Will Zoom Beat The Market In Next 5 Years?

When the world needed to connect from home, Zoom didn’t disappoint. The video conferencing providers saw numbers skyrocket from 10 million in December 2019 to over 300 million in April 2020. Rocket-ship like growth highlighted Zoom’s capacity to scale and investors couldn’t buy enough of it.

Since then the stock has languished but maybe that’s about to change? Will Zoom beat the market over the next 5 years after falling short over the past few?

Key Points

• Zoom’s users soared from 10 million to over 300 million during the early pandemic, result in a 48% market share.
• Revenue growth has drastically slowed, with a modest 2% increase expected next year and a 3.6% CAGR forecast over the next five years.
• Faster growth may come from new products and expanding internationally but regardless a DCF analysis shows reasons to be optimistic,

Why Buy Zoom

Zoom has a huge brand advantage over competitors. In fact, the word Zoom has become a verb in everyday language, akin to Google or Xerox. It makes Zoom the default go-to platform for virtual meetings, webinars, and online events in many users’ minds.

That’s evident in the data too where Zoom’s market share in the video conferencing space remains at 48%. The high market share is a function of Zoom’s intuitive and user-friendly interface. This ease of use has facilitated widespread adoption across various demographics, from corporate professionals to educational institutions and even social users.

Zoom built an easy-to-use platform on a rock solid foundation and continues to invest in infrastructure and technology ensure that it remains a leader in providing reliable and high-quality service.

Zoom Needs to Grow

Zoom had been growing like a weed. Revenues popped by 325% in 2021 and a further 54.6% in 2022. But the growth slowed to a snail’s pace, up just 3.1% last year and 7% the year prior.

Next year, management only expects about a 2% uptick. This slow growth suggests that while some metrics like new customer additions and product expansions look positive, overall revenue growth is stagnating, and that must change for investors to get excited again. When we look to the growth forecast over the next 5 years, the CAGR predicted is just 3.6%.

In spite of the slow revenue growth, Zoom has managed to maintain strong profitability, with a net income of $1.37 billion in fiscal 2023, translating to a net profit margin of 33.5%. This level of profitability is noteworthy in the tech industry and reflects efficient cost management and operational scalability.

Management has also done an A+ job in keeping cash balances high. Zoom ended its fiscal first quarter of 2025 without any debt and had $7.4 billion in cash, cash equivalents, and marketable securities. This financial strength provides significant optionality to either make acquisitions or invest to drive future growth. In fiscal 2023, the company also generated $1.46 billion in operating cash flow, a massive sum that can be similarly deployed.

How Can Zoom Grow Faster?

Zoom is much more than a video conferencing platform, and has already introduced Zoom Phone, an enterprise cloud phone system, and Zoom Rooms, a conference room solution. Additional offerings such as Zoom Contact Center may dial up revenues too on the back of licenses tripling during fiscal 2024.

The company isn’t restricting growth to US shores either, and has tapped into demand for remote communication solutions internationally. This geographic diversification means less dependency on the American market.

The hybrid work model is expected to persist and that’s where Zoom should continue to shine with predictable revenues, profits and cash flows.

It’s noteworthy that Zoom reported a 24% increase last year in customers contributing more than $100,000 in trailing 12-month revenue. That’s a crucial metric in highlighting the company’s ability to attract and retain high-value customers. If it persists, the future may be brighter for Zoom.

So to boil it down to dollars and cents, Zoom, in spite of slower forecast growth does have the potential to outperform the market over the coming years because a discounted cash flow forecast puts fair value at $81 per share, which represents 38.7% upside from current levels.