Shares of Zoom Video slid sharply in early trading after the company reported fiscal second-quarter 2027 results. While headline figures beat analysts’ consensus, the forward-looking metrics that investors had been watching did not provide the upside market participants had hoped for, prompting a pullback of about 5.8% in pre-open activity.
Zoom posted revenue of $1.277 billion versus expectations near $1.27 billion, and adjusted earnings per share of $1.55 compared with a $1.48 consensus. Despite these beats, the immediate market reaction was negative as the firm’s guidance failed to materially exceed existing analyst models.
Earnings guidance specifics were a central friction point. Management set third-quarter revenue in a $1.275 billion to $1.28 billion range, a midpoint that sat at or below some analysts’ prior assumptions. The full-year FY2027 revenue outlook was nudged to $5.085 billion to $5.095 billion, a modest increase that was broadly consistent with market expectations rather than a meaningful upside surprise.
There were clear operational positives within the report. Enterprise revenue grew 7.8% year-over-year, marking the fastest pace in three years. Management also noted substantial uptake of the company’s AI product: the customer count for Zoom Virtual Agent rose 256% year-over-year, a figure the CEO highlighted as evidence of accelerating AI adoption among customers. In addition, Bank of America reinstated coverage of the stock with a Buy rating and established a $130 price target, citing what it sees as a durable recovery in growth.
Yet these encouraging data points were not sufficient to offset investor disappointment over the tempered guidance. Market participants also factored in disclosures that insiders had sold roughly $95.7 million of company stock over the prior twelve months, a detail that added caution to the outlook.
The broader market provided little tailwind. At the same time, the Nasdaq Composite was down about 0.2%, the S&P 500 was roughly flat with a 0.1% decline, and the Dow inched up by 0.1%. Enterprise software peers were under the microscope that evening as well, with Intuit reporting its own results, keeping focus on sector-level growth dynamics and expectations around AI-driven monetization.
Taken together, the reaction reflects a confluence of factors: a quarterly result that beat on the surface, a guidance lift that did not materially exceed already-elevated expectations after a roughly 22% year-to-date gain heading into the report, a modest near-term revenue outlook, and a cautious tone across tech and software peers. Those elements combined to pressure the stock in pre-market trading.
Key points
- Zoom beat headline Q2 estimates: $1.277 billion in revenue and $1.55 adjusted EPS, exceeding consensus.
- Enterprise revenue growth accelerated to 7.8% year-over-year, and Zoom Virtual Agent customers rose 256% year-over-year, signaling strong AI and enterprise traction.
- Guidance disappointed: Q3 revenue range midpoint was at or below analyst models, and FY2027 revenue was only modestly raised, leaving investors unsatisfied.
Risks and uncertainties
- Muted near-term guidance could constrain upside for enterprise software and AI monetization expectations in the sector.
- Substantial insider share sales of roughly $95.7 million over the past year may introduce investor caution regarding insider sentiment.
- Sector-wide scrutiny as peers report results could amplify volatility for software and tech stocks tied to AI adoption and growth narratives.