Zoom Video Communications, Inc. (NASDAQ: ZM) Q2 2026 Earnings Call | 08/21/2025

Summary of Zoom Communications, Inc. Q2 FY26 Earnings Webinar (August 22, 2025)

Overview: Zoom reported strong Q2 FY26 results, with revenue growth at its fastest pace in 11 quarters, driven by robust enterprise performance and stabilizing online business. The company highlighted advancements in AI, Zoom Workplace, and high-growth solutions like Zoom Phone and Contact Center.

Key Financial Highlights (Michelle Chang, CFO):

• Revenue: $1.217 billion, up 4.7% year-over-year (4.4% in constant currency), exceeding guidance by $17 million.
• Enterprise Business: Grew 7% year-over-year, comprising 60% of total revenue. Customers contributing over $100,000 in trailing 12-month revenue increased 9% year-over-year, representing 32% of revenue.
• Online Business: Stabilized with a flat 2.9% monthly churn rate year-over-year.
• Non-GAAP Metrics: Gross margin rose to 79.8% (up 128 basis points), operating income grew 10.5% to $503 million, and diluted EPS was $1.53, beating guidance by $0.16.
• Balance Sheet: Deferred revenue grew 5% to $1.48 billion; RPO increased over 5% to $4 billion. Operating cash flow rose 15% to $516 million, and free cash flow grew 39% to $508 million. Zoom repurchased 6 million shares for $463 million.
• Guidance: Q3 revenue expected at $1.21–$1.215 billion (3% growth); full-year FY26 revenue raised to $4.825–$4.835 billion (3.5% growth). Non-GAAP EPS guidance for FY26 increased to $5.81–$5.84, with free cash flow projected at $1.74–$1.78 billion.

Strategic Priorities (Eric Yuan, CEO):

1. AI-Powered Collaboration: AI Companion monthly active users grew over 4x year-over-year, with adoption extending beyond meeting summaries to prep, task management, Zoom Phone call summaries, and Zoom Docs integration. A Fortune 200 tech company deployed Custom AI Companion for 60,000 employees, enhancing workflows and IT operations. Virtual Agent 2.0, launched in Q2, saved costs for customers like SecureOne by automating after-hours services.
2. Zoom Workplace Innovation: The platform, integrating meetings, phone, chat, events, docs, whiteboard, and rooms, won four UC Today Awards. Companies like HubSpot and F5 adopted Zoom Workplace for its cost efficiency and ease of use, with F5 returning to Zoom in a seven-figure deal.
3. High-Growth Solutions: Zoom Phone sustained mid-teens ARR growth, displacing competitors like Cisco. Zoom Contact Center saw 94% year-over-year growth in customers with over $100,000 ARR, with top deals displacing cloud competitors. A new partnership with PwC expanded enterprise opportunities.

Operational Highlights:

• Customer Wins: ATPI chose Zoom Contact Center Elite and Zoom Phone for AI-driven efficiencies. Inland Real Estate Group adopted the full Zoom platform to unify operations. Marubeni Corporation selected Workvivo for 10,000 licenses to enhance employee engagement.
• Market Channels: Growth through AWS Marketplace and partnerships like PwC bolstered enterprise adoption.
• Zoomtopia 2025: Set for September 17, 2025, the event will showcase new AI and product innovations.

Q&A Insights:

• AI ROI: Customers see productivity gains across the meeting lifecycle and beyond, with Custom AI Companion enabling tailored integrations (e.g., with ServiceNow, Salesforce). AI drives Contact Center growth, with high double-digit revenue increases.
• Macro Environment: Demand remains strong despite a dynamic macro environment, with partial abatement of deal scrutiny and robust SMB demand.
• Contact Center Success: Wins are driven by fast innovation, seamless integration, and AI capabilities, displacing competitors due to poor quality, high costs, or slow innovation.
• Online Segment: A price increase for monthly pro plans added $10–$15 million in revenue, with minimal pushback and some shifts to annual plans.