As of May 23, 2025, Zoom Video Communications Inc has a Discounted Cash Flow (DCF) derived fair value of $98.79 per share. With the current market price at $82.07, this represents a potential upside of 20.4%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $87.33 |
| DCF Fair Value (10-year) | $98.79 |
| Potential Upside (5-year) | 6.4% |
| Potential Upside (10-year) | 20.4% |
| Discount Rate (WACC) | 7.3% - 8.9% |
Revenue is projected to grow from $4665 million in 01-2025 to $8174 million by 01-2035, representing a compound annual growth rate of approximately 5.8%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 01-2025 | 4665 | 3% |
| 01-2026 | 4896 | 5% |
| 01-2027 | 5349 | 9% |
| 01-2028 | 5645 | 6% |
| 01-2029 | 5854 | 4% |
| 01-2030 | 6177 | 6% |
| 01-2031 | 6505 | 5% |
| 01-2032 | 6830 | 5% |
| 01-2033 | 7348 | 8% |
| 01-2034 | 8011 | 9% |
| 01-2035 | 8174 | 2% |
Net profit margin is expected to improve from 22% in 01-2025 to 26% by 01-2035, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 01-2025 | 1010 | 22% |
| 01-2026 | 1103 | 23% |
| 01-2027 | 1252 | 23% |
| 01-2028 | 1368 | 24% |
| 01-2029 | 1466 | 25% |
| 01-2030 | 1593 | 26% |
| 01-2031 | 1687 | 26% |
| 01-2032 | 1781 | 26% |
| 01-2033 | 1927 | 26% |
| 01-2034 | 2111 | 26% |
| 01-2035 | 2166 | 26% |
with a 5-year average of $122 million. Projected CapEx is expected to maintain at approximately 3% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 01-2026 | 134 |
| 01-2027 | 138 |
| 01-2028 | 149 |
| 01-2029 | 159 |
| 01-2030 | 169 |
| 01-2031 | 179 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 43 |
| Days Inventory | 0 |
| Days Payables | 4 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 2026 | 1389 | 337 | 148 | 75 | 828 |
| 2027 | 1569 | 383 | 162 | 36 | 988 |
| 2028 | 1721 | 418 | 171 | 25 | 1107 |
| 2029 | 1850 | 448 | 177 | 35 | 1190 |
| 2030 | 2015 | 487 | 187 | 32 | 1309 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 87.33 | 6.4% |
| 10-Year DCF (Growth) | 98.79 | 20.4% |
| 5-Year DCF (EBITDA) | 200.86 | 144.7% |
| 10-Year DCF (EBITDA) | 206.64 | 151.8% |
Is Zoom Video Communications Inc (ZM) a buy or a sell? Zoom Video Communications Inc is definitely a buy. Based on our DCF analysis, Zoom Video Communications Inc (ZM) appears to be moderately undervalued with upside potential of 20.4%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider a buy at the current market price of $82.07.