NASDAQ · Technology

Zoom Communications, Inc.

ZM · Software - Application

$86.36

▼ -1.03 (-1.18%)

Cached · 10 min

Overall Grade

Defensive

Enterprising

Profitability

A⤢

Gross Profit Margin 77.9%

Operating Margin 25.1%

Net Income Margin 34.4%

Fin. Health

A⤢

Years to Pay Off Debt 0.1 yrs

Working Capital vs Long-Term Debt $6.5B

Working Capital $6.5B

Valuation

F⤢

Margin of Safety 0.0%

Price-to-Book 2.29x

Cash Flow

A⤢

Free Cash Flow $500M

CapEx % of Net Income 5.0%

Owner Earnings $480M

Profitability

Gross Profit Margin 77.9%

Revenue minus cost of goods sold. Graham's ≥40% threshold identifies businesses with durable pricing power. Note: software and financial companies naturally exceed this; retailers and manufacturers rarely reach it due to their cost structures.

Operating Margin 25.1%

Profit after operating costs before interest and taxes. A consistent ≥15% operating margin signals a business with real competitive advantages. Capital-intensive industries (airlines, auto, commodities) rarely hit this threshold due to their structural cost base — compare within industry for context.

Net Income Margin 34.4%

Bottom-line profit as a percentage of revenue. The ≥20% target reflects Buffett's preference for highly profitable businesses. Financial engineering (buybacks, tax optimisation) can inflate this temporarily — look for consistency across multiple years rather than a single strong result.

Financial Health

Years to Pay Off Debt 0.1 yrs

Total Debt ÷ Net Income. Lower = stronger balance sheet. Important caveat: utilities, telecoms, REITs, and infrastructure companies carry large structural debt by design — their bond-like cash flows service it comfortably at ratios that would alarm Graham. Compare within sector.

Working Capital vs Long-Term Debt $6.5B

Working Capital minus Long-Term Debt. Negative results are common and expected in capital-return-focused businesses like Apple, Domino's, and McDonald's — where aggressive buybacks and dividends intentionally reduce book equity. This does not indicate financial distress in high-FCF businesses.

Working Capital $6.5B

Current Assets minus Current Liabilities. Negative working capital can be a deliberate efficiency strategy in businesses that collect cash before paying suppliers (retailers, fast food franchises, subscription businesses). Assess alongside free cash flow generation for full context.

Cash Flow

Free Cash Flow $500M

Operating cash flow minus capital expenditures. Buffett's most important metric — cash a business actually generates for its owners after maintaining and growing its asset base. Consistently positive FCF is one of the strongest indicators of a durable, well-run business regardless of accounting profits.

CapEx % of Net Income 5.0%

Capital expenditure as a share of net income. Low CapEx signals a capital-light business that doesn't need heavy reinvestment to sustain earnings — Buffett's ideal. High CapEx is structurally necessary in manufacturing, airlines, telecoms, and semiconductors. For these industries, a high reading reflects the business model, not poor management.

Owner Earnings $480M

Net Income + Depreciation & Amortisation − Capital Expenditures. Buffett's preferred measure of a company's true annual earning power — what could theoretically be distributed to owners without impairing the business. More reliable than reported EPS because it accounts for the capital cost of maintaining the business.

Defensive — Graham's strict criteria (P/B, P/E, dividends, stability) · Enterprising — Profitability & cash flow focused, accepts higher valuations for quality

About Zoom Communications, Inc.

Zoom Communications, Inc. provides an Artificial Intelligence-first open work platform for human connection in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. The company offers Zoom Meetings that offers HD video, voice, chat, and content sharing through mobile devices, desktops, laptops, telephones, and conference room systems; Zoom Phone, a cloud phone system; and Zoom Team Chat enables users to share messages, images, files, and content in desktop, laptop, tablet, and mobile devices. It also provides Zoom Docs, a modular workspace; Zoom Whiteboard, an interactive canvas; Zoom Clips for capturing video and screen content; Zoom Rooms, a software-based conference room system; and Workspace Reservation. In addition, the company offers Zoom Contact Center, an omnichannel solution; Zoom Revenue Accelerator, a conversation intelligence software for Zoom Meetings and Zoom Phone; Zoom Events to manage, host, market, and report on all of virtual and hybrid events; Zoom Webinars Plus; and Zoom Webinars which supports interactive video presentations to large audiences. Further, it provides Workvivo, an all-in-one employee experience platform; Zoom Developer Platform and App Marketplace which integrates platform with other applications, platforms, websites, and services; and Zoom Apps. It serves individuals; and education, entertainment/media, enterprise infrastructure, finance, government, healthcare, manufacturing, non-profit/not for profit and social impact, retail/consumer products, and software/Internet industries. The company was formerly known as Zoom Video Communications, Inc. and changed its name to Zoom Communications, Inc. in November 2024. The company was incorporated in 2011 and is headquartered in San Jose, California.

