Zoom Communications Inc. ($ZM) Stock: Q2 2025 Earnings Lift Outlook

TLDR

• Q2 revenue reached $1.217 billion, up 4.7% year over year.

• Net income jumped 64% year over year to $358.6 million.

• Adjusted EPS came in at $1.53, beating expectations.

• Repurchased 6 million shares, totaling 27.4 million under the plan.

• Raised full-year outlook with EPS guidance of $5.81–$5.84.

Zoom Communications Inc. (NASDAQ: ZM) reported its second quarter fiscal year 2026 results on August 21, 2025. Shares closed at $73.17, up 1.40% on the day, and climbed further to $76.75 in pre-market trading.

Zoom Communications Inc. (ZM)

The company delivered higher revenue, earnings growth, and improved operating margins, while raising its full-year guidance.

Revenue and Income Growth

For Q2, total revenue reached $1.217 billion, up 4.7% from the prior year, or 4.4% in constant currency. Enterprise revenue was a key driver, rising 7.0% to $730.7 million, while Online revenue grew 1.4% to $486.6 million.

GAAP income from operations increased to $321.7 million, up from $202.4 million in the year-ago period, reflecting margin improvements. Non-GAAP income from operations climbed to $503.2 million, compared with $455.5 million last year. GAAP operating margin improved to 26.4%, while non-GAAP margin rose to 41.3%.

Net income surged to $358.6 million, or $1.16 per share, compared with $219.0 million, or $0.70 per share, last year. On a non-GAAP basis, net income came in at $471.3 million, or $1.53 per share, up from $436.4 million, or $1.39 per share, last year.

Cash Flow and Balance Sheet

Zoom ended the quarter with $7.8 billion in cash, cash equivalents, and marketable securities. Net cash provided by operating activities was $515.9 million, compared with $449.3 million in the same quarter last year. Free cash flow rose to $508.0 million, up from $365.1 million.

The company repurchased about 6 million shares during the quarter, bringing the total under the current buyback program to 27.4 million. Roughly $724.7 million remains authorized for repurchases.

Customer Metrics

Zoom continued expanding its enterprise footprint. Customers contributing more than $100,000 in trailing 12-month revenue rose 8.7% year over year to 4,274. Enterprise customer expansion remained solid with a net dollar retention rate of 98%.

Churn in Online services was steady at 2.9%. About 74.9% of total Online MRR came from customers with service terms of at least 16 months, reflecting stability in longer-term contracts.

Guidance and Outlook

For Q3 fiscal year 2026, Zoom guided revenue between $1.210 billion and $1.215 billion, with adjusted EPS of $1.42–$1.44. For the full year, revenue is projected at $4.825–$4.835 billion, while adjusted EPS is expected between $5.81 and $5.84. Free cash flow is estimated at $1.74–$1.78 billion.

CEO Eric Yuan highlighted the role of AI in enhancing collaboration and productivity, noting that Zoom is positioned for growth while managing costs effectively.

Performance Overview

Despite strong Q2 results, Zoom’s long-term stock performance trails the broader market. As of August 21, 2025, year-to-date return stood at -10.34% versus the S&P 500’s +8.31%. One-year return was 21.48%, but three- and five-year returns remained negative at -26.46% and -74.74%, respectively.

Zoom’s second quarter underscored resilience in enterprise demand and effective cost management. With improved margins, robust cash flow, and raised guidance, the company aims to restore long-term investor confidence.

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