Zoom Q1 Earnings Surpass Expectations, Revenues Increase Y/Y

Zoom Communications’ ZM first-quarter fiscal 2026 adjusted earnings of $1.43 per share beat the Zacks Consensus Estimate by 10% and increased 5.93% year over year.

Zoom’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average earnings surprise being 10.33%. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Revenues of $1.175 billion beat the consensus mark by 0.89% and increased 2.93% year over year. Adjusting for foreign currency impact, revenues in constant currency were $1.18 billion, up 3.4% year over year.

Quarter Details of ZM

Enterprise revenues, representing 60.01% of total revenues, increased 5.86% year over year to $705 million. Customers contributing more than $100,000 in revenues in the trailing 12 months grew 8% to 4,192. These customers accounted for 32% of revenues.

The number of Enterprise customers at the end of the fiscal first quarter was approximately 182,600. 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 74.2%, which increased 40 bps year over year.

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

Zoom witnessed traction with Workvivo, where customers grew 106% year over year.

Non-GAAP Operating Details of ZM

Non-GAAP gross margin in the fiscal first quarter was 79.18% compared with 79.31% in the year-ago period, as the company continued to invest in AI developments.

Research and development expenses increased 8.88% year over year to $127.08 million. Sales and marketing expenses increased 2.73% to $271.8 million, and general and administrative expenses decreased 4.94% to $63.88 million.

Non-GAAP operating income rose 2.35% to $467.33 million year over year. The operating margin came in at 49.78% compared with the year-ago quarter’s operating margin of 40.01%.

Balance Sheet

Total cash, cash equivalents and marketable securities as of April 30, 2025, were $7.8 billion, which remained unchanged from the previous quarter.

Net cash provided by operating activities was $489.3 million for the fiscal first quarter, compared with $588.2 million in the year-ago quarter. Free cash flow was $463.4 million, compared with $569.7 million in the year-ago quarter.

Guidance

Zoom expects second-quarter fiscal 2026 revenues between $1.195 billion and $1.2 billion.

Non-GAAP earnings per share are expected in the range of $1.36-$1.37.

For fiscal 2026, Zoom expects revenues in the range of $4.8-$4.81 billion.

Non-GAAP earnings per share are expected in the band of $5.56-$5.59.

Zacks Rank and Stocks to Consider

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

Amphenol APH, Juniper Networks JNPR and Upwork UPWK are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. APH, JNPR and UPWK sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

APH shares have gained 23.4% in the year-to-date (YTD) period. The Zacks Consensus Estimate for APH’s full-year 2025 earnings is pegged at $2.62 per share, up by 4 cents over the past seven days, suggesting a growth of 38.6% from the year-ago quarter’s reported figure.

JNPR shares have lost 3.9% YTD. The Zacks Consensus Estimate for JNPR’s full-year fiscal 2025 earnings has been revised upward to $2.09 in the past 30 days, suggesting year-over-year growth of 21.5%.

UPWK shares have declined 0.8% YTD. The Zacks Consensus Estimate for UPWK’s full-year 2025 earnings is pegged at $1.14 per share, implying a rise of 9.62% from the year-ago quarter’s levels.

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This article originally published on Zacks Investment Research (zacks.com).

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