Investing.com -- Evercore ISI upgraded Zoom Video Communications Inc (NASDAQ:ZM) Inc to "outperform" from “in line” on Tuesday, driven promising growth opportunities in artificial intelligence and new product lines, strong operational execution, a bottoming out of churn rates.
Zoom's most recent quarter showcased record-low online churn at 2.7% and a steady enterprise net retention rate of 98%. Growth in large accounts was notable, with customers generating over $100,000 in annual revenue rising 7% year-over-year, now representing 31% of total revenue.
"The latest results show that the online segment has reached the trough in terms of churn stabilization, while NRR for the ent segment appears to have bottomed out,” Evercore analysts said.
Brokerage highlighted Zoom's expansion into AI productivity tools, its first 20,000-seat deal in the CCaaS market, and the ongoing international and partner ecosystem growth as key levers for reacceleration.
Zoom also doubled its share buyback program to $2 billion, underscoring confidence in its long-term trajectory. With $7.7 billion in cash on hand, Evercore expects disciplined M&A focused on product, talent, and cultural alignment.
On appointment of Michelle Chang as CFO, Evercore noted her deep experience at Microsoft (NASDAQ:MSFT), including scaling Teams. "We believe there couldn’t have been a better choice than Michelle Chang to take the helm—a 25-year Microsoft veteran who served as CFO of Microsoft’s Modern Workplace for five years," the note said.
Evercore raised its price target for Zoom to $115 from $70.