Zoom: Heavy Dose of AI at Investor Day With Stepped-Up Long-Term Margin Targets

Zoom hosted its Zoomtopia investor day, highlighting a resilient financial model and introducing many new product features and enhancements centered around artificial intelligence. While we view the new features as evolutionary rather than revolutionary, we are impressed with the company’s commitment to product innovation. The company also updated its long-term financial targets, demonstrating meaningfully higher profitability than management previously anticipated. Our long-term model was above management's prior framework, so this is no surprise to us, but it does pave the way for potentially higher margins than we currently contemplate. Critically, incoming CFO Michelle Chang approved these new financial targets. We also appreciate a much larger addressable market given the product introductions since the company’s investor day in 2022. Overall, we make no changes to our model and maintain our fair value estimate of $89 per share for narrow-moat Zoom.