Zoom (ZM) Q3 2025 earnings summary

Executive summary

• Q3 FY2025 revenue reached $1.178 billion, up 4% year-over-year, with enterprise revenue up 6% and online revenue flat; lowest ever online churn at 2.7%.

• Launched AI Companion 2.0 and new industry-specific AI add-ons, driving strong customer adoption and reinforcing the AI-first platform vision.

• Expanded into adjacent markets with significant growth in Workvivo and Contact Center, including record-setting deals and major new customers.

• Announced new corporate name, Zoom Communications, Inc., reflecting the shift to an AI-first work platform.

• Macroeconomic headwinds and elongated sales cycles impacted growth, but enterprise penetration and large customer growth remained strong.

Financial highlights

• Q3 revenue grew 4% year-over-year to $1.178 billion, $13 million above guidance high end; enterprise revenue up 6% to $699 million.

• Non-GAAP gross margin was 78.9%, down from 79.7% last year due to AI investments; GAAP gross margin was 75.9%.

• Non-GAAP operating income was $458 million (38.9% margin), exceeding guidance; GAAP operating margin was 15.5%.

• Non-GAAP diluted EPS was $1.38, up $0.09 year-over-year; GAAP EPS was $0.66, up 47% year-over-year.

• Free cash flow was $458 million for Q3 (38.9% margin); cash and equivalents at $7.7 billion.

Outlook and guidance

• Q4 revenue expected at $1.175–$1.18 billion, ~2.7% year-over-year growth; FY2025 revenue guidance raised to $4.656–$4.661 billion (~2.9% growth).

• Q4 non-GAAP operating income guidance: $443–$448 million (37.8% margin midpoint); FY2025 non-GAAP operating income expected at $1.813–$1.818 billion (39% margin midpoint).

• FY2025 non-GAAP EPS outlook: $5.41–$5.43; free cash flow expected at high end of $1.58–$1.62 billion range.