Financial Data and Key Metrics Changes - Total revenue grew 4.7% year over year to $1.217 billion, exceeding guidance by $17 million [14][19] - Non-GAAP gross margin increased to 79.8%, up 128 basis points year over year, driven by cost optimization [17] - Non-GAAP income from operations rose 10.5% year over year to $503 million, exceeding guidance by over $38 million [18] - Operating cash flow grew 15% year over year to $516 million, with a margin of 42.4% [20] - Free cash flow increased 39% year over year to $508 million, representing a margin of 41.7% [20] Business Line Data and Key Metrics Changes - Enterprise business revenue grew 7% year over year, representing 60% of total revenue, up one point year over year [15] - Average monthly churn in the online business remained flat year over year at 2.9% [16] - The number of enterprise customers contributing over $100,000 in trailing twelve-month revenue grew approximately 9% year over year [16] - The number of Zoom contact center customers with over $100,000 in ARR grew 94% year over year to 229 [10] Market Data and Key Metrics Changes - Revenue growth in the Americas was 5% year over year, EMEA grew 6%, and APAC grew 4% [17] - Deferred revenue at the end of the period grew 5% year over year to $1.48 billion [19] Company Strategy and Development Direction - The company is focusing on three key priorities: delivering world-class AI, rapidly innovating Zoom Workplace, and scaling high-growth departmental solutions [4] - AI adoption is expanding beyond meeting summaries to include meeting preparation, task management, and integration with other services [5][6] - The company aims to maintain a long-term goal of 80% non-GAAP gross margins while balancing investments in AI with cost efficiencies [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of customer demand and the ability to navigate a dynamic macroeconomic environment [90] - The company anticipates continued growth in AI adoption among customers, which is expected to enhance productivity and operational effectiveness [30][31] - Guidance for Q3 revenue is projected to be in the range of $1.21 to $1.215 billion, representing approximately 3% year-over-year growth [21] Other Important Information - The company has accelerated its share buyback program, purchasing 6 million shares for $463 million [20] - Upcoming event Zoomtopia is expected to showcase new product innovations and customer success stories [12] Q&A Session Summary Question: What ROI are customers seeing from AI solutions? - Management noted that AI adoption has led to significant increases in monthly active users, with a fourfold increase year over year [29] Question: How are vertical-specific AI companions informing customer needs? - Management indicated that customers are looking beyond basic functionalities and are interested in customized AI solutions that integrate with their existing systems [36] Question: Feedback on the online segment and price increase impact? - Management confirmed that the price increase is on track to add $10 to $15 million in incremental revenue, with stable churn rates and no significant pushback from customers [42][45] Question: Insights on WorkVivo's growth and market opportunities? - Management highlighted strong growth in WorkVivo, with a focus on ensuring smooth transitions for customers and expanding opportunities in the medium-sized customer segment [51] Question: What is driving success in the contact center business? - Management attributed success to customer dissatisfaction with existing providers, the comprehensive feature set of Zoom's solutions, and a strong focus on customer experience [98][100]

Zoom Communications Q2 FY26 Earnings August 21, 2025 © 2025 Zoom Communications, Inc. Use of non-GAAP financial measures In addition to the financials presented in accordance with U.S. generally accepted accounting principles ("GAAP"), this presentation includes the following non-GAAP metrics: Revenue in Constant Currency, non-GAAP gross profit, non-GAAP gross margin, non-GAAP R&D expense, non-GAAP S&M expense, non-GAAP G&A expense, non-GAAP operating margin, non-GAAP income from operations, non-GAAP net in ...

Financial Performance - Zoom provided a stronger-than-expected annual outlook for sales growth [1] - Zoom raised its fiscal-year forecast [1] Product & Service - The raised forecast suggests interest in the company's expanded line of software products [1]

[Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) [Q2 FY2026 Financial Highlights](index=1&type=section&id=Q2%20FY2026%20Financial%20Highlights) Zoom reported strong Q2 FY2026 results, with total revenue reaching **$1.22 billion** (up **4.7% YoY**), GAAP operating margin expanding to **26.4%**, and GAAP EPS growing **65.7%**, leading to an upward revision of its full-year outlook - CEO Eric S. Yuan attributed strong performance to AI-driven innovation, leading to an increased full-year outlook for **revenue**, **non-GAAP operating income**, and **free cash flow**[3](index=3&type=chunk) Q2 FY2026 Key Financial Metrics (Year-over-Year) | Metric | Q2 FY2026 (Millions USD) | YoY Growth | | :--- | :--- | :--- | | Total Revenue | $1,217.2 | 4.7% | | Enterprise Revenue | $730.7 | 7.0% | | GAAP Operating Margin | 26.4% | +9.0 p.p. | | Non-GAAP Operating Margin | 41.3% | +2.1 p.p. | | GAAP Diluted EPS | $1.16 | 65.7% | | Non-GAAP Diluted EPS | $1.53 | 10.0% | | Free Cash Flow | $508.0 | 39.1% | - The company repurchased approximately **6.0 million shares** of common stock during the second quarter[5](index=5&type=chunk) [Q2 FY2026 Customer Metrics](index=1&type=section&id=Q2%20FY2026%20Customer%20Metrics) Zoom's Q2 customer base grew **8.7%** in high-value segments (>$100k TTM revenue), while Enterprise net dollar expansion was **98%**, and online monthly churn remained stable at **2.9%** Key Customer Metrics as of Q2 FY2026 | Metric | Value | YoY Change | | :--- | :--- | :--- | | Customers >$100k TTM Revenue | 4,274 | +8.7% | | TTM Net Dollar Expansion (Enterprise) | 98% | Not specified | | Online Average Monthly Churn | 2.9% | Flat | [Financial Outlook](index=2&type=section&id=Financial%20Outlook) [Q3 FY2026 Guidance](index=2&type=section&id=Q3%20FY2026%20Guidance) For Q3 FY2026, Zoom projects total revenue between **$1.210 billion** and **$1.215 billion**, non-GAAP income from operations between **$465.0 million** and **$470.0 million**, and non-GAAP diluted EPS between **$1.42** and **$1.44** Guidance for Q3 Fiscal Year 2026 | Metric | Expected Range | | :--- | :--- | | Total Revenue | $1.210 B - $1.215 B | | Non-GAAP Income from Operations | $465.0 M - $470.0 M | | Non-GAAP Diluted EPS | $1.42 - $1.44 | [Full Year FY2026 Guidance](index=2&type=section&id=Full%20Year%20FY2026%20Guidance) Zoom raised its full-year FY2026 guidance, now expecting total revenue between **$4.825 billion** and **$4.835 billion**, non-GAAP income from operations between **$1.905 billion** and **$1.915 billion**, non-GAAP diluted EPS between **$5.81** and **$5.84**, and free cash flow between **$1.740 billion** and **$1.780 billion** Updated Guidance for Full Fiscal Year 2026 | Metric | Expected Range | | :--- | :--- | | Total Revenue | $4.825 B - $4.835 B | | Non-GAAP Income from Operations | $1.905 B - $1.915 B | | Non-GAAP Diluted EPS | $5.81 - $5.84 | | Free Cash Flow | $1.740 B - $1.780 B | [Detailed Financial Statements](index=5&type=section&id=Detailed%20Financial%20Statements) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of July 31, 2025, Zoom's balance sheet reported **$11.04 billion** in total assets, including **$7.8 billion** in cash and equivalents, with total liabilities at **$2.09 billion** and stockholders' equity at **$8.95 billion** Balance Sheet Summary (as of July 31, 2025) | Account | Amount (Billions USD) | | :--- | :--- | | Cash, Cash Equivalents & Marketable Securities | $7.8 | | Total Current Assets | $8.66 | | Total Assets | $11.04 | | Total Current Liabilities | $1.95 | | Total Liabilities | $2.09 | | Total Stockholders' Equity | $8.95 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q2 FY2026, Zoom reported **$1.217 billion** in revenue, **$944.1 million** gross profit, **$321.7 million** income from operations (up from **$202.4 million** YoY), and **$358.6 million** net income, or **$1.16** diluted EPS Q2 FY2026 vs Q2 FY2025 Income Statement (Millions USD) | Metric | Three Months Ended July 31, 2025 (Millions USD) | Three Months Ended July 31, 2024 (Millions USD) | | :--- | :--- | :--- | | Revenue | $1,217.2 | $1,162.5 | | Gross Profit | $944.1 | $877.4 | | Income from Operations | $321.7 | $202.4 | | Net Income | $358.6 | $219.0 | | Diluted Net Income Per Share | $1.16 | $0.70 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q2 FY2026, Zoom generated **$515.9 million** in net cash from operating activities (up from **$449.3 million** YoY), with free cash flow at **$508.0 million**, and utilized **$494.9 million** in financing activities, mainly for stock repurchases Q2 FY2026 vs Q2 FY2025 Cash Flow Summary (Millions USD) | Metric | Three Months Ended July 31, 2025 (Millions USD) | Three Months Ended July 31, 2024 (Millions USD) | | :--- | :--- | :--- | | Net cash provided by operating activities | $515.9 | $449.3 | | Net cash used in investing activities | ($60.7) | ($540.9) | | Net cash used in financing activities | ($494.9) | ($256.3) | [Reconciliation of GAAP to Non-GAAP Measures](index=8&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) This section reconciles GAAP to non-GAAP measures, showing Q2 FY2026 GAAP income from operations of **$321.7 million** adjusted to **$503.2 million** non-GAAP, primarily due to **$195.8 million** in stock-based compensation, and GAAP net income of **$358.6 million** adjusted to **$471.3 million** non-GAAP Q2 FY2026 GAAP to Non-GAAP Reconciliation (Millions USD) | Metric | GAAP (Millions USD) | Adjustments (Millions USD) | Non-GAAP (Millions USD) | | :--- | :--- | :--- | :--- | | **Income from Operations** | **$321.7** | **$181.5** | **$503.2** | | Stock-based compensation | | $195.8 | | | Litigation settlements, net | | ($18.0) | | | Acquisition-related expenses | | $3.7 | | | **Net Income** | **$358.6** | **$112.7** | **$471.3** | - Free cash flow for Q2 FY2026 was **$508.0 million**, calculated by subtracting **$8.0 million** in property and equipment purchases from **$515.9 million** in net cash from operating activities[32](index=32&type=chunk) [Supplementary Information](index=2&type=section&id=Supplementary%20Information) [Definitions of Non-GAAP Measures and Key Metrics](index=3&type=section&id=Definitions%20of%20Non-GAAP%20Measures%20and%20Key%20Metrics) This section defines non-GAAP financial measures, excluding non-cash or non-recurring items for clearer operational performance, and clarifies key business metrics like customer types, net dollar expansion rate, and online average monthly churn [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Financial%20Measures) - Non-GAAP Income from Operations excludes **stock-based compensation expense**, related payroll taxes, **acquisition-related expenses**, and significant **litigation settlements**[17](index=17&type=chunk) - Non-GAAP Net Income adjusts GAAP net income for the same items as Non-GAAP Income from Operations, plus **gains/losses on strategic investments** and the **tax effects** of these adjustments[18](index=18&type=chunk) [Free Cash Flow and Constant Currency](index=4&type=section&id=Free%20Cash%20Flow%20and%20Constant%20Currency) - Free Cash Flow is defined as GAAP net cash provided by operating activities less **purchases of property and equipment**[19](index=19&type=chunk) - Revenue in Constant Currency adjusts GAAP revenue using average exchange rates from the comparative period to exclude **foreign currency fluctuation effects**[20](index=20&type=chunk) [Customer Metrics Definitions](index=4&type=section&id=Customer%20Metrics%20Definitions) - **Enterprise customers** are engaged by direct sales, resellers, or partners, while **Online customers** subscribe directly via the website[21](index=21&type=chunk) - Net dollar expansion rate for Enterprise customers compares **Annual Recurring Revenue (ARR)** from a customer cohort at the beginning and end of a 12-month period[22](index=22&type=chunk) - Online average monthly churn is calculated by dividing **Monthly Recurring Revenue (MRR)** from canceled or downgraded customers by the starting MRR of that quarter, then dividing by three[23](index=23&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This legal disclaimer cautions that forward-looking statements, including financial guidance and strategic initiatives, are subject to risks like macroeconomic conditions and competition, which could cause actual results to differ materially - Statements regarding financial outlook for **Q3 and FY2026**, market position, growth strategy, and product initiatives are considered forward-looking[14](index=14&type=chunk) - Actual results could differ materially due to risks including **declines in new customers**, **competition**, **macroeconomic conditions**, and **security issues**[14](index=14&type=chunk)

