ZM Q3 Deep Dive: AI Platform Expansion and Profit Growth Define Quarter

Video communications platform Zoom (NASDAQ:ZM) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 4.4% year on year to $1.23 billion. The company expects next quarter’s revenue to be around $1.23 billion, close to analysts’ estimates. Its non-GAAP profit of $1.52 per share was 5.8% above analysts’ consensus estimates.

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StockStory’s Take

Zoom’s third quarter saw a positive response from the market, driven by ongoing adoption of its AI-powered platform and expanding enterprise customer base. Management pointed to acceleration in AI Companion usage, continued momentum in Zoom Phone, and robust growth in customer experience solutions as primary contributors to the quarter’s outperformance. CEO Eric Yuan underscored that “AI Companion adoption continued to surge more than four times year over year,” highlighting the platform’s evolution beyond core video communications. The company also cited improved cost management and strong cash flow as supportive factors.

Looking ahead, Zoom’s guidance is shaped by expectations for sustained enterprise demand, further AI-driven product expansion, and operational discipline. Management emphasized that future growth will be anchored by deepening customer relationships, particularly through AI-enhanced productivity tools and workflow integrations. CFO Michelle Chang stated, “Enterprise will continue to be the predominant growth driver,” while also noting that stability in churn and product diversification remain focal points. The company remains focused on expanding its AI offerings and leveraging new acquisitions to build out its platform and address broader business use cases.

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to accelerated AI product adoption, enterprise wins, and stabilization in churn, while also highlighting progress in expanding into new workflow solutions and customer engagement platforms.

• AI Companion momentum: Adoption of Zoom’s AI Companion quadrupled year over year, as customers increasingly used the tool for meeting preparation, follow-ups, and task automation. Management credited this surge to demand for more intelligent, seamless workplace solutions that span meetings, phone, and chat.
• Zoom Phone milestone: Zoom Phone surpassed 10 million paid seats, marking a significant achievement in unified communications. The product saw consistent annual recurring revenue (ARR) growth in the mid-teens and notable wins in healthcare and financial services, with customers citing advanced AI features and compliance capabilities as differentiators.
• Customer experience portfolio growth: The customer experience business, including Zoom Contact Center and Virtual Agent, delivered high double-digit ARR growth. Management emphasized that nine of the top ten customer experience deals involved paid AI components, reflecting rising demand for integrated, AI-first platforms.
• Strategic acquisition activity: The acquisition of BrightHire, an AI-powered hiring intelligence platform, was highlighted as a move to strengthen Zoom’s reach in critical business workflows such as remote hiring, aligning with the company’s broader strategy to embed AI across verticals.
• Channel partner expansion: A revitalized channel partner program contributed to growth in both phone and contact center segments, with over half of large enterprise deals now driven by partners. Management noted that channel-led sales are especially important for international expansion and scaling customer support offerings.

Drivers of Future Performance

Zoom’s outlook is underpinned by sustained enterprise momentum, continued AI integration across offerings, and disciplined cost management to preserve high margins.

• Enterprise-led growth focus: Management expects enterprise customers to remain the primary source of revenue growth, citing ongoing investments in AI-powered productivity tools and workflow integrations. Expansion into adjacent business functions and verticals, such as HR and customer service, is anticipated to drive additional upsell opportunities.
• AI monetization and product innovation: The company aims to accelerate monetization of its AI offerings through both horizontal (across broad collaboration tools) and vertical (industry-specific) products. Notably, initiatives like Custom AI Companion and the BrightHire acquisition are seen as ways to expand the total addressable market and increase customer value.
• Operational and market risks: Management acknowledged that seat-based contraction remains a risk, particularly as post-pandemic normalization continues in certain segments. They also highlighted the need to maintain strong cost discipline, particularly as AI investments scale, to avoid margin pressures in the coming quarters.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will watch (1) how fast AI Companion and other AI products are adopted and monetized across the customer base, (2) the impact of new workflow solutions and acquisitions like BrightHire on platform expansion, and (3) whether enterprise and channel-led sales continue to drive growth amid a stabilizing market. Integration progress and customer value derived from recent product launches will also be key measures of execution.

Zoom currently trades at $80.47, up from $78.60 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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