Zoom Video Communications Inc

Shares of Zoom fell 7.8% in afternoon trading after the company issued weaker-than-expected third-quarter profit guidance, overshadowing its second-quarter earnings beat. The video communications platform reported second-quarter revenue of $1.28 billion, up 4.9% year-over-year, slightly above analysts' expectations of $1.27 billion, and adjusted earnings per share of $1.55, topping estimates of $1.48. However, the company projected third-quarter adjusted EPS between $1.46 and $1.48, below the $1.50 consensus, while raising its full-year adjusted EPS guidance by 2% to $6.10 at the midpoint and lifting its full-year revenue outlook to $5.09 billion. Margin pressures also emerged, with GAAP operating margin declining to 24.6% from 26.4% a year earlier and free cash flow margin dipping sequentially to 37%.

Abercrombie & Fitch soared 37% after trouncing fiscal second-quarter estimates and raising its full-year outlook, with adjusted earnings of $2.42 per share and revenue up 5% to $1.27 billion, helped by tariff refunds and stronger growth at its Abercrombie unit. Intuit fell 4% after offering disappointing fiscal year 2027 guidance of $23.3 billion to $23.5 billion in revenue, below the $23.7 billion analyst estimate, though its fiscal fourth-quarter earnings and revenue beat expectations. Meta Platforms jumped 3% after reaching a settlement with state attorneys general in a case alleging it made its apps addictive to teenagers. Zoom Communications dropped 7% after its third-quarter forecast of $1.46 to $1.48 earnings per share missed the $1.50 estimate. Kohl's rose 2% after raising its full-year outlook, partly due to $150 million in tariff refunds, and announced share buybacks of up to $100 million in 2026. J.M. Smucker climbed 3% on fiscal first-quarter revenue of $2.22 billion, topping the $2.13 billion consensus. SolarEdge Technologies jumped nearly 8% after a UBS upgrade to buy, citing an FCC policy expected to boost market share and pricing power. Semtech rose over 8% on second-quarter earnings beat, with adjusted EPS of 71 cents versus 61 cents expected. Boston Scientific fell 5% after reporting a cybersecurity incident causing product disruptions. SAP declined 3% after a UBS downgrade to neutral, citing slow delivery of agentic AI.

Intuit shares plunged 11% in premarket trading after the financial technology platform issued fiscal 2027 revenue guidance of $23.279 billion to $23.512 billion, below the $23.7 billion analysts expected, though its fiscal fourth-quarter earnings and revenue beat estimates. The disappointing outlook dragged other software stocks lower, with the iShares Expanded Tech-Software ETF down over 1%, ServiceNow off more than 2.5%, and Workday and Salesforce each down 2%. Zoom Communications fell 7% after its third-quarter earnings per share guidance of $1.46 to $1.48 came in short of the $1.50 FactSet consensus. Kohl's declined 5% after reporting a 0.9% drop in second-quarter comparable sales, worse than the 0.6% decline expected, but the retailer raised its full-year outlook, partly due to $150 million in tariff refunds, and restarted share buybacks of up to $100 million in 2026. On the upside, J.M. Smucker climbed 5.6% after fiscal first-quarter revenue of $2.22 billion topped the LSEG consensus of $2.13 billion, SolarEdge jumped nearly 7% following a UBS upgrade to buy on a new FCC policy, and Semtech rose more than 5% after beating earnings estimates with adjusted EPS of 71 cents versus 61 cents expected. Box gained over 2% on revenue beat, while Boston Scientific fell more than 3% after disclosing a cybersecurity incident causing product disruptions, and SAP dropped almost 4% after a UBS downgrade to neutral on slow agentic AI delivery.

Zoom Communications CEO Eric S. Yuan sold 57,824 shares of Class A Common Stock for $5.3 million on July 13 and 14, 2026, according to an SEC filing. The transaction was executed under a Rule 10b5-1 trading plan adopted more than a year earlier, on June 20, 2025, indicating a routine portfolio diversification rather than a reaction to recent market events. The shares were sold indirectly through the 2018 Yuan and Zhang Revocable Trust at weighted-average prices ranging from $88.93 to $93.10, reducing his Class A holdings by 72% to 22,998 shares worth $2.1 million. However, Yuan retains a substantial economic interest through 41.4 million indirect derivative securities, including Class B Common Stock convertible into Class A shares. The sale occurred after a period of positive momentum, with Zoom stock delivering a 22% one-year total return and the company reporting trailing twelve-month net income of $2.1 billion on revenue of $4.9 billion, with a market capitalization of $26.7 billion.

Five9 holds a stronger value proposition than Zoom Communications based on earnings outlook and valuation metrics. Five9 carries a Zacks Rank of #1 (Strong Buy) while Zoom is ranked #3 (Hold), indicating a more positive earnings estimate trend for Five9. Five9 trades at a forward P/E of 6.54 compared to Zoom's 14.24, and its PEG ratio of 0.40 is significantly lower than Zoom's 3.21. Additionally, Five9's price-to-book ratio of 1.97 is below Zoom's 2.54, contributing to Five9's Value grade of A versus Zoom's C.

Zoom Communications shares have fallen more than 20% over the past month, and the decline may not be over. The video conferencing company reported just 5.5% year-over-year revenue growth in its fiscal 2027 first quarter and guided for only 4% growth in the second quarter, with full-year revenue expected to rise 4.4% to $5.085 billion at the midpoint. While the stock trades at a 12.7 price-to-earnings ratio, its price/earnings-to-growth ratio stands at 4.2, signaling overvaluation relative to its slowing expansion. Zoom faces intense competition from Google Meet and Microsoft Teams, which offer similar services often with more generous free features and lower paid-plan pricing, making it difficult for the company to reignite meaningful growth.