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ZC

Zoom Communications, Inc. (ZM)·Q2 2026 Earnings Summary

Executive Summary

  • Q2 FY26 delivered the fastest revenue growth in 11 quarters with total revenue of $1.217B (+4.7% YoY) and non-GAAP EPS of $1.53, both above guidance; enterprise revenue grew 7% YoY and non-GAAP operating margin expanded to 41.3% .
  • Results beat Wall Street consensus: revenue $1.218B actual vs $1.199B estimate* and non-GAAP EPS $1.53 actual vs $1.38 estimate*; the beat was driven by stronger enterprise, contact center momentum, cost optimization, and timing of spend .
  • Guidance raised for FY26: revenue to $4.825–$4.835B (from $4.800–$4.810B), non-GAAP op income to $1.905–$1.915B (from $1.865–$1.875B), non-GAAP EPS to $5.81–$5.84 (from $5.56–$5.59), and FCF to $1.74–$1.78B (from $1.68–$1.72B) .
  • Narrative/catalysts: expanding AI adoption (AI Companion MAUs up 4x YoY), paid Custom AI Companion deployments, and high double-digit Contact Center growth; upcoming Zoomtopia (Sep 17) set to showcase new agentic AI innovations, providing near-term stock narrative catalysts .

Note: Consensus estimates marked with * are from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Demand and mix: Enterprise revenue rose 7% YoY to $730.7M, with customers >$100K TTM revenue up 8.7% YoY; churn remained low (online 2.9%) and enterprise net dollar expansion held at 98% .
  • Profitability and cash generation: Non-GAAP operating income was $503.2M (41.3% margin), non-GAAP EPS $1.53, OCF $516M (42.4% margin), and FCF $508M (41.7% margin); margin expansion driven by cost optimization and timing .
  • Strategic wins in AI and CX: “AI Companion MAUs have grown over four times year over year,” with paid Custom AI Companion deployed to ~60,000 employees at a Fortune 200 tech company; Contact Center Elite wins displaced leading cloud competitors; top 10 CC deals were displacements and 7/10 emphasized AI .

What Went Wrong

  • Online segment growth remained modest: Online revenue grew 1.4% YoY; management continues to guide full-year online flat despite a monthly Pro SKU price increase, indicating limited elasticity and mix headwinds .
  • RPO/current RPO optics: Total RPO grew >5% YoY to ~$4.0B, but CRPO optics faced tough comps; CFO emphasized lapping high comparable and strong bookings to contextualize metrics .
  • FX and macro scrutiny: EMEA benefited from FX; while scrutiny in some geos partially abated, management maintained prudence on H2 macro assumptions, tempering roll-forward of the beat into H2 revenue guide .

Financial Results

Consolidated Revenue and EPS (oldest → newest)

MetricQ4 FY25Q1 FY26Q2 FY26
Total Revenue ($USD Millions)$1,184.1 $1,174.7 $1,217.2
GAAP EPS ($)$1.16 $0.81 $1.16
Non-GAAP EPS ($)$1.41 $1.43 $1.53

Margins and Cash Flow (oldest → newest)

MetricQ4 FY25Q1 FY26Q2 FY26
GAAP Operating Margin (%)19.0% 20.6% 26.4%
Non-GAAP Operating Margin (%)39.5% 39.8% 41.3%
Operating Cash Flow Margin (%)35.9% 41.6% 42.4%
Free Cash Flow Margin (%)35.2% 39.4% 41.7%

Segment Revenue Breakdown (oldest → newest)

Segment Revenue ($USD Millions)Q4 FY25Q1 FY26Q2 FY26
Enterprise$706.8 $704.7 $730.7
Online$477.3 $470.0 $486.6

KPIs (oldest → newest)

KPIQ4 FY25Q1 FY26Q2 FY26
Customers >$100K TTM4,088 4,192 4,274
Enterprise TTM Net Dollar Expansion Rate98% 98% 98%
Online Avg Monthly Churn2.8% 2.8% 2.9%
Online MRR ≥16 months75.1% 74.2% 74.9%

Q2 vs Consensus; Q3 and FY26 Guide vs Consensus

MetricQ2 FY26 ActualQ2 FY26 Consensus*Beat/MissQ3 FY26 GuideQ3 FY26 Consensus*FY26 GuideFY26 Consensus*
Revenue ($USD)$1,217,227,000 $1,198,269,060*+$19M / +1.6%*$1.210–$1.215B $1,213,346,320*$4.825–$4.835B $4,832,892,980*
Non-GAAP EPS ($)$1.53 $1.378*+$0.152*$1.42–$1.44 $1.436*$5.81–$5.84 $5.873*

Note: Consensus estimates marked with * are from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY26$4.800–$4.810B $4.825–$4.835B Raised
Non-GAAP Operating IncomeFY26$1.865–$1.875B $1.905–$1.915B Raised
Non-GAAP EPSFY26$5.56–$5.59 $5.81–$5.84 Raised
Free Cash FlowFY26$1.680–$1.720B $1.740–$1.780B Raised
Total RevenueQ3 FY26—$1.210–$1.215B New
Non-GAAP Operating IncomeQ3 FY26—$465–$470M New
Non-GAAP EPSQ3 FY26—$1.42–$1.44 (≈307M shares) New
Deferred Revenue (YoY)Q3 FY26—+4–5% YoY New
Q2 vs Guide (Revenue)Q2 FY26$1.195–$1.200B $1.217B actual Beat
Q2 vs Guide (Non-GAAP Op Inc)Q2 FY26$460–$465M $503M actual Beat
Q2 vs Guide (Non-GAAP EPS)Q2 FY26$1.36–$1.37 $1.53 actual Beat

