% year over year, and comfortably ahead of Zoom’s own guidance of $1.22 billion. Adjusted earnings came in at $1.55 per share, up from $1.43 a year ago. Free cash flow rose 8% to $500.5 million.
Enterprise revenue grew 7.2% to $755.7 million and now accounts for 61% of total revenue. Customers spending over $100,000 annually grew 8.2% to 4,534.
Net dollar expansion rate ticked up to 99% from 98%, a sign that existing customers are spending slightly more.
CEO Eric Yuan pointed to AI as the engine behind the momentum. AI Companion paid users grew 184% year over year. My Notes, a newer AI note-taking feature, reached 1.5 million licensed users within four months of launch.
“Customers are increasingly adopting Zoom as an AI-first system of action for modern work,” Yuan said.
The Anthropic Factor
The earnings story got a second act on Friday when a regulatory filing revealed the full scope of Zoom’s Anthropic investment.
Zoom put roughly $51 million into Anthropic in May 2023 through its Zoom Ventures arm. That stake is now worth nearly $1.3 billion — a return of more than $1 billion. The original investment was structured to help integrate Anthropic’s Claude models into Zoom’s AI products.
Anthropic is reportedly close to closing a new funding round of up to $30 billion at a $900 billion valuation, with Sequoia Capital, Dragoneer, Altimeter, and Greenoaks expected to each contribute $2 billion. If that valuation holds, Zoom’s stake could be worth even more.
Cantor Fitzgerald noted that if the Anthropic holding, estimated at $1.5 billion of Zoom’s total $1.88 billion in strategic investments, reaches the $900 billion valuation level, Zoom’s stock could be worth $116 per share.
Guidance and Analyst Reaction
Management raised full-year guidance. Zoom now expects revenue of $5.08 to $5.09 billion, adjusted EPS of $5.96 to $6.00, and free cash flow of $1.7 billion for fiscal 2027.
The company also authorized a new $1 billion share buyback program.
Analysts moved quickly. Morgan Stanley raised its target to $105 from $92. Rosenblatt went to $130 from $115. Benchmark lifted its target to $125 from $121. Mizuho moved to $120, and Needham also raised to $130. BofA went to $105 while keeping a Neutral rating.
Cantor Fitzgerald, which maintained a Neutral rating, raised its target to $104 from $87, citing adoption of Zoom’s CX, Phone, and AI products.
Zoom’s 52-week high stands at $113.73, reached during Friday’s session.
🚨 Our MAY Stock Picks Are Live!
A new month means new opportunities. Our analysts have just released their top stock picks for May, highlighting companies with strong momentum that rank highly on our KO Score algorithm. We’re also now sharing trade ideas for both long-term and short-term investors, giving you more ways to spot potential opportunities in the market.
Sign up to Knockout Stocks today and get 50% off to unlock the full list and see which stocks made the cut.
Use coupon code Special50 for your exclusive discount!
Be the first to comment