Zoom (ZM) Q3 2025 earnings summary

Executive summary

• Q3 FY2025 revenue reached $1.178 billion, up 4% year-over-year, with enterprise revenue up 5.8% and online revenue flat; online churn hit a record low of 2.7%.

• Net income rose to $207.1 million, up 46.6% year-over-year, with non-GAAP net income at $435.1 million ($1.38/share).

• AI-first platform vision advanced with strong adoption of AI Companion, launch of AI Companion 2.0, and expansion in Workvivo and Contact Center.

• Major customer wins included Agencia Tributaria (largest-ever contact center deal), ServiceNow, Redpin, and Athenahealth.

• Corporate name changed to Zoom Communications, Inc. on November 25, 2024, reflecting AI-first strategy.

Financial highlights

• Q3 revenue was $1.178 billion, up 4% year-over-year; enterprise revenue grew 6% to $699 million, now 59% of total revenue.

• 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); GAAP operating margin was 15.5%.

• Non-GAAP diluted EPS was $1.38, $0.07 above guidance and $0.09 higher year-over-year; GAAP EPS was $0.66.

• Operating cash flow was $483 million; free cash flow was $458 million, up 1% year-over-year.

• Ended Q3 with $7.7 billion in cash, cash equivalents, and marketable securities.

Outlook and guidance

• Q4 FY2025 revenue expected at $1.175–1.18 billion; non-GAAP operating income guidance: $443–448 million.

• FY2025 revenue guidance raised to $4.656–4.661 billion (~2.9% growth); non-GAAP operating income expected at $1.813–1.818 billion.

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

• Guidance reflects cautious outlook due to macroeconomic uncertainty and elongated sales cycles.