Zoom Video Communications Inc. shares declined 5.8% in pre-market trading on Wednesday after the company reported quarterly results that topped revenue and earnings estimates but provided a conservative outlook that disappointed investors.
The San Jose-based company posted revenue of $1.277 billion for the second quarter of fiscal 2027, exceeding the market consensus of approximately $1.27 billion. Adjusted earnings per share reached $1.55, surpassing the $1.48 forecast. Enterprise revenue, a key metric for the firm, grew 7.8% year-over-year, marking the fastest increase in three years.
Despite the positive financial performance, Zoom's guidance for the third quarter fell short of expectations. Revenue for the current quarter is projected between $1.275 billion and $1.28 billion, a range that analysts had already anticipated. For the full fiscal year 2027, Zoom raised its revenue outlook modestly to $5.085 billion–$5.095 billion, aligning with prior market expectations.
The broader market showed mixed performance, with the Nasdaq Composite down 0.2%, the S&P 500 flat at -0.1%, and the Dow Jones Industrial Average up 0.1%. The corporate software sector faced additional scrutiny as Intuit released its earnings on the same evening, further influencing investor sentiment.
Institutional activity provided mixed signals. Bank of America reinstated coverage of Zoom with a buy rating and a $130 price target, citing confidence in a sustainable growth recovery. CEO Eric Yuan noted a 256% year-over-year increase in Zoom Virtual Agent clients, highlighting accelerated adoption of AI-driven solutions. However, insider selling activity totaled approximately $95.7 million over the past 12 months, adding to investor caution.
Shares had rallied about 22% in the year leading up to the earnings report but extended losses following the announcement.
