Zoom Video Communications (ZM) stock surged over 9% on Friday after the company reported better-than-expected fiscal first-quarter results and revealed a massive return on its early investment in AI firm Anthropic.
Revenue for the quarter ended April 30 reached $1.24 billion, up 5.5% year-over-year, beating analyst estimates of $1.22 billion. Adjusted earnings per share came in at $1.55, significantly above the $1.42 consensus. Free cash flow rose 8% to $500.5 million. Enterprise revenue, a key growth driver, climbed 7.2% to $755.7 million and now represents 61% of total revenue. The number of customers generating over $100,000 in trailing 12-month revenue grew 8.2% to 4,534, and the enterprise net dollar expansion rate ticked up to 99%.
CEO Eric Yuan credited the company's AI push as a central growth driver. Paid users of Zoom’s AI Companion product surged 184% year-over-year, and the “My Notes” AI feature reached 1.5 million licensed users within four months of launch. “Customers are increasingly adopting Zoom as an AI-first system of action for modern work,” Yuan said.
Adding to the bullish sentiment, a regulatory filing disclosed that Zoom’s 2023 $51 million investment in Anthropic is now worth nearly $1.3 billion. The stake was made through Zoom Ventures to integrate Anthropic’s Claude models into Zoom’s AI products. With Anthropic reportedly raising a new round at a $900 billion valuation, analysts at Cantor Fitzgerald estimated the holding could be worth even more, potentially pushing Zoom’s stock to $116 per share.
Management raised full-year guidance: revenue of $5.08–$5.09 billion and adjusted EPS of $5.96–$6.00, both above consensus. The board also authorized a $1 billion share buyback program. Multiple Wall Street analysts raised price targets, with Rosenblatt going to $130 and Benchmark to $125. The stock touched a 52-week high of $113.73 during the session.