Market Data

Market Cap $25.3B

Enterprise Value $19.3B

P/E (TTM) 12.72

Dividend Yield N/A

Exchange NASDAQ

Key Margins

Gross Profit 77.9%

Operating Margin 25.1%

Net Margin 34.4%

Company Info

Sector Technology

Industry Software - Application

Employees 7438

Country United States

Visit website

📖

Full Graham Analysis

Mr. Market is currently offering Zoom Communications, Inc. at $86.36.

The business passes only 2 of 6 of Graham's defensive criteria — well below his required standard.

At $86.36, the stock trades at a 149% premium to its Graham Number of $34.70. Graham would consider this price speculative.

There is no margin of safety at the current price. Graham would advise patience and waiting for a better entry point.

Trading at 3.6x NCAV. Expected for most quality businesses — NCAV was designed to find depression-era bargains and rarely applies to modern profitable companies..

Conclusion: By Graham's standards, this stock is speculative at its current price. The intelligent investor would look elsewhere or wait.

Showing Key Metrics

Income Highlights

Metric	Q2 2026	Q4 2025
Gross Profit %	77.9%▼	77.9%
Operating Margin %	25.1%▼	25.2%
Net Income %	34.4%▼	49.8%
Diluted EPS	1.42▼	2.01

Balance Sheet Highlights

Metric	Q2 2026	Q4 2025
Total Assets	$12.2B	$11.4B
Total Debt	$60M▲	$48M
Working Capital	$6.5B▼	$6.8B
Years to Pay Debt	0.14	0.08

Cash Flow Highlights

Metric	Q2 2026	Q4 2025	Q4 2024
Free Cash Flow	$500M▼	$614M•	N/A
Owner Earnings	$480M	$660M	N/A
CapEx % of Net Income	5.0%	2.4%	N/A

Income Statement

	2026	2025
Tax Effect Of Unusual Items	30,307	92,988
Tax Rate For Calcs	0	0
Normalized EBITDA	190,957	-63,255
Total Unusual Items	152,297	406,060
Total Unusual Items Excluding Goodwill	152,297	406,060
Net Income From Continuing Operation Net Minority Interest	425,677	612,873
Reconciled Depreciation	32,781	32,391
Reconciled Cost Of Revenue	274,287	271,770
EBITDA	343,254	342,805
EBIT	310,473	310,414
Normalized Income	303,687	299,801
Net Income From Continuing And Discontinued Operation	425,677	612,873
Total Expenses	928,533	919,421
Total Operating Income As Reported	310,473	310,414
Diluted Average Shares	300,234	305,024
Basic Average Shares	294,435	298,660
Diluted EPS	0	0
Basic EPS	0	0
Diluted NI Availto Com Stockholders	425,677	612,873
Net Income Common Stockholders	425,677	612,873
Net Income	425,677	612,873
Net Income Including Noncontrolling Interests	425,677	612,873
Net Income Continuous Operations	425,677	612,873
Tax Provision	105,943	181,836
Pretax Income	531,620	794,709
Other Income Expense	221,147	484,295
Other Non Operating Income Expenses	68,850	78,235
Gain On Sale Of Security	152,297	406,060
Operating Income	310,473	310,414
Operating Expense	654,246	647,651
Research And Development	227,926	210,097
Selling General And Administration	426,320	437,554
Selling And Marketing Expense	330,050	342,814
General And Administrative Expense	96,270	94,740
Other Gand A	96,270	94,740
Gross Profit	964,719	958,065
Cost Of Revenue	274,287	271,770
Total Revenue	1,239,006	1,229,835
Operating Revenue	1,239,006	1,229,835