Core Viewpoint - Zoom Communications, Inc. reported strong financial results for the second fiscal quarter, achieving the highest year-over-year revenue growth in 11 quarters and expanding its GAAP operating margin by 9 percentage points year over year. The company raised its full-year outlook for revenue, non-GAAP operating income, and free cash flow, now expected to be between $1.74 billion and $1.78 billion [2][5]. Financial Highlights - Total revenue for Q2 was $1,217.2 million, reflecting a 4.7% increase year over year, and 4.4% in constant currency [5][6]. - Enterprise revenue reached $730.7 million, up 7.0% year over year, while Online revenue was $486.6 million, up 1.4% year over year [5][6]. - GAAP operating margin was 26.4%, and non-GAAP operating margin was 41.3% [5][6]. - GAAP EPS was $1.16, a 65.7% increase year over year, and non-GAAP EPS was $1.53, up 10.0% year over year [5][6]. Customer Metrics - The number of customers contributing more than $100,000 in trailing 12 months revenue increased by 8.7% year over year, totaling 4,274 customers [4][5]. - The trailing 12-month net dollar expansion rate for Enterprise customers was 98% [13]. - Online average monthly churn was 2.9%, remaining flat year over year [13]. Cash Flow and Securities - Net cash provided by operating activities was $515.9 million for Q2, compared to $449.3 million in the same quarter last year [6][30]. - Free cash flow for the quarter was $508.0 million, up from $365.1 million year over year [6][30]. - Total cash, cash equivalents, and marketable securities as of July 31, 2025, amounted to $7.8 billion [6]. Financial Outlook - For Q3 FY 2026, total revenue is expected to be between $1.210 billion and $1.215 billion, with non-GAAP income from operations projected between $465.0 million and $470.0 million [13]. - For the full fiscal year 2026, total revenue is anticipated to be between $4.825 billion and $4.835 billion, with non-GAAP income from operations expected between $1.905 billion and $1.915 billion [13].

