Market Analysis

Shares of video conferencing platform Zoom (NASDAQ:ZM) jumped 8.7% in the morning session after the company reported a "beat and raise" quarter. Zoom narrowly topped analysts' revenue estimates, while EPS and adjusted operating income beat more convincingly. That the company raised full year revenue guidance as well means the demand environment is healthy. This is especially comforting given some uneven macro commentary from other software companies reporting earnings. Overall, this was a solid quarter.

What is the market telling us: Zoom’s shares are quite volatile. The biggest move we wrote about over the last year was 6 months ago, when the stock gained 13.5% on the news that the company reported fourth-quarter results, with its revenue narrowly outperforming Wall Street's estimates, though EPS beat by a more convincing margin. There was also an acceleration in its new large contract wins.

On the other hand, its full-year revenue guidance was below expectations and suggests a slowdown in demand.

Lastly, Zoom demonstrated its focus on driving shareholder returns as its Board of Directors authorized a stock repurchase program of up to $1.5 billion of its common stock.

Overall, this was a mixed quarter for Zoom. However, the market reacted very positively to the news of the share buyback.

Zoom is down 2.2% since the beginning of the year, but at $67.61 per share it is still trading close to its 52-week high of $74.21 from December 2023. Investors who bought $1,000 worth of Zoom’s shares 5 years ago would now be looking at an investment worth $720.20