Zoom Video Communications reported second-quarter revenue of $1.28 billion, up 4.9% year-over-year and exceeding the $1.27 billion consensus estimate by $10 million. Adjusted earnings per share reached $1.55, surpassing the $1.48 forecast by seven cents. Despite the beat, shares fell 3.73% to $100.92 during regular trading, extending losses to 4.05% in after-hours as investors focused on margin pressures.
Enterprise revenue, now 62% of total sales, grew 7.8% year-over-year—the fastest pace in three years—while online business accounted for 38% of revenue with a monthly churn rate of 2.9%. Non-GAAP gross margin edged down to 79.1% from 79.8% a year earlier, reflecting higher AI-related infrastructure costs. Operating income rose 1% to $510 million, though the operating margin slipped to 40% from 41.3%.
Cash flow remained robust, with operating cash flow of $495 million and free cash flow of $472 million, representing margins of 38.7% and 37%, respectively. The company held $7.2 billion in cash and marketable securities, excluding restricted cash, and completed the acquisition of Common Room in mid-July. Share repurchases totaled 3.7 million shares for $352 million in the quarter, bringing the $4.7 billion buyback program to 44.2 million shares repurchased.
Product momentum centered on AI adoption, with licensed monthly active users of AI features in Zoom Workplace rising 125% year-over-year. Workvivo crossed the $100 million annual recurring revenue milestone, while Zoom Virtual Agent and Zoom Revenue Accelerator grew customer counts by 250% and 41% year-over-year, respectively. Enterprise customers contributing over $100,000 in trailing revenue grew 8% to 33% of total revenue, though net dollar expansion held steady at 99%.
For the third quarter, Zoom guided revenue to $1.275 billion–$1.28 billion, with adjusted EPS of $1.46–$1.48. Full-year revenue guidance was raised to $5.085 billion–$5.095 billion, while adjusted EPS increased to $6.08–$6.12. Free cash flow guidance was lifted to $1.78 billion–$1.82 billion, though online revenue growth was trimmed to flat.
CEO Eric Yuan highlighted AI-driven growth, noting the 125% surge in AI feature usage, while CFO Michelle Chang emphasized strong remaining performance obligations, up 14% year-over-year to $4.5 billion, driven by non-current RPO growth of 25%.
