Financial Data and Key Metrics Changes - Total revenue for Q3 FY2026 grew 4.4% year-over-year to $1.23 billion, exceeding guidance by $15 million [13] - Enterprise revenue increased by 6.1% year-over-year, accounting for 60% of total revenue, up 1 percentage point year-over-year [13] - Non-GAAP gross margin improved to 80%, up 117 basis points from the previous year, driven by cost optimization [14] - Non-GAAP income from operations grew 11% year-over-year to $507 million, exceeding guidance by $37 million [14] - Non-GAAP diluted net income per share increased to $1.52, $0.08 above guidance and $0.14 higher than the previous year [15] - Operating cash flow grew 30% year-over-year to $629 million, representing a margin of 51.2% [16] - Free cash flow margin increased to 50%, up 11 percentage points year-over-year [16] Business Line Data and Key Metrics Changes - AI Companion adoption surged more than four times year-over-year, indicating strong demand for AI-driven solutions [8] - Team Chat monthly active users rose 20% year-over-year, enhancing asynchronous work capabilities [8] - Workvivo logos grew nearly 70% year-over-year to 1,225, indicating strong performance in employee experience offerings [9] - Zoom Phone surpassed 10 million paid seats, marking significant growth in unified communications [9] Market Data and Key Metrics Changes - Americas revenue grew 5% year-over-year, EMEA grew 3%, and APAC grew 4% [14] - The number of enterprise customers contributing over $100,000 in trailing 12-month revenue grew by 9% year-over-year [13] Company Strategy and Development Direction - The company aims to evolve into an AI-first platform for work and customer experience, focusing on three priorities: enhancing core products with AI, driving growth of new AI products, and scaling AI-first customer experience [7] - The acquisition of BrightHire is part of the strategy to enhance collaboration and customer engagement through AI [10] - The company is committed to disciplined growth while investing in AI and maintaining strong profitability [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's durability and the growing value delivered to customers [7] - The company anticipates continued strength in customer experience and AI differentiation as key growth drivers [11] - Management expects revenue for Q4 FY2026 to be in the range of $1.23 billion to $1.235 billion, representing approximately 4.1% year-over-year growth [17] Other Important Information - Deferred revenue at the end of Q3 grew 5% year-over-year to $1.44 billion [15] - The board authorized an incremental $1 billion share repurchase, reflecting confidence in the company's financial position [18] Q&A Session Summary Question: How should we think about growth heading into next year? - Management indicated that enterprise will continue to be the predominant growth driver, with a focus on stabilization and product diversification [23][24] Question: Can you discuss the pressure on net dollar expansion and seat-based contraction? - Management noted that while there are some seat pressures, overall macro demand remains strong, and net dollar expansion is stabilizing [28] Question: What is the company's approach to M&A going forward? - Management stated that future M&A will be thoughtful and disciplined, focusing on small to medium-sized investments that align with strategic goals [34] Question: Can you elaborate on the growth sustainability of Zoom Phone and customer experience? - Management highlighted strong growth in Zoom Phone and customer experience, driven by AI integration and customer demand [40][41] Question: How is the company integrating with other productivity software? - Management confirmed strong integrations with major ecosystems like Google and Microsoft, and emphasized the importance of customer feedback in driving integration efforts [67] Question: Were there any one-time benefits to free cash flow this quarter? - Management clarified that improvements in the collection process contributed to free cash flow, but these changes are sustainable rather than one-time [73][74] Question: How does the BrightHire acquisition fit into the broader platform expansion strategy? - Management indicated that BrightHire aligns with the strategy to leverage AI in mission-critical business workflows, particularly in HR [83][107]

