Core Insights - Zoom Communications Inc reported strong fiscal second-quarter earnings, leading to a significant increase in share price by 10.45% to $80.82 [9]. Financial Performance - Revenue grew by 4.7% year-on-year to $1.22 billion, marking the strongest revenue growth in 11 quarters [2]. - Pro forma earnings were reported at $1.53 per share [2]. - Constant currency revenue exceeded guidance by $15 million, while full-year expectations were raised by $9 million [4]. - Non-GAAP gross margin improved to 79.8%, up from 79.2% in the previous quarter [6]. Guidance and Future Outlook - Management raised fiscal 2026 guidance for total revenue to $4.825-$4.835 billion and non-GAAP earnings to $5.81-$5.84 per share, surpassing street expectations [7]. - The enterprise segment is expected to continue its acceleration in the second half of the year, with a sequential increase in customer count to 184,000 [8]. Analyst Ratings and Price Targets - Rosenblatt Securities raised the price target from $100 to $110 while maintaining a Buy rating [10]. - RBC Capital Markets increased the price target from $95 to $100, maintaining an Outperform rating [10]. - KeyBanc Capital Markets reduced the price target from $73 to $69, reaffirming an Underweight rating [10].

Financial Data and Key Metrics Changes - Total revenue grew 4.7% year over year to $1.217 billion, exceeding guidance by $17 million [15][19] - Non-GAAP gross margin increased to 79.8%, up 128 basis points year over year, driven by cost optimization [17] - Non-GAAP operating income grew 10.5% year over year to $503 million, exceeding guidance by over $38 million [18] - Free cash flow increased 39% year over year to $508 million, representing a free cash flow 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][16] - Average monthly churn in the online business remained flat 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] - Zoom Phone sustained mid-teens ARR growth, gaining market share against competitors [11] 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 grew 5% year over year to $1.48 billion, slightly ahead of the high end of the previously provided range [19] Company Strategy and Development Direction - The company is focused on three key priorities: delivering world-class AI, rapidly innovating Zoom Workplace, and scaling high-growth departmental solutions [5][9] - Zoom aims to strengthen its position as a leader in AI-powered collaboration, with significant growth in AI Companion monthly active users [6][7] - The company is expanding its collaboration with PwC to enhance its contact center and AI opportunities [13] 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 [91] - The company raised its full-year revenue guidance to a range of $4.825 to $4.835 billion, representing approximately 3.5% year-over-year growth [22] - Management noted that AI adoption is critical for driving business outcomes and customer engagement [7][11] Other Important Information - The company has been recognized with multiple awards for innovation and leadership in the UCaaS space [9] - The launch of Virtual Agent 2.0 is expected to enhance customer engagement and drive revenue growth [8] Q&A Session Summary Question: What ROI are customers seeing from AI solutions? - Management highlighted that AI adoption has significantly increased, with monthly active users growing four times year over year, indicating positive feedback and productivity improvements [28][30] Question: How are vertical-specific AI companions informing customer needs? - Management noted that early adopters are looking beyond basic functionalities and are interested in customized AI solutions that integrate with their existing systems [34][35] Question: What feedback has been received regarding the price increase for the online segment? - Management reported stable churn rates and positive customer feedback regarding the value proposition, indicating that the price increase has not led to significant pushback [41][42] Question: What is the outlook for the AI Companion add-on? - Management indicated that initial customer feedback has been positive, and there is a strong interest in customizing AI solutions to better meet specific needs [56][62] Question: What is driving the success of the contact center solutions? - Management attributed success to customer dissatisfaction with existing providers, the comprehensive feature set of Zoom's solutions, and the trust in the Zoom brand [99][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 ...