We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Zoom Q3 Earnings & Revenues Surpass Estimates, Both Increase Y/Y
Read MoreHide Full Article
Key Takeaways
Zoom's Q3 FY26 earnings and revenues beat estimates and grew year over year.
Enterprise revenues rose 6.1% YoY, while Online revenues increased 2% in Q3.
Non-GAAP operating income climbed 10.7% YoY, with margin improving to 41.2%.
Zoom Communications’ (ZM - Free Report) third-quarter fiscal 2026 adjusted earnings of $1.52 per share beat the Zacks Consensus Estimate by 6.29% and increased 10.1% year over year.
Revenues of $1.23 billion beat the consensus mark by 1.4% and increased 4.4% year over year. Adjusting for the impact of foreign currency, revenues in constant currency were $1.23 billion, up 4.2% year over year.
Q3 Details of ZM
Enterprise revenues, which account for 60.3% of total revenues, increased 6.1% year over year to $741.4 million. Online revenues, which account for 39.7% of total revenues, increased 2% year over year to $488.4 million.
Customers contributing more than $100,000 in revenues in the trailing 12 months grew 9.2% to 4,363. These customers accounted for 32% of revenues.
Zoom Communications, Inc. Price, Consensus and EPS Surprise
The number of Enterprise customers at the end of the fiscal third quarter was approximately 185,100. In the fiscal third quarter, the percentage of total Online MRR pertaining to Online customers with a continued term of service of at least 16 months was 74.4%, which increased 30 basis points (bps) year over year.
The company reported a trailing 12-month net dollar expansion rate for Enterprise customers of 98% and an Online average monthly churn of 2.7%, flat year over year.
Zoom witnessed traction with Workvivo, where customers grew 70% year over year.
Non-GAAP Operating Details of ZM
Non-GAAP gross margin in the fiscal third quarter was 80% compared with 78.9% in the year-ago period and expanded 110 bps.
On a year-over-year basis, Research and development expenses increased 5.6% to $137 million. Sales and marketing expenses increased 0.1% to $278.1 million, while general and administrative expenses decreased 1.7% to $62.4 million.
Non-GAAP operating income rose 10.7% to $507 million year over year. The operating margin came in at 41.2% compared with the year-ago quarter’s operating margin of 38.9%.
ZM’s Balance Sheet & Cash Flow
Total cash, cash equivalents and marketable securities as of Oct. 31, 2025, were $7.9 billion, compared with $7.8 billion as of July 31, 2025.
Net cash provided by operating activities was $629.3 million for the fiscal third quarter, compared with $515.9 million in the previous quarter. Free cash flow was $614.3 million, compared with $508 million in the prior quarter.
ZM’s Q4 & FY26 Guidance
Zoom expects its fourth-quarter fiscal 2026 revenues to be between $1.230 billion and $1.235 billion. Revenues on a constant currency basis are expected to be between $1.224 billion and $1.229 billion.
Non-GAAP income from operations is expected to be between $477.0 million and $482.0 million.
Non-GAAP earnings per share are expected in the range of $1.48-$1.49.
For fiscal 2026, Zoom expects revenues in the range of $4.852-$4.857 billion. Revenues on a constant currency basis are expected to be between $4.844 billion and $4.849 billion.
Non-GAAP income from operations is expected to be between $1.955 billion and $1.960 billion.
Non-GAAP earnings per share are expected in the band of $5.95-$5.97.
Image: Shutterstock
Zoom Q3 Earnings & Revenues Surpass Estimates, Both Increase Y/Y
Key Takeaways
Zoom Communications’ (ZM - Free Report) third-quarter fiscal 2026 adjusted earnings of $1.52 per share beat the Zacks Consensus Estimate by 6.29% and increased 10.1% year over year.
Revenues of $1.23 billion beat the consensus mark by 1.4% and increased 4.4% year over year. Adjusting for the impact of foreign currency, revenues in constant currency were $1.23 billion, up 4.2% year over year.
Q3 Details of ZM
Enterprise revenues, which account for 60.3% of total revenues, increased 6.1% year over year to $741.4 million. Online revenues, which account for 39.7% of total revenues, increased 2% year over year to $488.4 million.
Customers contributing more than $100,000 in revenues in the trailing 12 months grew 9.2% to 4,363. These customers accounted for 32% of revenues.
Zoom Communications, Inc. Price, Consensus and EPS Surprise
Zoom Communications, Inc. price-consensus-eps-surprise-chart | Zoom Communications, Inc. Quote
The number of Enterprise customers at the end of the fiscal third quarter was approximately 185,100. In the fiscal third quarter, the percentage of total Online MRR pertaining to Online customers with a continued term of service of at least 16 months was 74.4%, which increased 30 basis points (bps) year over year.
The company reported a trailing 12-month net dollar expansion rate for Enterprise customers of 98% and an Online average monthly churn of 2.7%, flat year over year.
Zoom witnessed traction with Workvivo, where customers grew 70% year over year.
Non-GAAP Operating Details of ZM
Non-GAAP gross margin in the fiscal third quarter was 80% compared with 78.9% in the year-ago period and expanded 110 bps.
On a year-over-year basis, Research and development expenses increased 5.6% to $137 million. Sales and marketing expenses increased 0.1% to $278.1 million, while general and administrative expenses decreased 1.7% to $62.4 million.
Non-GAAP operating income rose 10.7% to $507 million year over year. The operating margin came in at 41.2% compared with the year-ago quarter’s operating margin of 38.9%.
ZM’s Balance Sheet & Cash Flow
Total cash, cash equivalents and marketable securities as of Oct. 31, 2025, were $7.9 billion, compared with $7.8 billion as of July 31, 2025.
Net cash provided by operating activities was $629.3 million for the fiscal third quarter, compared with $515.9 million in the previous quarter. Free cash flow was $614.3 million, compared with $508 million in the prior quarter.
ZM’s Q4 & FY26 Guidance
Zoom expects its fourth-quarter fiscal 2026 revenues to be between $1.230 billion and $1.235 billion. Revenues on a constant currency basis are expected to be between $1.224 billion and $1.229 billion.
Non-GAAP income from operations is expected to be between $477.0 million and $482.0 million.
Non-GAAP earnings per share are expected in the range of $1.48-$1.49.
For fiscal 2026, Zoom expects revenues in the range of $4.852-$4.857 billion. Revenues on a constant currency basis are expected to be between $4.844 billion and $4.849 billion.
Non-GAAP income from operations is expected to be between $1.955 billion and $1.960 billion.
Non-GAAP earnings per share are expected in the band of $5.95-$5.97.
Zoom’s Zacks Rank & Stocks to Consider
Currently, ZM carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Computer and Technology sector are nCino (NCNO - Free Report) , Ciena (CIEN - Free Report) and Docusign (DOCU - Free Report) . While nCino and Ciena currently sport a Zacks Rank #1 (Strong Buy) each, Docusign carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NCNO shares have declined 28.2% in the year-to-date period. It is slated to report third-quarter fiscal 2026 results on Dec. 3.
CIEN shares have soared 131.7% year to date. It is set to report fourth-quarter fiscal 2025 results on Dec. 11.
Shares of DOCU have fallen 26.5% year to date. It is set to report third-quarter fiscal 2026 results on Dec. 4.