Financial Data and Key Metrics Changes - Total revenue for Q3 FY2026 grew 4.4% year over year to $1.23 billion, exceeding guidance by $15 million [13] - Enterprise revenue increased by 6.1% year over year, accounting for 60% of total revenue, up 1 percentage point year over year [13] - Average monthly churn was 2.7%, matching last year's Q3 and marking an all-time low [13] - Non-GAAP gross margin improved to 80%, up 117 basis points year over year due to cost optimization [14] - Non-GAAP income from operations grew 11% year over year to $507 million, exceeding guidance by $37 million [14] - Non-GAAP diluted net income per share increased to $1.52, $0.08 above guidance and $0.14 higher than last year [15] - Operating cash flow grew 30% year over year to $629 million, with a margin of 51.2% [16] - Free cash flow margin increased to 50%, up 11 points year over year [16] Business Line Data and Key Metrics Changes - AI Companion adoption surged more than four times year over year, indicating strong demand for AI-driven solutions [8] - Team Chat monthly active users rose 20% year over year, enhancing asynchronous work capabilities [8] - WorkVivo logos grew nearly 70% year over year to 1,225, indicating strong performance in employee experience offerings [9] - Zoom Phone surpassed 10 million paid seats, with consistent ARR growth in the mid-teens [9] Market Data and Key Metrics Changes - Americas revenue grew 5% year over year, EMEA grew 3%, and APAC grew 4% [14] - Customer experience segment saw high double-digit ARR growth, with nine of the top ten CX deals involving paid AI solutions [11] Company Strategy and Development Direction - The company aims to evolve into an AI-first platform for work and customer experience, focusing on three priorities: elevating core products with AI, driving growth of new AI products, and scaling AI-first customer experience [7] - The acquisition of BrightHire is part of the strategy to enhance collaboration and customer engagement through AI [10] - The company is committed to disciplined growth while investing in AI and maintaining strong profitability [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's durability and the growing value delivered to customers [7] - The outlook for Q4 revenue is projected to be in the range of $1.23-$1.235 billion, representing approximately 4.1% year-over-year growth [17] - The company raised its full-year revenue guidance to $4.852-$4.857 billion, indicating a positive growth trajectory [18] Other Important Information - The board authorized an incremental $1 billion share repurchase, reflecting confidence in the company's financial health [18] - Deferred revenue grew 5% year over year to $1.44 billion, with expectations for continued growth in Q4 [15] Q&A Session Summary Question: Outlook for Q4 and pricing strategy for next year - Management indicated that they are not yet at the planning stage for FY2027 guidance, but enterprise growth will continue to be a key driver [22] Question: Pressure on enterprise net dollar expansion and seat-based contraction - Management noted that net dollar expansion is stabilizing, and while some seat pressures exist, overall macro demand remains strong [28] Question: Future M&A strategy - Management reiterated a disciplined approach to M&A, focusing on small to medium-sized acquisitions that align with strategic goals [33] Question: Sustainability of growth in Zoom Phone and customer experience - Management highlighted strong growth in Zoom Phone and customer experience, driven by AI integration and customer demand [41] Question: Integration with other productivity software - Management confirmed ongoing integrations with major productivity tools like Google and Microsoft, emphasizing the importance of customer feedback [66] Question: Free cash flow performance - Management acknowledged improvements in the collections process contributing to free cash flow, which is expected to remain durable [72] Question: Expansion into HR and other business workflows - Management confirmed that the BrightHire acquisition is part of a broader strategy to expand into mission-critical business workflows [82]

Financial Data and Key Metrics Changes - Total revenue grew 4.4% year over year to $1.23 billion, exceeding guidance by $15 million [12] - Enterprise revenue increased by 6.1% year over year, accounting for 60% of total revenue [12] - Non-GAAP gross margin improved to 80%, up 117 basis points from the previous year [13] - Non-GAAP diluted net income per share rose to $1.52, $0.14 higher than Q3 of last year [14] - Operating cash flow grew 30% year over year to $629 million, with a margin of 51.2% [16] Business Line Data and Key Metrics Changes - AI Companion adoption surged more than four times year over year, indicating strong demand for AI-driven solutions [6] - Team Chat monthly active users increased by 20% year over year [6] - WorkVivo logos grew nearly 70% year over year to 1,225 [7] - Zoom Phone surpassed 10 million paid seats, marking significant growth in unified communications [7] Market Data and Key Metrics Changes - Americas revenue grew 5% year over year, EMEA grew 3%, and APAC grew 4% [13] - The number of enterprise customers contributing over $100,000 in trailing 12-month revenue grew by 9% year over year [12] Company Strategy and Development Direction - The company aims to evolve into an AI-first platform for work and customer experience, focusing on elevating core products with AI and driving growth of new AI products [5] - The acquisition of BrightHire is part of the strategy to enhance collaboration and customer engagement through AI [9] - Customer experience is identified as a fast-growing business segment, with high double-digit ARR growth [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's durability and the ongoing demand for AI solutions [5] - The company anticipates continued growth in enterprise revenue and a slight increase in online business for the full year [22] - Management highlighted the importance of stabilizing churn and diversifying products as key growth drivers [24] Other Important Information - The board authorized an incremental $1 billion share repurchase, reflecting confidence in the company's financial health [18] - Deferred revenue grew 5% year over year to $1.44 billion, with expectations for continued growth [15] Q&A Session Summary Question: How should we think about growth heading into next year? - Management indicated that they are not yet at the planning stage for FY2027 guidance, but enterprise growth will continue to be a key driver [22] Question: Can you discuss the pressure on net dollar expansion and seat-based contraction? - Management noted that net dollar expansion is stabilizing, and while some seat pressures exist, overall demand remains strong [27] Question: What is the outlook for M&A in the future? - Management reiterated a disciplined approach to M&A, focusing on small to medium-sized acquisitions that align with strategic goals [32] Question: Can you elaborate on the growth sustainability of Zoom Phone and customer experience? - Management highlighted strong growth in Zoom Phone and customer experience, driven by AI integration and customer demand [38] Question: How is the company addressing the demand for integration with other productivity software? - Management confirmed ongoing integration efforts with major ecosystems like Google and Microsoft, while also adapting to AI-driven customer demands [58] Question: Were there any one-time benefits to free cash flow this quarter? - Management clarified that improvements in the collections process contributed to free cash flow, which is expected to be sustainable [61]

Zoom Communications Q3 FY26 Earnings November 24, 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 ...

