Zoom Communications — Second Quarter Fiscal Year 2027 Earnings Summary

Financial Performance

• Total revenue for the second quarter was $1,277.2 million, up 4.9% year over year (4.7% in constant currency).
• Enterprise revenue was $787.5 million, up 7.8% year over year; Online revenue was $489.7 million, up 0.6% year over year.
• GAAP income from operations was $314.3 million compared to $321.7 million in the prior year quarter; GAAP operating margin was 24.6%.
• Non-GAAP income from operations was $510.3 million compared to $503.2 million in the prior year quarter; non-GAAP operating margin was 40.0%.
• GAAP net income was $1,542.4 million ($5.15 per share) compared to $358.6 million ($1.16 per share) in the prior year quarter.
• Non-GAAP net income was $464.0 million ($1.55 per share) compared to $471.3 million ($1.53 per share) in the prior year quarter.
• Net cash provided by operating activities was $494.8 million compared to $515.9 million in the prior year quarter.
• Free cash flow was $472.4 million compared to $508.0 million in the prior year quarter.
• Total cash, cash equivalents, and marketable securities (excluding restricted cash) were $7.2 billion as of July 31, 2026.
• Deferred revenue increased to $1,549.4 million (current) and $12.7 million (noncurrent) as of July 31, 2026, from $1,411.1 million (current) and $13.2 million (noncurrent) as of January 31, 2026.

Guidance and Future Outlook

• Third Quarter Fiscal Year 2027 total revenue is expected to be between $1.275 billion and $1.280 billion.
• Third Quarter Fiscal Year 2027 non-GAAP income from operations is expected to be between $510.0 million and $515.0 million.
• Third Quarter Fiscal Year 2027 non-GAAP diluted EPS is expected to be between $1.46 and $1.48.
• Full Fiscal Year 2027 total revenue is expected to be between $5.085 billion and $5.095 billion.
• Full Fiscal Year 2027 non-GAAP income from operations is expected to be between $2.065 billion and $2.075 billion.
• Full Fiscal Year 2027 non-GAAP diluted EPS is expected to be between $6.08 and $6.12.
• Full Fiscal Year 2027 free cash flow is expected to be between $1.780 billion and $1.820 billion.
• Guidance assumes approximately 301 million weighted average shares outstanding.

Business Segments and Product Lines

• Enterprise revenue growth of 7.8% was the strongest rate in three years.
• AI-first Customer Experience portfolio delivered high-double-digit ARR expansion.
• Zoom Virtual Agent customer count increased 256% year over year.
• New product innovations include ZoomMate, My Notes, AI Productivity Suite, ZVA Receptionist, and Workvivo HQ Agent.
• Acquisitions included Common Room and BrightHire to embed AI into collaboration, customer experience, revenue orchestration, recruiting, and employee experience.

Market and Competitive Landscape

• The number of customers contributing more than $100,000 in trailing 12 months revenue was 4,625, up 8.2% year over year.
• Trailing 12-month net dollar expansion rate for Enterprise customers increased to 99% from 98% in the prior year quarter.
• Online average monthly churn was 2.9%, consistent with the prior year quarter.
• Online customers with at least 16 months of continual service represented 75.6% of total Online MRR, up 70 basis points year over year.

Risks and Challenges

• Risks include declines in new customers, renewals, or upgrades, and demand for the platform.
• Potential difficulties in evaluating prospects due to growth in scale, complexity, and scope.
• Risks related to the pace of development, adoption, or performance of AI capabilities.
• Competition from other communications platform providers.
• Macroeconomic conditions including geopolitical tensions, tariffs, trade tensions, interest rate fluctuations, inflation, and foreign currency volatility.
• Lengthened sales cycles with large organizations.
• Service delays or outages from co-located data centers, internet infrastructure failures, or broadband interference.
• Security measures compromises and global security concerns impacting supply chains and economies.

Management Commentary and Tone

• CEO Eric S. Yuan stated FY27 is progressing well with focused execution on three priorities and clear Enterprise business momentum.
• Management highlighted the scaling of the AI-first Customer Experience portfolio and differentiation as a system of action for modern work.
• The tone reflects confidence in embedding AI into the flow of work across multiple business functions.

Other Key Points

• The company repurchased approximately 3.7 million shares of common stock in the second quarter.
• Total shares repurchased under the current plan reached 44.2 million.
• Approximately $1.3 billion of authorized share repurchase remained as of July 31, 2026.
• Strategic investments on the balance sheet increased to $3.79 billion as of July 31, 2026, from $1.58 billion as of January 31, 2026.
• Gains on strategic investments, net, were $1.61 billion in the second quarter of FY27 compared to $45.1 million in the prior year quarter.
• Cash paid for acquisitions, net of cash acquired, was $248.7 million in the six months ended July 31, 2026.