Balance Sheet

	2026	2025
Ordinary Shares Number	293,488	297,024
Share Issued	293,488	297,024
Total Debt	60,212	48,465
Tangible Book Value	9,503,991	8,930,215
Invested Capital	9,971,148	9,286,840
Working Capital	6,543,479	6,755,544
Net Tangible Assets	9,503,991	8,930,215
Capital Lease Obligations	60,212	48,465
Common Stock Equity	9,971,148	9,286,840
Total Capitalization	9,971,148	9,286,840
Total Equity Gross Minority Interest	9,971,148	9,286,840
Stockholders Equity	9,971,148	9,286,840
Gains Losses Not Affecting Retained Earnings	-8,129	10,363
Other Equity Adjustments	-8,129	10,363
Retained Earnings	6,125,343	5,025,586
Additional Paid In Capital	3,853,641	4,250,595
Capital Stock	293	296
Common Stock	293	296
Total Liabilities Net Minority Interest	2,190,869	2,103,971
Total Non Current Liabilities Net Minority Interest	159,344	144,548
Other Non Current Liabilities	8,276	5,407
Tradeand Other Payables Non Current	105,331	98,387
Non Current Deferred Liabilities	13,814	12,682
Non Current Deferred Revenue	13,814	12,682
Long Term Debt And Capital Lease Obligation	31,923	28,072
Long Term Capital Lease Obligation	31,923	28,072
Current Liabilities	2,031,525	1,959,423
Other Current Liabilities	64,343	35,329
Current Deferred Liabilities	1,538,196	1,487,700
Current Deferred Revenue	1,538,196	1,487,700
Current Debt And Capital Lease Obligation	28,289	20,393
Current Capital Lease Obligation	28,289	20,393
Pensionand Other Post Retirement Benefit Plans Current	141,244	147,764
Payables And Accrued Expenses	259,453	268,237
Current Accrued Expenses	183,607	166,369
Payables	75,846	101,868
Total Tax Payable	57,149	89,025
Income Tax Payable	17,386	53,422
Accounts Payable	18,697	12,843
Total Assets	12,162,017	11,390,811
Total Non Current Assets	3,587,013	2,675,844
Other Non Current Assets	11,016	12,463
Non Current Prepaid Assets	30,172	39,105
Non Current Deferred Assets	862,929	864,716
Non Current Deferred Taxes Assets	628,432	746,400
Non Current Accounts Receivable	31,003	24,610
Investments And Advances	1,876,419	1,052,604
Investmentin Financial Assets	1,876,419	1,052,604
Held To Maturity Securities	3,978	3,957
Available For Sale Securities	1,872,441	1,048,647
Goodwill And Other Intangible Assets	467,157	356,625
Other Intangible Assets	66,765	49,330
Goodwill	400,392	307,295
Net PPE	308,317	325,721
Accumulated Depreciation	-407,957	-379,268
Gross PPE	716,274	704,989
Leases	54,495	57,591
Other Properties	55,510	40,870
Machinery Furniture Equipment	606,269	606,528
Current Assets	8,575,004	8,714,967
Other Current Assets	21,800	12,334
Current Deferred Assets	125,118	175,047
Restricted Cash	39,941	11,711
Prepaid Assets	199,355	154,877
Receivables	467,815	417,693
Accounts Receivable	467,815	417,693
Allowance For Doubtful Accounts Receivable	-19,120	-18,128
Gross Accounts Receivable	486,935	435,821
Cash Cash Equivalents And Short Term Investments	7,720,975	7,943,305
Other Short Term Investments	6,830,037	6,727,428
Cash And Cash Equivalents	890,938	1,215,877

Cash Flow

	2026	2025
Free Cash Flow	500,497	614,317
Repurchase Of Capital Stock	-361,683	-413,706
Capital Expenditure	-21,113	-15,009
End Cash Position	930,879	1,227,588
Beginning Cash Position	1,283,781	1,208,699
Effect Of Exchange Rate Changes	314	-14
Changes In Cash	-353,216	18,903
Financing Cash Flow	-394,110	-466,055
Cash Flow From Continuing Financing Activities	-394,110	-466,055
Net Other Financing Charges	-32,931	-52,828
Proceeds From Stock Option Exercised	504	479
Net Common Stock Issuance	-361,683	-413,706
Common Stock Payments	-361,683	-413,706
Investing Cash Flow	-480,716	-144,368
Cash Flow From Continuing Investing Activities	-480,716	-144,368
Net Investment Purchase And Sale	-459,603	-129,359
Sale Of Investment	858,309	996,558
Purchase Of Investment	-1,317,912	-1,125,917
Net PPE Purchase And Sale	-21,113	-15,009
Purchase Of PPE	-21,113	-15,009
Operating Cash Flow	521,610	629,326
Cash Flow From Continuing Operating Activities	521,610	629,326
Change In Working Capital	-53,944	72,629
Change In Other Working Capital	-17,137	-99,360
Change In Other Current Liabilities	-7,192	-6,244
Change In Payables And Accrued Expense	-57,421	48,275
Change In Accrued Expense	-67,748	46,696
Change In Payable	10,327	1,579
Change In Account Payable	10,327	1,579
Change In Prepaid Assets	3,116	21,897
Change In Receivables	24,690	108,061
Changes In Account Receivables	24,690	108,061
Other Non Cash Items	64,749	79,975
Stock Based Compensation	178,953	185,282
Provisionand Write Offof Assets	3,026	3,546
Amortization Of Securities	-1,293	-4,705
Deferred Tax	23,294	53,404
Deferred Income Tax	23,294	53,404
Depreciation Amortization Depletion	32,781	32,391
Depreciation And Amortization	32,781	32,391
Operating Gains Losses	-151,633	-406,069
Gain Loss On Investment Securities	-152,297	-406,060
Net Foreign Currency Exchange Gain Loss	664	-9
Net Income From Continuing Operations	425,677	612,873

📊 Quarterly mode — Graham Fair Value & 7 Criteria require annual data. Switch to Annual for full analysis.