Core Insights - Converged Technology Professionals (CTPros) and Carahsoft Technology Corp. have formed a strategic partnership to enhance access to Zoom's cloud-based communication solutions for K-12, higher education, and government agencies [1][4] - The partnership aims to streamline procurement processes and promote the adoption of secure communication tools across State, Local, and Education (SLED) sectors [2][4] Group 1: Partnership Details - Carahsoft will act as CTPros' Master Government Aggregator®, facilitating procurement through its extensive portfolio of Federal, State, and Local contract vehicles [1][2] - CTPros will provide advisory services, solution design, deployment, and ongoing support for Zoom products, enhancing communication infrastructure for public service and education [2][3] Group 2: Benefits and Solutions - SLED organizations will gain access to secure and scalable communication tools, including Zoom Phone, Zoom Meetings, Zoom Contact Center, and advanced AI features [2][3] - The partnership is expected to improve productivity, enhance remote teaching and learning, and deliver more responsive services to constituents [2][3] Group 3: Company Backgrounds - CTPros specializes in unified communications, contact center modernization, and has extensive experience in telecom and IT, focusing on enhancing productivity for government offices and educational institutions [3][6] - Carahsoft is recognized as a trusted provider of IT solutions for public sector organizations, offering a wide range of services including cybersecurity, multi-cloud, and AI solutions [7]

Investment Thesis - Josh Brown initiated a "new buy alert" for Zoom stock, citing potential growth beyond video calling [1] - The current earnings multiple is 18 times, considered a discount relative to the tech sector and S&P, with potential for rerating upon growth [1] - Morgan Stanley initiated coverage, arguing the stock isn't priced at a premium and could see significant upside with growth [1] Business Operations & Strategy - Zoom has an enterprise business providing phone numbers for companies, with 10 million users of Zoom Phone [1] - Zoom's revenue accelerator, an AI note-taking product, is gaining traction among enterprise customers [1] - The company has $8 billion in cash, providing flexibility for acquisitions and stock buybacks [1] Challenges & Risks - The stock has been negatively impacted by stock option compensation issues related to post-pandemic hiring [1][2] - Wall Street is urging Zoom to focus on shareholder value by reducing share dilution [2] - Concerns exist regarding Zoom's ability to demonstrate growth beyond its video conferencing services [1]

Core Insights - Zoom Communications, Inc. announced that its AI-first cloud phone system, Zoom Phone, has surpassed 10 million seats globally, indicating a significant milestone in modernizing business communications [1][2][3] Company Overview - Zoom Phone, launched in 2019, has rapidly become one of the fastest-growing cloud telephony solutions, reflecting a shift from traditional PBXs to unified, AI-first communications [2][3] - The platform is built on Zoom's reliable and scalable architecture, offering enterprise-grade features and flexibility to enhance collaboration and customer engagement for businesses of all sizes [2][5] Market Impact - The achievement of 10 million seats demonstrates a global rethinking of phone systems, with organizations recognizing the value of simpler management, reduced costs, and AI-powered interactions [3] - A notable example includes the Sydney Film Festival, which reported an 81% cost savings during its core period after switching to Zoom Phone [3] Product Features - Zoom Phone integrates calling, meetings, messaging, and contact center functionalities into a single solution, supported by innovations in AI and mobility [3] - The system offers PSTN coverage in over 49 countries and territories, with a claimed uptime of 99.999%, ensuring resilient communication across various devices and locations [5] Company Mission - Zoom's mission focuses on providing an AI-first work platform to enhance human connection and productivity, with offerings like Zoom Workplace and Zoom Contact Center to strengthen customer relationships [6]

