Zoom (ZM) Q2 2025 earnings summary

Executive summary

• Q2 FY25 revenue reached $1,163 million, up 2.1% year-over-year, driven by strong enterprise growth, major product launches including Zoom Docs and scalable Webinar, and enhanced AI integration across the platform.

• Surpassed 1,100 Contact Center customers with over 100% year-over-year growth, and enabled AI Companion on over 1.2 million accounts.

• Net income rose to $219 million, with non-GAAP EPS at $1.39, both above guidance; operating cash flow increased 34% to $449 million.

• Announced CFO transition, with Kelly Steckelberg to remain through Q3 earnings for a seamless handover.

• Continued robust share repurchases, ending Q2 with $7.5 billion in cash and equivalents.

Financial highlights

• Q2 revenue was $1,163 million, up 2.1% year-over-year and $13 million above guidance; enterprise revenue grew 4% to $683 million, now 59% of total revenue.

• Non-GAAP gross margin was 78.6%, down from 80.3% last year due to AI and data center investments; GAAP gross margin was 75.5%.

• Non-GAAP operating income was $456 million (39.2% margin); GAAP operating margin was 17.4%.

• Operating cash flow grew 34% year-over-year to $449 million; free cash flow up 26% to $365 million.

• Deferred revenue grew 3% year-over-year to $1.41 billion; RPO increased 8% to $3.78 billion.

Outlook and guidance

• Q3 FY25 revenue expected at $1.16–$1.165 billion; full-year FY25 revenue guidance raised to $4.63–$4.64 billion.

• FY25 non-GAAP operating income expected at $1.79–$1.8 billion (38.7% margin); non-GAAP EPS guidance $5.29–$5.32.

• Free cash flow for FY25 projected at $1.58–$1.62 billion.

• Guidance excludes impact from $1.062 billion of authorized share repurchase remaining as of July 31, 2024.

• Management expects continued revenue growth, but at a moderated pace due to macroeconomic uncertainty and competitive pressures.