Zoom Reports Q2 2026 Profit and Revenue Growth, Raises Full-Year Outlook

Zoom (ZM.US) reported strong financial results for the second fiscal quarter ended July 31, 2025, with total revenue reaching $1,217.2 million, marking a 4.7% year-over-year increase. Non-GAAP diluted EPS for the quarter was $1.53, up 10.0% year-over-year, significantly surpassing the analyst estimate of $1.37. The company's performance was highlighted by its highest year-over-year revenue growth in 11 quarters and an expanded GAAP operating margin.

Segment Performance and Customer Growth

The company saw notable growth across its business segments, with Enterprise revenue increasing 7.0% year-over-year to $730.7 million. Online revenue also contributed with a 1.4% year-over-year increase, reaching $486.6 million. A key driver of this growth was the acquisition of new customers, especially those with significant contributions.

Zoom added 4,274 customers contributing more than $100,000 in trailing 12 months revenue, an 8.7% increase from the same period last fiscal year. The trailing 12-month net dollar expansion rate for Enterprise customers stood at 98%, demonstrating solid retention and expansion within its larger client base.

Enhanced Profitability and Cash Flow

Zoom's profitability saw substantial improvements, with non-GAAP income from operations rising to $503.2 million, up from $455.5 million in the prior year's quarter. This resulted in a non-GAAP operating margin of 41.3%, compared to 39.2% in the second quarter of fiscal year 2025. The GAAP operating margin also expanded significantly, increasing by 9 percentage points year over year to 26.4%.

The company also demonstrated robust cash generation, with net cash provided by operating activities increasing to $515.9 million from $449.3 million in the prior year's quarter. Free cash flow, a key liquidity measure, reached $508.0 million, compared to $365.1 million in the second quarter of fiscal year 2025, showcasing strong operational efficiency and cash management.

Management Outlook

Building on its strong quarterly performance, Zoom has raised its full-year fiscal year 2026 outlook. The company now expects total revenue to be between $4.825 billion and $4.835 billion, and non-GAAP diluted EPS to range from $5.81 to $5.84. Free cash flow for the full fiscal year is anticipated to be between $1.740 billion and $1.780 billion, reflecting management's confidence in continued growth and profitability.