Core Insights - Zoom Communications is evolving from a pandemic-focused video meeting platform to a diversified collaboration provider, offering solutions like Zoom Phone, Contact Center, Workvivo, and AI-driven Zoom Workplace [1] Financial Performance - In Q2 of fiscal 2026, Zoom reported revenue of $873.97 million from the Americas, a 4.6% year-over-year increase; EMEAC contributed $200 million, up 5.7%; and Asia Pacific generated $148.3 million, growing 4.2% [2] - The Zacks Consensus Estimates for Q3 fiscal 2026 revenues are $870.53 million for the Americas (up 3%), $194.32 million for EMEAC (up 4%), and $149 million for Asia Pacific (up 3.2%) [4] - Zoom shares have appreciated 2.4% year to date, while the Zacks Internet – Software industry and the Zacks Computer and Technology sector have increased 26.5% and 22.4%, respectively [6] Strategic Initiatives - Zoom is expanding its market reach through new distribution channels and strategic partnerships, including collaborations with AWS and PwC, to enhance enterprise penetration globally [3][8] - The company is focusing on AI-driven product enhancements, such as AI Companion 3.0, to resonate with multinational and hybrid workforces [3][8] Competitive Landscape - Competitors like Microsoft and Cisco are also expanding their global reach, with Microsoft leveraging its Office 365 ecosystem and Cisco investing in local data centers for Webex [5] - Zoom differentiates itself through AI-driven innovation and platform flexibility, which is crucial for building global momentum [5] Valuation Metrics - Zoom's stock is currently trading at a forward 12-month Price/Sales ratio of 5.14X, compared to the industry's 6.01X, indicating a relatively favorable valuation [10] - The Zacks Consensus Estimate for Q3 fiscal 2026 earnings is $1.42 per share, reflecting a year-over-year improvement of 2.9% [13]

Core Insights - Zoom Communications (ZM) shares are trading at a significant discount with a forward 12-month Price/Earnings ratio of 14.82X compared to the Zacks Internet - Software industry's 40.19X, indicating potential undervaluation [1] - The company has transformed from a pandemic-era video conferencing tool into a broader workplace collaboration platform, including unified communications, contact center solutions, and AI-powered productivity tools [1] - Despite diversification into hybrid work solutions, Zoom continues to trade at a discount compared to peers like Microsoft, Cisco, and Alphabet [1] Valuation and Performance - Zoom shares have returned 5.7% Year to Date (YTD), while the Zacks Internet - Software industry and the Zacks Computer and Technology sector have returned 24.1% and 20.3%, respectively [3] - At a forward P/E of 14.82X, ZM appears undervalued as enterprise, AI, and global growth gain momentum [6] - Technical indicators suggest potential momentum shifts, with shares trading above both their 50-day and 200-day simple moving averages [8] Revenue Growth and Business Momentum - In Q2 of fiscal 2026, Zoom's total revenues reached $1.22 billion, representing 4.7% year-over-year growth, with enterprise revenues rising 7% [12] - Customers contributing over $100,000 in trailing 12-month revenues grew 8.7% to 4,274, indicating steady upmarket traction [12] - The Zacks Consensus Estimate for Q3 fiscal 20265 revenues is $1.21 billion, indicating 2.99% growth year over year [13] AI Integration and Product Diversification - The strategic implementation of AI capabilities has led to a significant increase in AI Companion monthly active users, growing over 4X year over year [14] - Zoom's expansion into contact center and unified communications markets has shown strong growth, with Contact Center customers with over $100,000 annual recurring revenue growing 94% year over year [15] - Employee experience solutions through Workvivo have also shown strong momentum, with customers generating over $100,000 in annual recurring revenues reaching 168, up 142% year over year [16] Conclusion - Zoom Communications represents a compelling investment opportunity at current valuation levels, supported by attractive metrics, accelerating business fundamentals, and successful product diversification [17] - The company currently holds a Zacks Rank 1 (Strong Buy), suggesting that investors should consider accumulating the stock [18]

Financial Performance & Growth - Zoom's CFO highlights the company's AI-first vision, focus on innovation, growth acceleration, profitability, and shareholder value creation[20] - Zoom is experiencing accelerating growth driven by enterprise progress, online stabilization, product diversification, new routes to market, and AI monetization[47, 55] - Online revenue growth is stabilizing, moving from -8% to flat[59] - Enterprise revenue continues to drive growth, with implied revenue share increasing from 58% to 60%[65] - The number of customers contributing over $100k in TTM (Trailing Twelve Months) revenue is increasing, representing 32% of total revenue[69, 70] - Zoom maintains strong non-GAAP gross margins of approximately 79%, with a target of 80%[102] - Zoom's non-GAAP operating margin is around 39%[102] - Zoom has executed a $2.7 billion buyback program ahead of schedule, leading to a YoY dilution of -1.9%[103] Product Diversification & AI Innovation - Zoom is diversifying its product set, with Workplace, Phone, and ZCX & Workvivo experiencing growth[77] - Millions of users are actively using AI, with a 4x YoY increase in monthly active users (MAUs)[80, 123] - Zoom is evolving its AI capabilities with AI Companion 2.0, enhancing user capabilities and workflows[122]