Key Takeaways
- Zoom shares surged more than 9% following first-quarter fiscal 2027 results that exceeded Wall Street expectations
- The company posted $1.24 billion in quarterly revenue, representing 5.5% year-over-year growth, while enterprise sales climbed 7.2%
- A strategic $51 million investment in Anthropic made during 2023 has appreciated to approximately $1.3 billion
- The company increased its full-year outlook, now forecasting revenue between $5.08–$5.09 billion and adjusted EPS reaching $6.00
- Several Wall Street firms upgraded their price targets, including Rosenblatt to $130 and Benchmark to $125
Shares of Zoom experienced a significant rally on Friday morning, advancing over 9% to approximately $105.55, following the video communications platform’s impressive first-quarter performance and the disclosure of extraordinary gains from its early-stage investment in artificial intelligence company Anthropic.
The financial results demonstrated solid execution across key metrics. The company generated $1.24 billion in quarterly revenue, marking a 5.5% increase compared to the prior year and exceeding Zoom’s previous guidance of $1.22 billion. Adjusted earnings per share reached $1.55, up from $1.43 in the year-ago period. Free cash flow increased 8% to $500.5 million.
Enterprise segment revenue expanded 7.2% to $755.7 million, representing 61% of overall revenue. The number of customers with annual spending exceeding $100,000 grew 8.2% to 4,534.
The company’s net dollar expansion rate improved to 99% from 98%, indicating that current customers are gradually increasing their spending levels.
CEO Eric Yuan highlighted artificial intelligence as the primary driver of the company’s growth trajectory. The number of AI Companion paid users skyrocketed 184% year over year. My Notes, a recently launched AI-powered note-taking capability, attracted 1.5 million licensed users in just four months.
“Customers are increasingly adopting Zoom as an AI-first system of action for modern work,” Yuan said.
Anthropic Investment Delivers Massive Returns
The earnings narrative gained additional momentum on Friday when regulatory documents disclosed the remarkable performance of Zoom’s Anthropic investment.
Zoom deployed approximately $51 million into Anthropic during May 2023 through its Zoom Ventures division. That position has now ballooned to nearly $1.3 billion — representing gains exceeding $1 billion. The initial investment was designed to facilitate integration of Anthropic’s Claude AI models into Zoom’s product ecosystem.
Anthropicis reportedly nearing completion of a substantial new funding round totaling up to $30 billion at a $900 billion valuation, with major investors including Sequoia Capital, Dragoneer, Altimeter, and Greenoaks each expected to contribute $2 billion. Should that valuation materialize, Zoom’s equity stake could appreciate further.
Cantor Fitzgerald analysts noted that if the Anthropic position, estimated at $1.5 billion within Zoom’s total $1.88 billion strategic investment portfolio, achieves the $900 billion valuation threshold, Zoom shares could reach $116 per share.
Upgraded Outlook and Wall Street Response
Management enhanced its full-year projections. Zoom now anticipates revenue ranging from $5.08 to $5.09 billion, adjusted EPS between $5.96 and $6.00, and free cash flow of $1.7 billion for fiscal 2027.
The company additionally approved a new $1 billion stock repurchase authorization.
Analyst firms responded swiftly. Morgan Stanley increased its price target to $105 from $92. Rosenblatt elevated its target to $130 from $115. Benchmark boosted its projection to $125 from $121. Mizuho raised its target to $120, while Needham also lifted its estimate to $130. BofA moved to $105 while maintaining a Neutral rating.
Cantor Fitzgerald, which retained a Neutral rating, raised its target to $104 from $87, highlighting adoption momentum for Zoom’s CX, Phone, and AI products.
Zoom’s 52-week peak stands at $113.73, achieved during Friday’s trading session.
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