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Zoom Q4 Earnings Surpass Estimates, Revenues Increase Y/Y

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Zoom’s (ZM - Free Report) fourth-quarter fiscal 2025 adjusted earnings of $1.41 per share beat the Zacks Consensus Estimate by 7.63% but decreased 0.7% year over year.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Zoom’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average earnings surprise being 10.33%.

Revenues of $1.184 billion beat the consensus mark by 0.50% and increased 3.29% year over year. Adjusting for foreign currency impact, revenues in constant currency were $1.188 billion, up 3.6% year over year.

Zoom Communications, Inc. Price, Consensus and EPS Surprise

Zoom Communications, Inc. Price, Consensus and EPS Surprise

Zoom Communications, Inc. price-consensus-eps-surprise-chart | Zoom Communications, Inc. Quote

Quarter Details

Enterprise revenues, representing 59.69% of total revenues, increased 5.9% year over year to $706.8 million. Customers contributing more than $100,000 in revenues in the trailing 12 months grew 7.3% to 4,088. These customers accounted for 31% of revenues.

The number of Enterprise customers at the end of the fiscal fourth quarter was approximately 192,600. In the quarter, the percentage of total Online MRR pertaining to Online customers with a continued term of service of at least 16 months was 75.1%, which increased 90 bps year over year.

The company reported a trailing 12-month net dollar expansion rate for Enterprise customers of 98%. 

In the quarter, Zoom achieved its largest ARR deal in history with a Fortune 100 U.S. tech company in its Contact Center. The number of Contact Center customers with over $100,000 in ARR grew more than 100% year over year.

Zoom witnessed additional traction with Workvivo, where customers grew 89% year over year. It signed three new deals with more than $1 million in ARR.

Non-GAAP Operating Details

Non-GAAP gross margin in the fiscal third quarter was 78.22% compared with 69.80% in the year-ago period, mainly due to strategic investments in AI innovation.

Research and development expenses increased 16.66% year over year to $133.03 million. Sales and marketing expenses declined 0.62% to $276.81 million, and general and administrative expenses decreased 21.74% to $55.69 million.

Non-GAAP operating income rose 5.46% to $467.96 million year over year. The operating margin came in at 40.82% compared with the year-ago quarter’s operating margin of 39.70%.

Balance Sheet

Total cash, cash equivalents and marketable securities as of Jan. 31, 2025, were $7.8 billion. As of Oct. 31, 2024, cash, cash equivalents and marketable securities were $7.7 billion.

Net cash provided by operating activities was $424.6 million for the fiscal fourth quarter, up 20.9% year over year. Free cash flow was $416.2 million, up 25.1% year over year.

Guidance

Zoom expects first-quarter fiscal 2026 revenues between $1.162 billion and $1.167 billion.

Non-GAAP earnings per share are expected in the range of $1.29-$1.31.

For fiscal 2026, Zoom expects revenues in the range of $4.785-$4.795 billion.

Non-GAAP earnings per share are expected in the band of $5.34-$5.37.

Zacks Rank and Stocks to Consider

Currently, ZM carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Computer and Technology sector are Backblaze (BLZE - Free Report) , Cogent Communications (CCOI - Free Report) and DoubleVerify (DV - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Backblaze is scheduled to report its fourth-quarter 2024 results on Feb. 25. Cogent Communications and DoubleVerify are scheduled to report their respective fourth-quarter fiscal 2025 results on Feb. 27.

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