Zoom Communications Inc. ZM will release earnings results for the second quarter, after the closing bell on Thursday, Aug. 21. Let's have a look at how Benzinga's most-accurate analysts have rated the company in the recent period. Considering buying ZM stock? Here's what analysts think: Analysts expect the Bentonville, Arkansas-based company to report quarterly earnings at $1.38 per share, down from $1.39 per share in the year-ago period. Zoom projects to report quarterly revenue of $1.2 billion, compared t ...

Group 1: Industry Outlook - Morgan Stanley's report indicates that the disruptive impact of AI continues to suppress sentiment in the software industry, and Q2 earnings reports from SaaS companies are unlikely to alleviate concerns [1] - Individual stock performance is expected to diverge, with companies that exceed expectations and raise guidance likely to see significant stock price increases, while those with weak key metrics or slowing growth will heighten market concerns about AI competition or business models [1] Group 2: Company Ratings and Expectations - Morgan Stanley maintains a "Hold" rating on Box (BOX.US), expecting strong Q1 performance to continue into Q2, with potential for significant upward revisions to full-year guidance due to conservative expectations and a stable macroeconomic environment [1] - Morgan Stanley also holds a "Hold" rating on DocuSign (DOCU.US) with a target price of $86, anticipating that Q2 billings may exceed expectations due to a low base effect, but expressing caution regarding potential disappointments in Q3 and the overall outlook for the second half of the year [1] - For Asana (ASAN.US), Morgan Stanley maintains a "Reduce" rating with a target price of $13, noting that while Q2 performance may be stable, growth rates in the second half could slow to mid to high single digits, leading to stock price fluctuations if guidance does not show significant adjustments [2] - Morgan Stanley gives Zoom (ZM.US) a "Hold" rating, expecting Q2 results to significantly exceed market expectations, but indicating that sustained accelerated growth will require more time, thus maintaining a cautious outlook until the company's prospects become clearer [2]

Core Insights - Zoom Video Communications is set to report its Q2 results on August 21, 2025, with historical data indicating a 74% likelihood of negative one-day stock movements post-earnings, averaging a decline of -7.7% [2][3] Financial Performance - Current consensus forecasts for the upcoming quarter predict earnings per share (EPS) of $1.38 on revenue of $1.2 billion, compared to $1.39 EPS on $1.16 billion in revenue for the same quarter last year [3] - Zoom's market capitalization is currently $22 billion, with trailing twelve-month revenue of $4.7 billion, operating profit of $852 million, and net income of $1.0 billion [4] Historical Earnings Reaction - Over the past five years, there have been 19 observations of Zoom's one-day post-earnings returns, with only 5 positive returns, indicating a 26% chance of a positive reaction [7] - The median return for the 5 positive instances was 8.0%, while the median for the 14 negative returns was -7.7% [7] Post-Earnings Strategy - A pre-earnings strategy suggests weighing historical odds of positive versus negative reactions to inform positions before earnings releases [6] - A post-earnings strategy involves evaluating immediate reactions in relation to medium-term performance to guide trading decisions after earnings announcements [6] Correlation with Peers - Historical data indicates that peer performance can influence Zoom's post-earnings reactions, with potential pricing-in occurring prior to the earnings release [9]

