Why Zoom Stock Jumped Today
Key Points
Zoom's sales and profits are growing at a solid clip.
Management projects $1.7 billion in free cash flow in fiscal 2027.
Shares of Zoom Communications (NASDAQ: ZM) popped on Friday after the live collaboration software provider highlighted its artificial intelligence (AI)-driven growth.
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AI-driven momentum
Zoom's total revenue rose 5.5% year over year to $1.2 billion in its fiscal 2027 first quarter, which ended on April 30. The gains were driven by a 7.2% rise in enterprise revenue to $755.7 million.
Customers contributing over $100,000 in trailing-12-month revenue grew 8.2% to 4,534. Zoom's trailing 12-month net dollar expansion rate improved to 99% from 98% in the prior-year quarter, providing further evidence that it's successfully servicing its corporate customers.
The video conferencing leader is working to become a comprehensive business communications platform by rolling out new AI-powered assistants, note-taking apps, and other productivity tools.
"Customers are increasingly adopting Zoom as an AI-first system of action for modern work, with AI Companion paid users growing 184% year over year, and My Notes reaching 1.5 million licensed users within just four months of launch," CEO Eric Yuan said.
All told, Zoom's adjusted earnings increased 8% to $1.55 per share. The software maker's impressive free cash flow also rose by 8% to $500.5 million.
A healthy profit forecast
Looking ahead, management expects full-year revenue of roughly $5.1 billion, adjusted earnings per share of $5.96 to $6.00, and free cash flow of $1.7 billion.
"We remain focused on turning AI innovation into durable growth, measurable customer value, and long-term shareholder returns," Yuan said.
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Zoom Communications. The Motley Fool has a disclosure policy.