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 FY25)Previous Mentions (Q1 FY26)Current Period (Q2 FY26)Trend
AI/Technology initiativesAI Companion driving AI-first transformation; margin expansion Platform momentum across CX, Revenue Accelerator, Workvivo AI Companion MAUs +4x YoY; Custom AI Companion paid deployments; GPT-5 integration coming; agentic ZVA 2.0 and concierge with Phone Accelerating adoption and productization
Contact Center (CCaaS)Strong FY capped by excellent Q4 Continued momentum (CX emphasis) High double-digit growth; 9/10 top wins replacing leading CC provider; CC customers >$100K ARR +94% YoY (to 229) Upmarket wins, competitive displacements
Zoom Phone (UCaaS)——Sustained mid-teens ARR growth; gateway to CC and Workplace; MAU up >30% sequentially for AI features in Phone Durable growth; cross-sell engine
Workvivo (Employee Experience)“Incredible year” in FY25 Continued momentum Customers >$100K ARR up 142% YoY to 168; Meta migration example at Marubeni Strong expansion, broader market penetration
Macro/ScrutinyMargin expansion despite macro Dynamic macro; scrutiny in some geos Partial abatement of deal scrutiny; cautious H2 planning; SMB demand strong Improving but management prudent
Profitability & AI costStrong OCF and margin expansion Operational discipline Non-GAAP GM 79.8%; offsets AI costs via cost optimization, federated models, colo migration Margins trending to 80% LT goal

Management Commentary

  • “We delivered strong results highlighted by revenue growing at its fastest rate in eleven quarters… AI Companion monthly active users have grown over four times year over year.” — Eric Yuan (CEO) .
  • “Non-GAAP operating margin for Q2 was 41.3%, up 216 bps YoY… Free cash flow margin of 41.7% up 10 pts YoY, driven by timing of tax payments and lapping PP&E investments.” — Michelle Chang (CFO) .
  • “Our top 10 contact center deals were all displacements of leading competitors, and all but one were cloud displacements.” — Eric Yuan (CEO) .
  • “In Q3, we expect deferred revenue to be up 4% to 5% year over year.” — Michelle Chang (CFO) .
  • “Please join Zoomtopia next month… we will debut more innovations around AI Companion 3.0 and agentic workflows.” — Eric Yuan (CEO) .

Q&A Highlights

  • AI monetization and usage: Management framed AI Companion as a platform enabling monetization across Contact Center Elite and ZVA today, with Custom AI Companion and vertical SKUs becoming more material in FY27; MAUs up 4x YoY and deeper usage across meeting lifecycle and Phone .
  • Online pricing and behavior: Monthly Pro price increase tracking to add $10–$15M this year; churn held low, modest shift to annual, and value-add via AI and higher storage limits .
  • Contact Center competitive dynamics: 9/10 top CC wins replace the leading cloud provider; customers choose Zoom for integrated stack (ZVA, QM, WFM) and faster innovation; 8/10 wins via channels .
  • Macro and bookings optics: Partial abatement of deal scrutiny vs Q1, strong SMB demand; RPO +5% YoY amid tough comps; guidance prudently reflects dynamic macro .
  • Product innovation: New AI-first Auto Dialer (proactive outreach), Phone+ZVA concierge, and Hub; Phone AI MAU up >30% q/q .

Estimates Context

  • Q2 FY26 beat: Revenue $1.217B vs $1.199B consensus* and non-GAAP EPS $1.53 vs $1.38 consensus*; strongest YoY growth in 11 quarters driven by enterprise outperformance, CC displacements, and margin efficiencies .
  • Q3 FY26 guide is broadly in line with consensus*: revenue $1.210–$1.215B vs $1.213B* and EPS $1.42–$1.44 vs $1.436*; implies steady H2 trajectory as enterprise growth offsets flat online .
  • FY26 raised guide brackets consensus*: revenue $4.825–$4.835B vs $4.833B*, EPS $5.81–$5.84 vs $5.873*; expect modest upward estimate revisions on margins/FCF given cost offsets to AI spend .

Note: Consensus estimates marked with * are from S&P Global.

Key Takeaways for Investors

  • Quality beat and raise: Q2 revenue/EPS beat with margin expansion; FY26 guide raised across revenue, op income, EPS, and FCF — supportive for estimate revisions and multiple stability .
  • AI adoption translating to monetization: Near-term monetization visible in Contact Center Elite and ZVA; Custom AI Companion is building pipeline with enterprise deployments and opens online channel TAM .
  • Integrated stack competitive edge: “Better together” of Meetings/Phone/CC drives cross-sell and displacements of leading cloud CC providers; Phone remains mid-teens growth and gateway to CC .
  • Margin durability amid AI costs: Non-GAAP GM near 80%, operating margin above 41% with cost optimization (colo migration, federated models) mitigating AI inference costs .
  • H2 setup: Q3 guide aligns with consensus; watch enterprise demand, deferred revenue +4–5% YoY, and Zoomtopia AI announcements as near-term sentiment catalysts .
  • KPIs healthy: >$100K customers +8.7% YoY, enterprise NDR 98%, online churn ~2.9% — supports stable base with enterprise-led growth .
  • Capital return: Buybacks continue (6.0M shares repurchased in Q2 for $463M), lowering dilution and supporting EPS growth .

Appendix: Additional Press Releases (Q2 window)

  • Agentic AI and concierge ZVA integrations with Phone; AI scheduling and Hub launch .
  • Custom AI Companion expands to online and third-party platforms (e.g., Google Meet), with 16 app integrations (ServiceNow, Jira, Asana, Box, etc.) .
  • Industry recognition: Forrester Wave UCaaS leader; multiple UC awards; Engineering, Science & Technology Emmy for Zoom for Broadcast .