What Is Going On With Zoom Stock?
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Zoom Communications (ZM) stock trades at 8.3 times earnings, compared with a 22.8 multiple for the median S&P 500 company, though on operating profit its $26.9 billion market value is about 23 times. Yet the software maker expanded its sales, margins and cash flow over the twelve months to July 2026. Zoom shares returned 5.4% in the year to November 2, 2026, trailing the 10.3% rise in the S&P 500 index. Either a sound business is on sale, or the low price is a fair one. So what are you actually buying at $91.98 a share?
Zoom Is Growing And Holds $7.25 Billion In Cash
You are buying a profitable software business holding far more cash than debt. At the end of July 2026, Zoom had $7.25 billion in cash and short-term investments against about $60 million of debt. Spread across 300 million diluted shares, that cash equals about $24 a share. The company’s products include Zoom Workplace, Zoom Phone and Zoom Contact Center.
The business also earns well. Over the twelve months to July 2026, Zoom recorded an operating margin of 23.7%, compared with 18.6% for the median S&P 500 company. The company carries a 7.1% free cash flow yield, measuring free cash flow against market value. Management is returning cash to shareholders through buybacks, repurchasing about $352 million of stock in fiscal Q2 2027. Based on those figures, the low multiple looks like a discount on a sound business.
Zoom’s Net Income Is Nearly Triple Its Operating Profit
That 8.3 multiple is based on $3.26 billion in net income over the twelve months to July 2026, a figure almost three times the $1.19 billion Zoom earned from its operations. This gap is widest in fiscal Q2 2027, when net income was $1.54 billion against operating income of $314 million. Zoom’s non-GAAP results, which exclude net gains on strategic investments, came to $1.55 a share in that quarter.
The multiple fell alongside that jump in profit, rather than falling with the share price. When measuring the end-of-June share price against profit for the twelve months to July, Zoom traded at 19.8 times earnings in 2025 and 7.8 times in 2026. Over the same year, its price to sales barely moved, inching from 5.0 to 5.1.
Beneath that profit, the business is growing slowly. Revenue expanded 2.8% in the twelve months to July 2024 and 3.6% a year later. While the growth rate reached 5.0% in the latest twelve months, it remains below the 8.5% for the median S&P 500 company. Management also expects its online business to remain flat in fiscal 2027.
Can Zoom’s Enterprise Customers Lift Its Growth?
Not yet, according to management’s own forecast. Enterprise revenue grew 7.8% in fiscal Q2 2027, its fastest rate in three years, and the Enterprise segment now accounts for 62% of revenue. Even so, management is guiding for 3.9% revenue growth at the midpoint for fiscal Q3 2027, a step down from the 4.9% Zoom reported for fiscal Q2 2027. For the full fiscal year 2027, management raised its revenue guide to 4.5% growth at the midpoint.
Management’s own goal is to lift the Enterprise net dollar expansion rate to 100% and beyond. This metric, which tracks what existing Enterprise customers spend now compared with a year earlier, sat at 99% in fiscal Q2 2027. Since then, at its Zoomtopia investor session in October 2026, Zoom set long-term financial targets through fiscal 2030, including 6% to 8% growth.
At this price, buyers are betting the Enterprise business can lift total growth, not that the market misread Zoom’s twelve-month profit. Enterprise revenue growth is the figure to watch when Zoom reports its fiscal Q3 2027 results, expected in November 2026.
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