Zoom just did the thing skeptics said it couldn’t: it proved the business has a second act beyond pandemic-era video calls. The May 21 print was not just another cost-cutting EPS beat; management raised full-year revenue guidance to $5.080B-$5.090B, guided to $1.70B-$1.74B in free cash flow, and added another $1.0B to the buyback authorization. At roughly 14.21x trailing earnings, that is not the setup of a broken software story. It is the setup of a profitable platform getting valued like the market still thinks growth died two years ago.
The first reason this setup works is simple: the core business is stabilizing, and the mix is getting better. Zoom grew revenue 4.4% year over year, which is not explosive, but it matters that FY26 growth accelerated to 4.4% and Q4 topped 5% for the first time in 14 quarters. Enterprise growth inflected to 6.5% in FY26, Online revenue returned to growth, and GAAP operating margin improved by 570 basis points. That is what a real turnaround looks like in software: not hype, but a business that is growing a little faster while getting materially more efficient.
The second reason is that AI is no longer just a slide-deck promise. Zoom Phone monthly active users leveraging AI grew 35% quarter over quarter in Q4 FY26, and the company is pushing that usage into actual workflows with call summaries, voice and SMS automation, and follow-up dashboards. On the customer service side, Zoom Customer Experience crossed $100M in ARR in Q1 FY26, then grew at a high-double-digit pace in each quarter of FY26. Even better, management said all top 10 ZCX deals in Q4 included paid AI. That is monetization, not experimentation.
The third reason is capital return backed by a fortress balance sheet. Zoom ended FY26 with $7.8B in cash, generated $2.0B of operating cash flow, repurchased about 20 million shares for $1.6B, and just authorized another $1.0B in buybacks on top of $625M still remaining as of April 30. This matters because buybacks are often a red flag when they are used to hide weak fundamentals. Here, they are being layered on top of 77.4% gross margins, 24.2% operating margins, 42.0% net margins, and 92.7% EPS growth. The TickerSpark Score of 86 captures that mix well, with a 100 Profitability score, 83 Valuation score, and 100 Momentum score. For a software name with this level of cash generation, the market is still paying a very undemanding multiple.
The obvious pushback is that 4.4% revenue growth is still modest, and that criticism is fair. Zoom is not suddenly turning into a 20%-plus growth software stock like HUBS or TTD, and buybacks alone do not create durable demand. Consensus also still leans cautious, with 27 holds against 18 buys and 3 sells, which tells you plenty of investors are waiting for another quarter or two before they believe the reacceleration story.
That skepticism is exactly why the opportunity exists. ZM does not need hypergrowth to work from here; it needs proof that growth is durable, margins stay elite, and newer products keep taking a larger share of the story. The latest quarter checked those boxes. A company trading at 14.21x earnings with a 42.0% net margin and raised guidance does not need perfection to rerate. It just needs the market to stop treating it like a melting-ice-cube video app.
That leaves ZM looking more like a buy-on-disbelief setup than a stock to fade. We would respect the fact that shares are still below the 20-day moving average and off the 52-week high of $113.73, but they remain above both the 50-day and 200-day averages, which says the broader uptrend is intact. After a 7-for-7 earnings beat streak and a fresh beat-and-raise quarter, a pullback toward $100 looks like weakness to use, not fear to follow.
What would change our mind is straightforward: if the next earnings cycle shows AI and ZCX excitement without corresponding revenue follow-through, the rerating case weakens fast. Until then, the combination of raised FY27 guidance, $1.70B-$1.74B free cash flow guidance, and another $1.0B in buybacks makes the current reaction look backward-looking. We think the market is still pricing old Zoom while the company is already operating like a better one.