Core Viewpoint - Wall Street analysts anticipate a slight decline in Zoom Communications' quarterly earnings per share, with a projected EPS of $1.37, reflecting a year-over-year decrease of 1.4%, while revenues are expected to increase by 3% to $1.2 billion [1]. Earnings Projections - Over the past 30 days, the consensus EPS estimate has been revised downward by 1.1%, indicating a collective reassessment by analysts of their initial forecasts [2]. - Changes in earnings projections are crucial for predicting investor reactions, as empirical studies show a strong correlation between earnings estimate trends and short-term stock price movements [3]. Revenue Estimates - Analysts estimate 'Geographic Revenue - Asia Pacific (APAC)' to be $146.13 million, representing a year-over-year increase of 2.7% [5]. - 'Geographic Revenue - Europe, Middle East, and Africa (EMEA)' is projected to reach $190.04 million, indicating a 3% increase from the previous year [5]. - The 'Geographic Revenue - Americas' is estimated at $862.08 million, reflecting a 3.2% year-over-year growth [6]. Customer Metrics - The average prediction for 'Enterprise Customers' stands at 186,862, down from 191,600 in the same quarter last year [6]. - Analysts expect 'Customers >$100K TTM Revenue' to reach 4,233, an increase from 3,933 reported in the same quarter of the previous year [7]. Remaining Performance Obligations (RPO) - The 'Current Remaining Performance Obligation (RPO)' is expected to be $2.45 billion, up from $2.28 billion year-over-year [7]. - Total 'Remaining Performance Obligations (RPO)' are projected at $4.00 billion, compared to $3.78 billion in the previous year [8]. - 'Non-Current Remaining Performance Obligation (RPO)' is forecasted to reach $1.53 billion, slightly up from $1.50 billion reported last year [8]. Stock Performance - Zoom shares have decreased by 2.3% over the past month, contrasting with a 3.5% increase in the Zacks S&P 500 composite [8].

Core Insights - Zoom Communications, Inc. has introduced a new concierge use case for Zoom Virtual Agent, integrated with Zoom Phone, enhancing call handling and support for businesses [1][2] - The company launched Zoom Hub, a centralized content center for organizing and managing Zoom assets, along with enhanced AI features across Zoom Meetings and Team Chat [1][6] Zoom Virtual Agent (ZVA) Concierge - The ZVA concierge offers a 24/7 AI receptionist that provides a personalized experience, handling tasks such as booking appointments and routing calls without long hold times [2][3] - It supports multilingual conversations in several languages including English, Spanish, French, German, Portuguese, and Japanese, ensuring a consistent experience for callers [3][4] Use Cases for ZVA Concierge - In healthcare, the ZVA concierge can quickly connect patients to the right care, answer common questions, and allow appointment bookings after hours [7] - In retail, it assists customers in finding products, checking stock availability, and scheduling pickups without human intervention [7] - In manufacturing, it captures service requests and guides customers through troubleshooting, directing them to the appropriate team [7] - In financial services, it provides personalized service by gathering information and resolving requests efficiently [7] AI Companion Features - The AI Companion enhances meeting scheduling by analyzing calendars and time zones to suggest convenient meeting times, eliminating scheduling friction [8][9] - It automates the coordination process, sending invites and tracking responses in real-time, ensuring quick meeting confirmations [10] Zoom Hub - Zoom Hub serves as a central workspace for users to create, manage, and organize Zoom files, integrating with AI Companion for efficient content creation [11] - It consolidates various Zoom assets, including meeting recordings and documents, to streamline user experience [11] Zoom Team Chat Enhancements - The integration of AI Companion into Zoom Team Chat allows users to draft messages and summarize documents without opening files, improving productivity [12][14] - These updates are included at no additional cost for paid Zoom Workplace plans, reinforcing Zoom's commitment to an AI-first collaboration platform [14]