Is Zoom Communications, Inc. (ZM) overvalued or undervalued?
Updated Nov 10, 2026 · hand-researched model · educational, not advice
At a recent price of $91.71, Zoom Communications, Inc. (ZM) trades 3% below TickerWorth's blended fair value of $94.28 per share — a discounted-cash-flow model cross-checked against peer multiples and asset value — meaning the market currently prices ZM undervalued vs our estimate of what the business is intrinsically worth. Our fair value sits above the market, an implied +2.8% move to close the gap if the business performs in line with our assumptions. This is an educational model, not a price target or a recommendation — the value moves with the inputs, which you can test yourself using the WACC slider below.
One of the lenses behind that blended figure is a discounted-cash-flow model, which on its own values ZM at about $82.56 per share. The rest of this page walks through that DCF — its assumptions, reverse-DCF and discount-rate sensitivity — because it is the auditable anchor of the blend.
The valuation discounts Zoom Communications, Inc.'s projected free cash flows at a weighted-average cost of capital (WACC) of 10.4%, with a long-run terminal growth rate of 2.5%. About 70% of the enterprise value comes from the terminal value — the portion beyond the explicit forecast window — which is typical for a stable, cash-generative business and a reminder that small changes in the discount rate or terminal growth assumption swing the intrinsic value meaningfully.
Running the DCF in reverse — solving for the growth the current price already assumes — the market is implying roughly 8.1% annual revenue growth for ZM. Our base case instead compounds to about 4.0% a year over the same forecast, so the market is pricing in materially faster growth than our base case. The reverse-DCF is a quick sanity check: it reframes 'is this stock cheap?' as 'do I believe the growth the price requires?' rather than arguing over a single point estimate of fair value.
Sensitivity matters more than any single number. Across a reasonable band of discount-rate assumptions, ZM's modeled DCF value ranges from about $72.03 to $102.69 per share. If that range still sits below today's price, the market is optimistic relative to the model across the whole band; if it brackets the price, the stock is roughly fairly valued on our assumptions. Use the interactive slider to see exactly where your own cost-of-capital view lands.
How to read this page: the DCF fair value is what Zoom Communications, Inc. would be worth if its cash flows grow as modeled and are discounted at the stated WACC. The assumptions table shows every input and its source; the reverse-DCF shows what the market believes; the sensitivity band shows how fragile the answer is. None of this is investment advice — it is a transparent, auditable framework for forming your own view of ZM's intrinsic value. Figures update as new filings and prices come in.
The assumptions behind ZM's DCF
| Input | Value | Source |
|---|---|---|
| Base-year revenue | $4,868,800,000 | Zoom FY2026 10-K (accession 0001585521-26-000030, filed 2026-02-27); Q4/FY2026 results release 8-K Ex-99.1 (accession 0001585521-26-000026): FY2026 (fiscal year ended 2026-01-31) revenue $4,868.8M, +4.4% on FY2025's $4,665.4M (+4.2% in constant currency). Zoom's fiscal year ends 31 January, so 'FY2026' is mostly calendar 2025. Mix: Enterprise ~61% (Q4 $757.3M, +7.1%), Online ~39% (Q4 $489.7M, +2.6%). CROSS-CHECK: H1 FY2027 (Feb-Jul 2026) revenue $2,516.2M, +5.2% on H1 FY2026 $2,391.9M (+4.7% constant currency); TTM to 2026-07-31 = $4,993.1M. Q2 FY2027 Enterprise +7.8% (fastest in three years), Online +0.6%. Remaining performance obligations were $4,185.0M at 2026-01-31, 57% due within 12 months. |
| Base EBIT margin | 23.1% | Zoom Q4/FY2026 results release, 8-K Ex-99.1 (accession 0001585521-26-000026, filed 2026-02-25); FY2026 10-K (accession 0001585521-26-000030): GAAP income from operations $1,123.6M / revenue $4,868.8M = 23.08%. This is AFTER $797.2M of stock-based compensation and related payroll taxes (16.4% of revenue) and $25.2M of acquisition-related expense. Three one-offs roughly cancel: an $18.0M litigation-settlement credit, against an $18.2M asset impairment and a $20.9M charitable donation of common stock (net ~$21M drag, ~0.4 points). Company non-GAAP operating margin 40.4%; the 17-point gap is almost entirely stock pay. FY2025 GAAP margin was 17.4% with SBC of $931.3M (20.0% of revenue), so the margin trend is SBC falling. CROSS-CHECK: H1 FY2027 GAAP operating margin 24.8% ($624.8M), Q2 alone 24.6%; TTM 23.7%. H1 SBC $358.7M = 14.3% of revenue. Interest income on the cash pile ($328.8M of 'other income' in FY2026) and the $969.8M of strategic-investment gains sit BELOW operating income and are excluded here; the cash and investments are credited through net_debt instead. |
| Forecast revenue growth | 5% → 4% → 4% → 4% → 4% | Assumption — TickerWorth's 5-year explicit forecast |
| Risk-free rate | 5.2% | US 10Y Treasury constant maturity (FRED DGS10): 5.24% on 2026-10-01, the latest published observation; program-wide input shared by every researched model. |
| Beta | 1.03 | yfinance 5Y-monthly beta (published): Published 5Y-monthly beta 1.033, used AS PUBLISHED. Zoom has no debt, so there is nothing to relever. Two arguments pull in opposite directions and I take neither: (a) about 38% of Zoom's market value is cash, securities and the Anthropic stake, and cash has a beta near zero, so the OPERATING business is arguably riskier than 1.03 (stripping out the cash alone gives ~1.4, which would cut the value by ~$9.15/share); (b) the window still contains the 2021-22 post-pandemic collapse, and a mature subscription business at 40% non-GAAP margins could argue for ~0.85 (+$6.40/share). Gives a 10.4% cost of equity - well above Dropbox's 8.4% WACC, which is the main reason this model values Zoom's cash flows at a lower multiple. |
| Terminal growth | 2.5% | Assumption — house default: House default 2.5%, roughly long-run nominal GDP. Zoom exits the forecast at 3.5% revenue growth, so 2.5% is a modest step down rather than a cliff; Online (~38% of revenue) is already flat, which argues against anything higher. Well below the 10.41% WACC. 2.0% costs ~$2.15/share; 3.0% adds ~$2.45. |
| Diluted shares | 300M | Zoom Q2 FY2027 results release, 8-K Ex-99.1 (accession 0001585521-26-000119, filed 2026-08-25): Q2 FY2027 weighted-average diluted shares 299,746,342 (Q2 FY2026: 308.2M; FY2026: 307.3M). Buybacks: 7.9M shares retired in H1 FY2027 ($722.2M cash), 44.2M cumulative under the program, ~$1.3B of authorization left at 2026-07-31. Shares outstanding on the 10-Q cover were 291.8M; the ~8M gap is unvested RSUs and options counted under the treasury method. Management's FY2027 guide uses ~301M weighted shares before further buybacks. Using 291.8M would add ~$2.25/share; the diluted figure is the conservative choice. Q3 buybacks after 2026-07-31 are reflected in neither cash nor shares, so the two stay consistent. |
| Market price | $91.71 | Delayed quote · as of 2026-11-10 05:19 UTC |
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