01—Abstract
Summary
Summary of the 10-Q filed May 23, 2025. Cited figures are marked; the original filing is the authoritative source.
Zoom Communications, Inc. (ZM) reported revenue of $1,174.7 milliona for the three months ended April 30, 2025, up 2.9% from $1,141.2 million a year earlier, and net income of $254.6 million compared with $216.3 million.
Income from operations was $241.6 millionb versus $203.0 million, and diluted net income per share was $0.81 versus $0.69. The filing states that Enterprise customers generated 60.0% of revenue, Online customers 40.0%, and that the trailing 12-month net dollar expansion rate for Enterprise customers was 98%, down from 99% a year earlier. Cash flow from operations was $489.3 million compared with $588.2 million, which the filing attributes primarily to first-quarter estimated tax payments that fell in this period rather than the prior-year quarter.
Free cash flow, a non-GAAP measure defined in the filing, was $463.4 millionc. The company repurchased and retired 5,561,920 Class A shares for $418.0 million during the quarter, and $1.2 billion of its repurchase authorization remained available. Cash, cash equivalents and marketable securities totaled $7.8 billion as of April 30, 2025.
The filing describes ongoing DOJ and SEC investigations related to data privacy and security matters, with an $18.0 milliond tentative SEC settlement subject to SEC approval, and a $150.0 million securities class action settlement still awaiting final court approval. Management states it cannot reasonably estimate a range of possible loss beyond the $18.0 million SEC settlement offer.
02—Key points
Key Highlights
- Revenue of $1,174.7 million, up 2.9% year over year, with Enterprise revenue increasing 5.9% and Online revenue declining 1.2%.
- Gross margin of 76.3% versus 76.1% a year earlier, with the filing attributing the improvement mainly to lower stock-based compensation.
- Net income of $254.6 million, versus $216.3 million, and diluted EPS of $0.81 versus $0.69.
- Operating cash flow of $489.3 million, down from $588.2 million, largely due to the timing of first-quarter estimated tax payments.
- Share repurchases of $418.0 million for 5,561,920 shares during the quarter, with $1.2 billion of authorization remaining.
- Remaining performance obligations of $3,877.3 million, with 61% expected to be recognized as revenue over the next 12 months.
- Trailing 12-month net dollar expansion rate for Enterprise customers of 98%, down from 99%, with the filing citing macroeconomic headwinds and seat downsells.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, Zoom Communications kept $0.22.
- Revenue$1.17B100.0%
- Cost of revenue−$278.4M23.7%
- Gross profit$896.3M76.3%
- Operating costs−$654.7M55.7%
- Operating income$241.6M20.6%
- Interest, other & tax$13.0M1.1%
- Net income$254.6M21.7%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed May 23, 2025Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $1.17B$1.14B | +2.9% |
| Cost of Revenue | $278.40M$273.30M | +1.9% |
| Gross Profit | $896.31M$867.93M | +3.3% |
| R&D Expenses | $205.42M$205.56M | −0.1% |
| Operating Expenses | $654.72M$664.91M | −1.5% |
| Operating Income | $241.59M$203.02M | +19.0% |
| Net Income | $254.60M$216.31M | +17.7% |
| EPS (Basic) | $0.84$0.70 | +20.0% |
| EPS (Diluted) | $0.81$0.69 | +17.4% |
| Shares Outstanding (Basic) | 304.91M308.70M | −1.2% |
| Shares Outstanding (Diluted) | 312.78M315.36M | −0.8% |
05—Questions
Frequently Asked Questions
How did Zoom's profitability change in the first quarter of fiscal 2026?
Income from operations rose to $241.6 million from $203.0 million, and net income rose to $254.6 million from $216.3 million. Operating expenses fell to $654.7 million from $664.9 million, while gross profit increased to $896.3 million from $867.9 million. Losses on strategic investments of $13.6 million partially offset these gains, compared with gains of $17.4 million a year earlier.
Why did operating cash flow decline?
The filing attributes the decline from $588.2 million to $489.3 million primarily to first-quarter estimated tax payments for federal and state jurisdictions being made during the three months ended April 30, 2025. In the prior fiscal year, those payments were made in the quarter ended July 31, 2024.
What is the status of the legal matters the company faces?
The company is fully cooperating with DOJ and SEC investigations into data privacy and security matters, and these remain ongoing. A $18.0 million tentative settlement with the SEC is subject to SEC approval. A securities class action settlement totaling $150.0 million was preliminarily approved by the court on April 16, 2025, but remains subject to final court approval.
How much capital is available for further share repurchases?
As of April 30, 2025, $1.2 billion of the stock repurchase authorization remained available. The program does not obligate the company to repurchase any specific number of shares and may be discontinued at any time.
06—Continue