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.

Zoom Communications, Inc. Price, Consensus and EPS Surprise

Zoom Communications, Inc. price-consensus-eps-surprise-chart | Zoom Communications, Inc. Quote

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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research