Is One Stalled Business Reason Enough To Sell Zoom Stock?
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The growth outlook for the Online business is the one number that should worry a Zoom Communications (ZM) holder, though the concern remains a moderate one. Online brought in about 38% of Zoom’s revenue in fiscal Q2 2027. During its August 25, 2026 call, management cut the fiscal 2027 outlook for the Online segment from slight growth down to flat. So why does management no longer expect its Online business to grow?
Why Does Zoom Expect Flat Online Sales?
Management blamed an industry-wide change in how users first encounter products. The company observed buyers moving from search to AI to discover software during the second quarter, and it said it is actively working to address that shift.
Management also presented the flat outlook as an exercise in caution rather than a changed view of the business, calling it “really just a near-term statement of expectations.”
What Flat Online Sales Mean For Zoom’s Growth
A flat Online segment leaves the Enterprise business to drive Zoom’s expansion, at a time when the company’s overall growth is already trailing the broader market. Zoom’s revenue increased an average of 3.8% a year over its last three twelve-month periods, compared with 6.1% for the S&P 500. That gap is mild, and Zoom now expects no help from the Online unit in narrowing it.
Management confirmed this dynamic on the August call: it raised the fiscal 2027 revenue outlook, noting the revision assumes faster-than-expected Enterprise revenue growth partly offset by flat Online growth. For fiscal Q3 2027, management expects revenue growth of 3.9% at the midpoint, against 4.9% in fiscal Q2 2027.
Meanwhile, Zoom stock fell 15.8% from May 5 to November 3, 2026, while the S&P 500 gained 4.8%. On a cash flow basis, the share price likely already assumes slow growth: Zoom trades at 13.4 times operating cash flow, against 15.1 for the S&P 500.
What Is Going Right At Zoom?
Online customers are staying even as they pay more. Monthly churn in the Online business was 2.9% in fiscal Q2 2027, matching the rate from a year earlier. That followed a second round of Online price increases totaling roughly 6%, which management said brought no real change in churn. Even so, management still expects flat Online sales for the year.
The Enterprise business grew revenue 7.8% in fiscal Q2 2027, marking its strongest rate in three years. Zoom’s RPO, the revenue customers have signed for but the company has yet to record, rose 14% from a year earlier to about $4.5 billion. Management did caution that churn from one white-label deal will weigh a little more on Enterprise in the second half.
Zoom also ended July 2026 with $7.19 billion more in cash and short-term investments than debt. That position comes to about $24 a share, making up roughly a quarter of the $91.84 share price.
Flat Online sales offer a reason for moderate worry rather than alarm, as long as Online customers keep paying more without leaving. Online growth and Online churn are the figures to watch when Zoom reports its fiscal Q3 2027 results, expected in November 2026.
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