Zoom Video Communications (ZM +2.19%) was founded in 2011 by Eric Yuan, a former engineer and corporate vice president at Cisco Systems (CSCO +0.20%). In the spring of 2011, Yuan decided to leave Cisco and launch Saasbee, Inc. with 40 other engineers.
Early on in its business journey, the company raised $3 million in seed money from venture capitalists and various company leaders, including the founder of WebEx. In the spring of 2012, the company relaunched as Zoom, and by September of that year, it had introduced a beta version of its software that could host conferences with as many as 15 participants. In 2013, Zoom officially released Zoom Meetings to the public after raising $6 million in a Series A round of funding.
NASDAQ: ZM
Key Data Points
The first version of Zoom Meetings allowed up to 25 participants per conference. By the end of Zoom's first month in business, it already had close to half a million users; a few months later, that figure was up to 1 million users. By September 2013, Zoom raised a Series B round of funding to the tune of $6.5 million and had 3 million daily participants using its meeting software.
Zoom hit multiple major goalposts for the business in 2015. It introduced breakout rooms in Zoom Meetings, welcomed its 100th employee to the business, raised $30 million in Series C funding from investors, and hit the 40 million-user mark with 65,000 organizations using its software.
In 2017, Zoom hit a $1 billion valuation after raising $100 million in Series D funding from Sequoia Capital. It also hosted its first annual user conference (Zoomtopia) in 2017 and launched its telehealth platform. In these years, the company rapidly integrated its solutions with those of existing companies that included Salesforce (CRM +3.59%), Slack (now owned by Salesforce), Microsoft (MSFT +0.25%), Meta Platforms (META +0.15%), and Alphabet (GOOGL -2.34%)(GOOG -2.21%).
In 2018, the company launched Zoom Phone and Zoom Marketplace. Zoom made its debut in the public markets in April 2019 and began trading on the Nasdaq exchange under the ticker ZM.
That same year, Zoom also turned its first profit. While there were plenty of early investors in Zoom, many first started paying attention when witnessing its explosive streak of growth with the onset of the COVID-19 pandemic. Zoom was the fifth-most-downloaded app in 2020 and experienced 30x growth in daily meeting participants between December 2019 and April 2020.
The pandemic also marked Zoom's first foray into selling hardware products, with offerings like Zoom Rooms and Zoom Phone becoming available to customers who could pay a monthly subscription for hardware and accompanying services.
In 2021, Zoom Phone recorded 1 million licenses. The telecom product was available in more than 40 countries, with this product expanding to 4 million seats globally in 2022.
Zoom launched its artificial intelligence (AI)-powered assistant Zoom AI companion in 2023, and a new AI-powered collaboration platform called Zoom Workplace in 2024. Zoom has been faced with headwinds as growth has normalized in recent years from pandemic heights, and it's had to slash its workforce.
While the business is maturing and may not witness pandemic-level growth again, the stock could still make an attractive addition for some investors with a well-diversified portfolio. If you want to know the ins and outs of how to invest in Zoom stock, whether or not it's currently profitable, and how the business is doing, keep on reading.
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How to buy Zoom Video Communications stock
If you want to buy Zoom stock, you can easily add shares to your portfolio.
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Should I invest in Zoom Video Communications stock?
Whether or not you should invest in Zoom stock is ultimately a personal decision, but there are some factors you should weigh when deciding whether or not the company makes sense for your portfolio. Zoom isn't experiencing the level of growth it was in the early days of the pandemic, but it wasn't reasonable to expect that streak to continue indefinitely, either.
Even as Zoom's trajectory has normalized from the triple-digit growth figures it was reporting several years ago and investors have displayed more apathy towards the stock over the last couple of years, this is also a far more mature business than five or six years ago. Investors who want to put cash into the tech stock space can certainly still find a lot to like about this business, especially because it's still in strong financial shape and making steady investments in the world of artificial intelligence.
With more than a decade in business under its belt, Zoom is also much more than a software business, although Zoom Meetings remains a core part of the business and a market leader in videoconferencing solutions. Besides products like Zoom Phone and other workplace tools and solutions, its AI investments could drive meaningful growth for the business over the next five to 10 years.
New AI products include Zoom Virtual Agent, Zoom Revenue Accelerator, and Zoom AI Companion. Zoom Virtual Agent is a self-service chatbot that can handle a wide range of issues, including complex customer problems, and an AI virtual voice agent that enables self-service voice calls. The Zoom Revenue Accelerator uses machine learning algorithms to support better customer interactions, communication, and improve the performance of sales teams.
Meanwhile, the Zoom AI Companion does everything from providing meeting summaries and action items from in-person meetings to recommending what days employees should work from the office to what meeting rooms they should use based on workforce scheduling.
In the first quarter of fiscal year 2026, Zoom's total revenue was $1.2 billion, a year-over-year increase of about 3%. Enterprise revenue grew by 6% year over year. In the quarter, 4,192 customers contributed more than $100,000 in trailing-12-month revenue, up 8% from the same quarter last fiscal year.
Looking ahead, Zoom's strategic initiatives revolve around becoming an AI-first company, with a focus on its AI Companion tool, which is driving increased productivity for customers.
Is Zoom Video Communications profitable?
Yes, Zoom is profitable. Its net income for the first quarter of fiscal 2026 was $254.6 million, or $0.81 per share, up about 19% year over year.
Does Zoom Video Communications pay a dividend?
Zoom does not pay a dividend, and management has not announced its intention to pay one at any point in the near future.
Pros and cons of investing in Zoom stock
While Zoom experienced explosive growth during the pandemic, it's now a maturing company with a focus on enterprise solutions and AI integration that is still working to differentiate itself from its peers. The company does remain a leading provider of a unified communications and collaboration platform, but there are some pros and cons to consider before you put cash to work. Some pros to investing in Zoom stock include:
- Zoom holds a significant market share in the videoconferencing software market and has a substantial base of enterprise customers, including many Fortune 100 and 500 companies.
- The company also has a healthy balance sheet with a significant cash position, and reported $7.8 billion in cash and marketable securities at the close of the first quarter of its fiscal 2026.
- Zoom has demonstrated strong profitability and cash flow generation, converting a substantial portion of its earnings into free cash flow. The company's free cash flow margin was just shy of 40% at the end of Q1.
- Zoom is actively investing in AI capabilities, including its AI Companion, and expanding its product suite to include solutions like Zoom Contact Center and Workvivo.
- Despite moderate growth, Zoom's strong financials, customer retention, and consistent cash generation could position it as a potential value play for some investors.
However, there are some characteristics of this company that could prove to be cons for certain investors. For example:
- Zoom's rapid pandemic-driven growth has slowed significantly, and management's forecasts indicate modest revenue growth is forthcoming.
- Zoom faces stiff competition from major tech players, which could impact its future market share.
- Zoom's platform is not nearly so novel or unique against the backdrop of its broad industry as it was when the pandemic first emerged.
- Zoom's significant share-based compensation is contributing to its high number of outstanding shares and potential dilution for existing shareholders.
As with any stocks you're considering for your portfolio, make sure you understand the business you're buying and whether it fits into the basket of stocks you're building before you commit your hard-earned capital.
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The bottom line on Zoom Video Communications
While Zoom has fallen out of favor with some investors, the business fundamentals still look good, the company is profitable, and it's leaning into the potential of AI for its business. That could create a valuable buying proposition for investors looking for a potentially undervalued stock that was once a pandemic favorite, but has plenty of growth opportunity left to explore outside of that time frame.
As long as you're not expecting pandemic-era returns and want to invest in Zoom stock for its more mature business potential, there's a lot for investors to like about this stock.
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