Zoom Video Communications(ZM 1.54%) reported outcomes for the fiscal second quarter ended July 31, 2025, with income up 4.7% 12 months over 12 months to $1.22 billion and non-GAAP diluted EPS of $1.53, each exceeding non-GAAP steerage. Free money circulation rose 39% 12 months over 12 months to $508 million (41.7% margin); the corporate ended the quarter with $7.8 billion in money and marketable securities and repurchased 6 million shares for $463 million. The corporate additionally accelerated share buybacks and raised full-year income and profitability outlooks for fiscal 2026 whereas highlighting speedy AI adoption and robust enterprise traction.
AI companion adoption drives platform engagement at Zoom Video Communications
Month-to-month lively customers of AI Companion, Zoom Video Communications’ built-in synthetic intelligence (AI) suite, elevated over fourfold 12 months over 12 months, now within the thousands and thousands, with utilization broadening to assembly preparation, post-meeting job administration, and new AI-supported options for Zoom Cellphone and Zoom Docs. AI-driven instruments contributed to large-scale enterprise wins, equivalent to a deployment of almost 60,000 seats at a Fortune 200 U.S. know-how firm and measurable price reductions for purchasers like SecureONE by way of Digital Agent 2.0.
“Reflecting this affect, AI Companion Month-to-month lively customers have grown over 4 instances 12 months over 12 months, with thousands and thousands utilizing our AI to spice up enterprise worth all through the assembly life cycle and past. AI adoption now extends effectively past assembly summaries, with robust momentum in assembly prep and post-meeting job administration, name summaries for Zoom Cellphone, and AI-first assembly integration in content material era capabilities for Zoom Docs. This progress is only the start, and we stay up for sharing extra AI improvements at Zoomtopia subsequent month.”
Accelerating consumer adoption of AI options strengthens buyer stickiness, will increase cross-sell alternatives, and positions Zoom Video Communications to steer future enterprise collaboration software program innovation.
Zoom Video Communications delivers best-in-class profitability and sturdy free money circulation
Non-GAAP gross margin reached 79.8%, up 128 foundation factors 12 months over 12 months, whereas non-GAAP working earnings of $503 million (41.3% margin) topped steerage by $38 million, and free money circulation rose 39% 12 months over 12 months to $508 million (41.7% margin). The corporate ended the quarter with $7.8 billion in money and marketable securities and repurchased 6 million shares for $463 million. These monetary achievements have been pushed by sustained enterprise development, low churn, and cautious administration of AI infrastructure prices, together with migration from cloud to colocation information facilities.
“Non-GAAP working margin was 41.3%, up 216 foundation factors from Q2 of final 12 months. The non-GAAP working margin enchancment was pushed by ongoing price administration and timing of spend. Non-GAAP diluted web earnings per share was $1.53 on roughly 308 million non-GAAP diluted weighted common shares excellent. This end result was 16¢ above the excessive finish of our non-GAAP steerage and 14¢ increased than ’25. The non-GAAP EPS development displays robust enterprise efficiency, efficient price administration, and fewer dilution, pushed by our buyback program and disciplined inventory compensation administration. Turning to the stability sheet, deferred income on the finish of the quarter grew 5% 12 months over 12 months to $1.48 billion, barely forward of the excessive finish of our beforehand supplied vary. Within the fiscal third quarter ending October 31, 2025, we count on deferred income to be up 4% to five% 12 months over 12 months. … We count on to acknowledge just below 61% of the overall RPO as income over the subsequent 12 months (from the fiscal second quarter ended July 31, 2025), barely up from 60% in fiscal 2025.”
Zoom Video Communications’ potential to broaden margins and generate robust free money circulation, even whereas investing in AI, demonstrates operational self-discipline and helps ongoing shareholder returns.
The variety of Zoom Video Communications Contact Heart clients with over $100,000 annual recurring income (ARR) grew 94% 12 months over 12 months to 229, and Zoom Cellphone maintained mid-teens ARR development regardless of already-large scale. Among the many prime 10 contact middle offers, 9 changed the main contact middle supplier, and 7 have been explicitly AI-driven, with cross-selling increasing penetration in upmarket accounts. The expansion highlights Zoom’s potential to win with massive accounts in high-stakes deployments and migrate them into the high-end AI merchandise.
“Our prime 10 contact middle offers have been all of main opponents, and all however one have been cloud displacements. Inland Actual Property Group, whose member corporations make use of greater than 1,200 individuals, confronted challenges for years managing disparate programs. … Now we have additionally made progress in constructing further routes to market. We’re enthusiastic about our newly established collaboration with PwC, which expands our Zoom contact middle and AI alternative and talent to satisfy the wants of world enterprise clients. Collectively, we now have already co-sold a number of massive offers, together with a Fortune 50 know-how agency for which PwC will present advisory and implementation providers. Our worker expertise providing continued to shine with WorkVivo reaching 168 clients with over $100,000 ARR, up 142% 12 months over 12 months.”
This speedy upmarket enlargement involved middle and telephone demonstrates efficient execution towards main opponents and highlights the corporate’s potential to win massive, advanced enterprise offers.
Trying forward
Administration raised fiscal 2026 steerage: income is now projected at $4.83 billion to $4.84 billion (midpoint 3.5% year-over-year development), non-GAAP working earnings is projected at $1.91 billion to $1.92 billion (39.5% margin), non-GAAP EPS is forecast at $5.81 to $5.84, and free money circulation is anticipated to succeed in $1.74 billion to $1.78 billion. Fiscal third-quarter income steerage implies 3% year-over-year development on the midpoint, with underlying momentum pushed by continued enlargement in enterprise and AI-driven workloads. No specific quantification was supplied for Customized AI Companion monetization; administration expects materials AI income uplift primarily from fiscal 2027 onward.
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