Zoom (ZM) Q2 2026 earnings summary

Executive summary

• Q2 FY26 revenue grew 4.7% year-over-year to $1.217 billion, with enterprise revenue up 7% and now 60% of total revenue; online revenue rose 1.4%.

• AI adoption accelerated, with AI Companion monthly active users up over 4x year-over-year, driving strong customer demand and innovation in collaboration tools.

• Major customer wins included Fortune 200 companies, with significant contact center displacements of leading competitors and large transitions from Meta Workplace.

• Share buybacks accelerated, with 6 million shares repurchased in Q2 for $463 million, totaling over 27 million under the current plan.

• Net income rose 63.8% year-over-year to $358.6 million, and GAAP EPS increased 65.7% to $1.16.

Financial highlights

• Non-GAAP gross margin was 79.8%, up 128 basis points year-over-year; GAAP gross margin improved to 77.6%.

• Non-GAAP operating income grew 10.5% year-over-year to $503 million, with a non-GAAP operating margin of 41.3%, up 216 basis points.

• Non-GAAP diluted EPS was $1.53, $0.16 above guidance and up 10% year-over-year; GAAP EPS was $1.16, up 65.7%.

• Free cash flow for Q2 was $508 million, with a margin of 41.7%, up 39% year-over-year.

• Ended Q2 with $7.8 billion in cash, cash equivalents, and marketable securities.

Outlook and guidance

• Q3 FY26 revenue expected at $1.210–$1.215 billion, with non-GAAP operating income of $465–$470 million and non-GAAP EPS of $1.42–$1.44.

• FY26 revenue guidance raised to $4.825–$4.835 billion, non-GAAP operating income to $1.905–$1.915 billion, non-GAAP EPS to $5.81–$5.84, and free cash flow to $1.74–$1.78 billion.

• $724.7 million remains under the current share repurchase authorization as of July 31, 2025.

• Management expects continued revenue growth, focusing on AI-driven product expansion and international markets.

• Guidance assumes ongoing macroeconomic uncertainty and dynamic market conditions.