Key Takeaways
- Zoom shares rose over 9% following better-than-expected fiscal Q1 2027 results
- Company reported $1.24 billion in revenue, reflecting 5.5% annual growth, with enterprise sales up 7.2%
- A $51 million 2023 stake in Anthropic has appreciated to approximately $1.3 billion
- Full-year outlook upgraded with revenue forecast of $5.08–$5.09 billion and adjusted EPS reaching $6.00
- Wall Street firms boosted price targets, with Rosenblatt setting a $130 target and Benchmark at $125
Shares of Zoom opened Friday’s trading session with a significant jump, surging more than 9% to approximately $105.55, following the video conferencing platform’s impressive quarterly performance and the disclosure of a remarkably profitable investment in artificial intelligence startup Anthropic.
The company’s financial metrics showed strength throughout. Total revenue reached $1.24 billion, marking a 5.5% increase from the previous year and exceeding Zoom’s prior guidance of $1.22 billion. Adjusted profit per share landed at $1.55, climbing from $1.43 in the same quarter last year. The company’s free cash flow expanded 8% to reach $500.5 million.
Enterprise segment revenue climbed 7.2% to $755.7 million, representing 61% of overall revenue. The number of enterprise clients with annual spending exceeding $100,000 expanded 8.2% to reach 4,534.
The net dollar expansion metric improved to 99% from the previous quarter’s 98%, indicating that current customers are gradually increasing their platform spending.
Chief Executive Eric Yuan credited artificial intelligence technology as the primary growth catalyst. Users of the paid AI Companion feature surged 184% on an annual basis. The company’s newer AI-powered note-taking tool, My Notes, accumulated 1.5 million licensed subscribers just four months after launching.
“Customers are increasingly adopting Zoom as an AI-first system of action for modern work,” Yuan said.
The Anthropic Windfall
The positive earnings narrative gained additional momentum Friday when regulatory documents disclosed the remarkable performance of Zoom’s Anthropic investment.
Through its Zoom Ventures division, the company invested approximately $51 million into Anthropic during May 2023. That position has since appreciated to nearly $1.3 billion — representing gains exceeding $1 billion. The strategic investment was designed to facilitate integration of Anthropic’s Claude AI models throughout Zoom’s product ecosystem.
Reports indicate Anthropic is nearing completion of a substantial funding round worth up to $30 billion, potentially valuing the AI company at $900 billion. Major investors including Sequoia Capital, Dragoneer, Altimeter, and Greenoaks are each expected to contribute $2 billion. Should that valuation materialize, Zoom’s position could appreciate further.
Analysts at Cantor Fitzgerald observed that if the Anthropic holding, estimated at $1.5 billion within Zoom’s $1.88 billion strategic investment portfolio, achieves the $900 billion valuation benchmark, Zoom’s equity could reach $116 per share.
Updated Outlook and Wall Street Response
Management upgraded its full-year financial projections. Zoom now anticipates revenue between $5.08 and $5.09 billion, adjusted earnings per share of $5.96 to $6.00, and free cash flow totaling $1.7 billion for fiscal 2027.
Additionally, the board approved a fresh $1 billion stock repurchase authorization.
Wall Street firms responded swiftly with revised price targets. Morgan Stanley increased its objective to $105 from $92. Rosenblatt elevated its target to $130 from $115. Benchmark raised its forecast to $125 from $121. Mizuho adjusted upward to $120, while Needham similarly moved to $130. Bank of America lifted its target to $105 while maintaining a Neutral stance.
Cantor Fitzgerald, preserving its Neutral rating, raised its price objective to $104 from $87, highlighting growing adoption of Zoom’s customer experience, telephony, and AI products.
Zoom’s 52-week peak sits at $113.73, a level touched during Friday’s trading activity.
