Zoom Q3 Earnings & Revenues Surpass Estimates, Both Increase Y/Y

Core Insights - Zoom Communications reported third-quarter fiscal 2026 adjusted earnings of $1.52 per share, exceeding the Zacks Consensus Estimate by 6.29% and reflecting a year-over-year increase of 10.1% [1] - Revenues reached $1.23 billion, surpassing the consensus mark by 1.4% and showing a year-over-year growth of 4.4% [1] Revenue Breakdown - Enterprise revenues, which constitute 60.3% of total revenues, increased by 6.1% year over year to $741.4 million [2] - Online revenues, accounting for 39.7% of total revenues, rose by 2% year over year to $488.4 million [2] - Customers generating over $100,000 in revenues over the trailing 12 months grew by 9.2% to 4,363, representing 32% of total revenues [2] Customer Metrics - The number of Enterprise customers at the end of the fiscal third quarter was approximately 185,100 [3] - The percentage of total Online Monthly Recurring Revenue (MRR) from Online customers with a service term of at least 16 months was 74.4%, an increase of 30 basis points year over year [3] - The trailing 12-month net dollar expansion rate for Enterprise customers was 98%, while the average monthly churn for Online customers remained flat at 2.7% year over year [3] Operating Performance - Non-GAAP gross margin for the fiscal third quarter was 80%, up from 78.9% in the previous year, reflecting an expansion of 110 basis points [5] - Non-GAAP operating income increased by 10.7% year over year to $507 million, with an operating margin of 41.2%, compared to 38.9% in the year-ago quarter [6] Financial Position - As of October 31, 2025, total cash, cash equivalents, and marketable securities amounted to $7.9 billion, slightly up from $7.8 billion as of July 31, 2025 [7] - Net cash provided by operating activities was $629.3 million for the fiscal third quarter, compared to $515.9 million in the previous quarter, with free cash flow at $614.3 million, up from $508 million [7] Future Guidance - For the fourth quarter of fiscal 2026, Zoom expects revenues to be between $1.230 billion and $1.235 billion, with constant currency revenues projected between $1.224 billion and $1.229 billion [8] - For fiscal 2026, total revenues are anticipated to be in the range of $4.852 billion to $4.857 billion, with non-GAAP earnings per share expected between $5.95 and $5.97 [10]