Zoom Communications’ latest quarterly results provide a detailed look at how the company is navigating a slower but steady phase of post-pandemic growth while leaning heavily on margin discipline, enterprise expansion, and AI-oriented product positioning. For the third quarter of fiscal year 2026, the company reported total revenue of $1.2298 billion, a year-over-year increase of 4.4 percent, or 4.2 percent in constant currency. While the pace reflects a maturing market for video communications and collaboration software, the results indicate that enterprise spending continues to be the primary driver of Zoom’s growth. Enterprise revenue rose 6.1 percent to $741.4 million, compared with more modest 2 percent growth in online revenue.
Profitability remains a notable strength. GAAP operating margin reached 25.2 percent, supported by higher operating income of $310.4 million, up from $182.8 million a year earlier. On a non-GAAP basis, operating margin stood at 41.2 percent, reflecting ongoing cost controls and operational adjustments. The company also generated significant cash, reporting $629.3 million in operating cash flow — a 30.2 percent increase — and $614.3 million in free cash flow. As of October 31, 2025, Zoom held $7.9 billion in cash, cash equivalents, and marketable securities, giving it substantial flexibility as competition in the collaboration and AI-enhanced productivity market intensifies.
Customer metrics show incremental but steady movement. Zoom ended the quarter with 4,363 customers contributing more than $100,000 in trailing 12-month revenue, up 9.2 percent year over year. Enterprise net dollar expansion remained below 100 percent at 98 percent, signaling that while customers continue to spend, expansion within existing accounts is stabilizing rather than accelerating. Online churn held at 2.7 percent, and the percentage of online monthly recurring revenue coming from users with at least 16 months of continuous service edged higher to 74.4 percent.
CEO Eric S. Yuan positioned the results as evidence of momentum behind the company’s AI-focused strategy. He highlighted adoption of AI Companion 3.0, Custom AI Companion, and an AI-driven customer experience suite, framing these products as central to Zoom’s longer-term transition beyond video meetings toward a broader collaboration and communications platform. While such positioning aligns with moves seen across the tech sector, the financial results suggest that AI features alone are not yet producing transformative revenue gains, though they may be contributing to retention and higher-value deals in the enterprise segment.
In terms of capital allocation, Zoom repurchased approximately 5.1 million shares during the quarter, bringing total repurchases under the current plan to 32.5 million shares. The board also approved an additional $1.0 billion share repurchase authorization, on top of the $310.4 million that remained as of October 31, 2025. The company notes that repurchases may occur through open-market transactions, pre-set trading plans, or private agreements, depending on market conditions. Any repurchased shares will be retired.
Looking ahead, Zoom expects fourth-quarter revenue between $1.230 billion and $1.235 billion, with non-GAAP operating income between $477 million and $482 million. Full-year fiscal 2026 revenue is projected to fall between $4.852 billion and $4.857 billion. The company anticipates full-year free cash flow between $1.86 billion and $1.88 billion, with non-GAAP diluted EPS projected at $5.95 to $5.97. These outlooks indicate incremental growth in a competitive field where AI capabilities are becoming increasingly standard rather than differentiating on their own.
