Zoom Communications (ZM) Earnings Date & Reports

Key Takeaways

• Zoom Communications beat expectations, reporting revenue of $1.28 billion (up 4.9% year over year) and adjusted earnings of $1.55 per share, above the $1.48 consensus.
• Enterprise revenue grew 7.8% year over year, its fastest pace in three years, and now represents roughly 62% of total revenue.
• Management raised full-year guidance, but the increase was modest, and next-quarter revenue guidance came in slightly below some analyst forecasts.
• Despite the top-and-bottom-line beat, shares fell roughly 3.7% in regular trading and slid further in after-hours action as investors weighed cautious forward guidance.
• AI adoption remains a bright spot, with licensed AI users in Zoom Workplace rising 125% year over year.

Earnings Context and Why It Matters

Zoom Communications (NASDAQ: ZM) reported its second quarter of fiscal year 2027, covering the three months ended July 31, 2026, after the market close on August 25, 2026. Once the defining pandemic growth story, Zoom has spent years pivoting from a video-conferencing tool into an "AI-first" work platform spanning meetings, phone, and contact center services. That transformation is central to the investment case: investors are watching whether AI and enterprise momentum can re-accelerate growth and offset a maturing online business. With the stock up roughly 22% year to date entering the report, this quarter served as a key test of whether Zoom's strategic shift is translating into durable, profitable growth rather than a one-quarter bump.

Reported Results

Zoom delivered a top-and-bottom-line beat. Total revenue rose 4.9% year over year to $1.28 billion (about $1.28 billion, or 4.7% in constant currency), edging past the roughly $1.27 billion consensus. Non-GAAP (non-Generally Accepted Accounting Principles) diluted earnings per share (EPS) came in at $1.55, above the $1.48 analysts expected and up from $1.53 a year earlier.

The quarter was anchored by enterprise momentum. Enterprise revenue climbed 7.8% year over year to $787.5 million — its strongest growth rate in three years — while online revenue grew a more muted 0.6% to $489.7 million. Management highlighted continued double-digit growth in Zoom Phone's annual recurring revenue (ARR, a measure of subscription revenue run-rate) and high double-digit growth in Zoom Contact Center, while the Workvivo product crossed $100 million in ARR. Non-GAAP operating margin was 40.0%, and free cash flow (cash from operations minus capital spending) was $472.4 million. Non-GAAP gross margin was 79.1%, down from 79.8% a year ago, reflecting rising costs tied to AI usage.

Zoom also raised its full-year fiscal 2027 outlook. It now expects revenue of $5.085 billion to $5.095 billion, non-GAAP diluted EPS of $6.08 to $6.12, and free cash flow of $1.78 billion to $1.82 billion. For the upcoming third quarter, it guided to revenue of $1.275 billion to $1.280 billion and non-GAAP EPS of $1.46 to $1.48.

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Market Reaction and Investor Sentiment

Investor reaction was mixed, skewing negative despite the earnings beat. Zoom shares fell 3.7% to $100.92 in regular trading on August 25, 2026, and declined further in after-hours trading. The pullback reflected a familiar pattern: Zoom beat on both revenue and EPS, yet the market focused on the forward guide. Next-quarter revenue guidance was roughly in line to slightly below consensus, and management signaled tempered expectations for online services growth. Investors appeared to want more aggressive signs of re-acceleration, and the modest full-year raise — alongside continued margin pressure from AI compute costs — left some underwhelmed. Still, analysts maintained a broadly constructive view, with a consensus "Moderate Buy" rating and an average price target near $112.

Forward Outlook and Key Factors to Monitor

Looking ahead, the central question for Zoom is whether enterprise and AI momentum can offset a still-maturing online segment and drive a durable re-acceleration of growth. The 7.8% enterprise growth rate and rising AI adoption are encouraging, but investors will want to see those trends sustain and convert into higher revenue growth and expanding margins over the next several quarters.

A key factor to watch is AI monetization. Zoom's AI Companion and newer AI features are driving engagement, but rising compute costs have pressured gross margin. How effectively the company balances AI adoption with cost control will shape profitability going forward. Equally important is the trajectory of online revenue, where growth has slowed to near zero and churn remains a watch item.

Finally, investors should monitor the company's balance sheet and capital allocation. Zoom maintains a substantial cash position and continues to repurchase shares, which can support earnings per share even as revenue growth stays in the low-to-mid single digits. Upcoming quarters will reveal whether the enterprise inflection seen this period is the start of a broader re-acceleration or a more isolated improvement.

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