QS Research · Michael Burry's Scion Capital analyst template · 2006
Zoom Communications, Inc. (ZM)
As of 2026-11-09 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case +0% · downside -15% · upside +13%
At $89.88 the market pays $19.69B EV for $1.32B TTM EBITDA (15.0x), $1.19B EBIT (16.6x) and $1.93B FCF (7.1% yield), with $7.25B cash/ST investments and no debt tagged (N23, N24, N16, N27, N18, N21). Unlike section 13's 12x-20x range, I keep all three cases at today's 15.0x because no dated non-valuation catalyst justifies rerating; the cases vary EBITDA instead (N23). Base: 15.0 x $1.32B = $19.8B EV + $7.25B cash - $0.0585B leases = $26.99B / 299.75M shares = $90.05, +0.2% from $89.88 (N12, N18, N19, N5, N1). Downside: 15.0 x $1.05B = $15.75B EV + $7.19B net cash = $22.94B / 299.75M = $76.54, -14.8%; upside: 15.0 x $1.55B = $23.25B EV + $7.19B net cash = $30.44B / 299.75M = $101.56, +13.0%. The business is cash-generative but ~4-5% growth and falling GAAP operating income leave no margin of safety; this is a watch, not a long or short.
Key numbers
- Share price: $89.88
- Market cap: $26.94B
- Latest financial period: TTM to Jul 31, 2026
- Revenue (TTM): $4.99B
- EV / EBITDA (TTM): 15.0x
- P/E (TTM): 8.3x
- Price / book: 2.38x
The 15 boxes
- ✓ 1. Long-form business notes
Zoom monetizes paid communications/collaboration services and subscriptions across Zoom Workplace, Business Services, Employee Experience and AI Companion, but the FY2026 10-K excerpt gives no segment revenue, ARPU or retention. The business description changed from a video-first UC platform centered on Zoom Meetings in the FY2021 10-K to an AI-first platform with AI Companion, Workplace and Business Services in the FY2026 10-K. XBRL shows revenue of $2.65B in FY2021 rising to $4.87B in FY2026, FY2026 operating income of $1.12B and operating cash flow of $1.99B, with $1.62B of FY2026 buybacks.
- ✓ 2. Competitive advantage
No wide moat. Zoom competes with Microsoft 365 (with Teams), Google Workspace (with Meet), Cisco Webex and others that its own 10-K risk factor says have greater name recognition, longer histories and larger marketing budgets; the advantage it claims is product-level (open AI-first platform, ease of use, low total cost of ownership), not size, licences or network lock-in. What the numbers do support is a durable pricing position inside that fight: gross margin held at 69.1% to 77.0% (computed from S28) from FY2021 to FY2026, operating income recovered from $245.4M in FY2023 to $1.12B in FY2026, and operating cash flow was $1.99B on $65.0M of capex. But FY2026 revenue grew only from $4.67B to $4.87B, so the recovery is cost-driven, and the $1.90B FY2026 net income sits on $2.42B pre-tax income versus $1.12B operating income — a $1.30B gap these sources do not itemize.
- ✓ 3. 10-Q takeaways
Q2 FY2027 (quarter ended July 31, 2026) revenue was $1,277.2M, up 4.9% year over year (4.7% in constant currency), with Enterprise revenue +7.8% to $787.5M and Online only +0.6% to $489.7M. GAAP operating income fell to $314.3M and GAAP operating margin to 24.6% from 26.4%, as AI-related hosting and R&D costs rose; the reported $1,542.4M / $5.15 GAAP net income is inflated by $1,614.2M of strategic-investment gains, mostly the $1,612.7M fair-value increase on the Anthropic stake, while non-GAAP net income was $464.0M / $1.55 versus $471.3M / $1.53 a year ago. Cash and marketable securities were $7.2B, Q2 free cash flow slipped to $472.4M from $508.0M, and management guided Q3 FY2027 revenue to $1.275–1.280B and FY2027 free cash flow to $1.780–1.820B, all on a non-GAAP basis.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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