Quarter vs Same Quarter Last Year

YoY strips seasonality

Revenue Growth (YoY)

Prior year: $1.2B ▲ $1.2B +5.5%

Revenue growth vs same quarter last year strips seasonality. Consistent double-digit growth is a Buffett hallmark.

Gross Margin

Prior year: 76.3% ▲ 77.9% +1.6pp

Buffett: consistent gross margin above 40% signals durable pricing power and competitive moat.

Operating Margin

Prior year: 26.4% ▲ 25.1% -1.4pp

Graham: operating margin reflects true business economics before financing. Trend matters as much as level.

Net Margin

Prior year: 21.7% ▲ 34.4% +12.7pp

Net margin can be distorted by one-time items, tax timing, or interest costs — compare to operating margin for signal quality.

Quarterly Health Checks

3 Graham/Buffett criteria that are valid and reliable on quarterly data

✅ Adequate Size

Graham required scale for resilience. Quarterly revenue × 4 gives an annualised proxy.

$1.2B/qtr (≈$5.0B ann.)

vs > $1.5B annualised revenue

✅ Financial Condition

Current assets vs current liabilities — a real-time liquidity snapshot. Valid and reliable on quarterly data.

4.22x current ratio

vs ≥ 2.0x

✅ Free Cash Flow

Buffett's most important single metric. A positive FCF quarter means the business generated real cash for owners after maintaining its asset base.

$500M

vs Positive

Operating Cash Flow

$522M

Latest quarter · Buffett's cash reality check

ROIC

2.4%

Based on latest annual operating income

Return on Invested Capital — Buffett's preferred measure for asset-light businesses. ROIC > 15% consistently signals a durable competitive advantage (moat). More meaningful than P/B for software, pharma, and consumer brand companies where most value is intangible and off-balance-sheet.

Market Cap / Net Assets

2.3x

Net Assets: $10.0B

Asset Context — Software - Application

Software companies store most of their value in code, IP, recurring revenue, and customer relationships — none of which appear on the balance sheet under GAAP. Book value and Net Assets are poor proxies for intrinsic value here. Focus on ROIC, gross margin trajectory, and free cash flow instead.

Peers & Industry

No auto-detected peers for Software - Application. You can manually compare ZM against any stock using the Compare tool.

"The management of a business is its most important single factor — more important than market position, patents, or financial structure."

— Benjamin Graham

Capital Allocation & Alignment

Insider Ownership

0.23%

Low — management has little skin in the game

Return on Equity (ROE)

4.3%

Weak — poor returns on equity

Return on Assets (ROA)

3.5%

Fair — average asset utilization

Share Buybacks (Latest Year)

$1.6B

Management is returning capital to shareholders via buybacks

Debt Trend YoY

+3.0% YoY

Debt is roughly stable

Leadership Team

Eric Yuan

Founder, President, CEO & Chairman

Age 55

Pay: $816,836

0.192% of net income

Michelle Chang

Chief Financial Officer

Age 50

Pay: $1,220,008

0.287% of net income

Velchamy Sankarlingam

President of Product & Engineering

Age 56

Pay: $704,585

0.166% of net income

Top Institutional Holders

Institution	% Owned	Shares
Blackrock Inc.	6.72%	17,777,558
Vanguard Portfolio Management LLC	5.06%	13,402,043
Vanguard Capital Management LLC	4.34%	11,490,856
JPMORGAN CHASE & CO	3.43%	9,075,320
AQR Capital Management, LLC	3.16%	8,362,011
State Street Corporation	2.96%	7,828,632
FMR, LLC	2.89%	7,660,272
Geode Capital Management, LLC	1.99%	5,267,794

Risk Analysis

Beta (Market Risk)

0.99

Low volatility — more stable than the market

Short Interest

2.2% of float

Low short interest — market is not heavily bearish

Debt-to-Equity

0.01x

Conservative balance sheet — low financial risk

Current Ratio

4.22x

Strong liquidity — Graham approved

52-Week Price Range

Low: $69.15 Current: $86.36 High: $114.74

Currently at 38% of 52-week range

Zoom Communications, Inc.

Metric Explanations

Full Graham Analysis

Income Highlights

Balance Sheet Highlights

Cash Flow Highlights

Quarter vs Same Quarter Last Year

Quarterly Health Checks

Operating Cash Flow

ROIC

Market Cap / Net Assets

Peers & Industry

Capital Allocation & Alignment

Leadership Team

Top Institutional Holders

Risk Analysis