Zoom Video Communications reported second-quarter fiscal 2026 results that exceeded Wall Street expectations, though its stock fell in after-hours trading as investors focused on cautious guidance.
Adjusted earnings per share reached $1.55, beating the $1.48 consensus by 4.7%, while total revenue grew 4.9% year-over-year to $1.28 billion, topping the $1.27 billion forecast by $10 million. Enterprise revenue, now 62% of total sales, climbed 7.8%—the fastest pace in three years—while online business accounted for 38% of revenue with an average monthly churn rate of 2.9%.
Non-GAAP gross margin narrowed to 79.1% from 79.8% a year earlier, while operating income rose 1% to $510 million, keeping the operating margin at 40%. Operating cash flow totaled $495 million, with free cash flow at $472 million. Cash and marketable securities stood at $7.2 billion, excluding restricted cash, and deferred revenue grew 6% to $1.56 billion.
The company repurchased 3.7 million shares for approximately $352 million during the quarter. AI feature adoption in Zoom Workplace surged 125% year-over-year, and the Zoom Virtual Agent customer base expanded more than 250%, while Workvivo crossed $100 million in annual recurring revenue.
Despite the strong performance, shares fell 3.73% to $100.92 in regular trading, extending declines to 4.05% in after-hours sessions. The stock has traded between $70.70 and $114.74 over the past 52 weeks.
For the third quarter, Zoom guided revenue to $1.275 billion–$1.28 billion and adjusted EPS to $1.46–$1.48, with non-GAAP operating income expected between $510 million and $515 million. Full-year revenue guidance was raised to $5.085 billion–$5.095 billion, up from prior expectations, while adjusted EPS was lifted to $6.08–$6.12. Free cash flow guidance was increased to $1.78 billion–$1.82 billion, though online revenue growth was trimmed to flat.
CEO Eric Yuan highlighted progress in AI integration, stating that licensed monthly active users of AI features grew 125% year-over-year. CFO Michelle Chang noted that rising remaining performance obligations—up 14% to $4.5 billion—reflected momentum in larger, multi-product deals.
