01—Abstract
Summary
Summary of the 10-Q filed August 22, 2025. Cited figures are marked; the original filing is the authoritative source.
Zoom Communications, Inc. reported revenue of $1,217.2 milliona for the three months ended July 31, 2025, up 4.7% from $1,162.5 million a year earlier, and net income of $358.6 million versus $219.0 million.
For the six months ended July 31, 2025, revenue was $2,391.9 millionb (up 3.8%) and net income was $613.2 million versus $435.3 million. Income from operations rose to $321.7 million for the quarter from $202.4 million, and gross margin expanded to 77.6% from 75.5%. The filing attributes the margin gain mainly to lower stock-based compensation and hosting costs, and the operating expense decline mainly to lower stock-based compensation and a $18.0 million reversal of an accrual related to an SEC investigation, which the SEC concluded on July 30, 2025 without recommending enforcement.
Cash flow remained steady, with net cash provided by operating activities of $1,005.2 millionc for the six months versus $1,037.5 million a year earlier, and free cash flow (a non-GAAP measure) of $971.3 million. The company repurchased 11,512,818 Class A shares for about $881.4 million during the six months, leaving $724.7 million of authorization available at July 31, 2025. Cash, cash equivalents and marketable securities totaled $7.8 billion.
Enterprise customers generated 60.0% of revenue, and the trailing 12-month net dollar expansion rate for Enterprise customers was 98%, below one hundred percent. The filing also reports ongoing DOJ investigations by the EDNY and NDCA, which the company says could result in substantial fines, and it notes a subsequent event: an unrealized gain of approximately $400.0 milliond on a private strategic investment recognized after July 31, 2025.
02—Key points
Key Highlights
- Revenue of $1,217.2 million for Q2 FY2026, up 4.7% year over year; six-month revenue of $2,391.9 million, up 3.8%.
- Net income of $358.6 million for the quarter versus $219.0 million a year earlier; diluted EPS of $1.16 versus $0.70.
- Gross margin rose to 77.6% from 75.5%, mainly from lower stock-based compensation and hosting costs.
- General and administrative expense fell 29.8% in the quarter, aided by an $18.0 million accrual reversal tied to the concluded SEC investigation.
- Share repurchases totaled $881.4 million over six months, with $724.7 million of authorization remaining at July 31, 2025.
- Free cash flow (non-GAAP) was $971.3 million for the six months, versus $934.8 million a year earlier.
- Subsequent to quarter-end, an unrealized gain of approximately $400.0 million was recognized on a private strategic investment.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2026, Zoom Communications kept $0.29.
- Revenue$1.22B100.0%
- Cost of revenue−$273.2M22.4%
- Gross profit$944.1M77.6%
- Operating costs−$622.3M51.1%
- Operating income$321.7M26.4%
- Interest, other & tax$36.9M3.0%
- Net income$358.6M29.5%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed August 22, 2025Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $1.22B$1.16B | +4.7% |
| Cost of Revenue | $273.17M$285.09M | −4.2% |
| Gross Profit | $944.06M$877.43M | +7.6% |
| R&D Expenses | $206.45M$206.76M | −0.1% |
| Operating Expenses | $622.33M$675.06M | −7.8% |
| Operating Income | $321.74M$202.37M | +59.0% |
| Net Income | $358.59M$219.01M | +63.7% |
| EPS (Basic) | $1.19$0.71 | +67.6% |
| EPS (Diluted) | $1.16$0.70 | +65.7% |
| Shares Outstanding (Basic) | 301.78M309.14M | −2.4% |
| Shares Outstanding (Diluted) | 308.22M314.03M | −1.8% |
05—Questions
Frequently Asked Questions
How did Zoom's revenue and profitability change in the quarter ended July 31, 2025?
Revenue rose 4.7% to $1,217.2 million, and net income increased to $358.6 million from $219.0 million. Income from operations grew to $321.7 million from $202.4 million, with gross margin improving to 77.6% from 75.5%.
What drove the growth in Enterprise and Online revenue?
For the quarter, Enterprise customer revenue grew 7.0%, with 57.4% of that from new customers and 42.6% from existing customers, while Online customer revenue increased 1.4%. For the six months, Enterprise revenue grew 6.4% and Online revenue was flat year over year.
Is the company's net dollar expansion rate a concern?
The trailing 12-month net dollar expansion rate for Enterprise customers was 98% as of both July 31, 2025 and 2024. The filing says macroeconomic headwinds led to slower hiring and higher seat-count downsells, which caused the rate to fall below one hundred percent.
What is the status of the government investigations and legal matters?
The SEC informed the company on July 30, 2025 that it had concluded its investigation without recommending enforcement, and the $18.0 million accrual was reversed. The EDNY and NDCA investigations remain ongoing, and the company says a negative outcome could result in substantial fines, penalties or other financial exposure.
How much cash does Zoom have and how is it returning capital?
Cash, cash equivalents and marketable securities totaled $7.8 billion as of July 31, 2025. Operating cash flow was $1,005.2 million for the six months, and the company repurchased shares for $881.4 million, with $724.7 million of authorization remaining.
06—Continue