Zoom delivers highest revenue growth in 11 quarters in Q2 FY2026, expands margins and raises full-year outlook

ByInvestment Club

Overview

Zoom Communications, Inc. reported a solid second quarter of fiscal 2026, highlighted by its strongest year-over-year revenue growth in nearly three years, improved profitability, and expanding customer adoption of enterprise and AI-powered solutions.

CEO Eric Yuan emphasized Zoom’s position as an AI-first open work platform, enabling productivity, cost savings, and enhanced customer and employee experiences: “AI is transforming the way we work together, and Zoom is at the forefront, driving innovation that helps people get more done, reduce costs, and deliver better experiences for customers and employees alike. We delivered an across-the-board strong Q2 marked by achieving our highest year-over-year revenue growth in 11 quarters and expanding GAAP operating margin year over year by 9 percentage points. With our robust performance, we are happy to raise our full year outlook for revenue, non-GAAP operating income, as well as free cash flow, which we now expect to be in the range of $1.74 billion to $1.78 billion.”

Q2 FY2026 vs. Q2 FY2025:

  • Total revenue was $1.22bn (+4.7% YoY and +4.4% constant currency), with growth led by enterprise demand.
    • Enterprise revenue rose to $731m (+7.0% YoY), supported by larger customer accounts and expanded adoption of Zoom’s AI-driven collaboration tools.
    • Online revenue increased to $487m (+1.4% YoY), with churn stable at 2.9% and 74.9% of Online MRR coming from customers with >16 months tenure.
  • GAAP income from operations was $322m (26.4% margin), up from $202m (17.4% margin) a year ago, while non-GAAP operating income reached $503m (41.3% margin).
  • GAAP net income jumped to $359m (+64% YoY) or $1.16 per share, while non-GAAP net income grew to $471m (+8% YoY) or $1.53 per share.
  • Operating cash flow increased to $516m (+15% YoY), and free cash flow rose to $508m (+39% YoY), reflecting stronger profitability and lower CapEx.
  • Zoom repurchased ~6.0m shares in Q2, bringing cumulative repurchases under the current program to 27.4m shares.
  • Customers contributing more than $100,000 in trailing 12-month revenue rose 8.7% to 4,274, while enterprise net dollar expansion rate was 98%.

For Q3 FY2026, Zoom expects revenue between $1.210bn-$1.215bn, non-GAAP operating income of $465m-$470m, and non-GAAP EPS of $1.42-$1.44. For FY2026, Zoom raised its full-year guidance, now projecting revenue of $4.825bn-$4.835bn, non-GAAP operating income of $1.905bn-$1.915bn, non-GAAP EPS of $5.81-$5.84, and free cash flow between $1.74bn-$1.78bn. Management highlighted AI-powered product innovation and enterprise adoption as the primary drivers of durable growth.

Zoom shares delivered a spectacular move following their latest earnings release, surging +12.7% in the last day of the trading week after the company decisively beat Wall Street estimates. This rally pushed the stock above both the 50-day SMA ($75.06) and the 200-day SMA ($78.64) for the first time in several months, a positive technical development. However, it may still be premature to confirm a sustained bullish reversal, as further confirmation will likely come in the upcoming trading sessions. The RSI has spiked to 71.79, entering overbought territory, which suggests the possibility of a short-term pullback or consolidation after the recent surge in investor enthusiasm. Overall, the earnings-driven breakout is a strong signal, but market participants will be watching closely for follow-through to validate a longer-term trend shift.

Source: TradingView

Author: Ionuț-Adrian Lazar

Similar Posts