01—Abstract
Summary
Summary of the 10-Q filed May 22, 2026. Cited figures are marked; the original filing is the authoritative source.
Zoom Communications, Inc. reported revenue of $1,239.0 milliona for the three months ended April 30, 2026, up from $1,174.7 million in the prior-year period, an increase of 5.5%.
Income from operations rose to $310.5 millionb from $241.6 million, and net income was $425.7 million compared with $254.6 million. Results were helped by gains on strategic investments, net, of $152.3 million, compared with a loss of $13.6 million a year earlier, and the filing attributes the gains mainly to privately held securities other than Anthropic. Diluted net income per share was $1.42 versus $0.81.
Net cash provided by operating activities was $521.6 millionc, and free cash flow, a non-GAAP measure defined in the filing, was $500.5 million. The balance sheet remained strong, with cash and cash equivalents of $890.9 million and marketable securities of $6,830.0 million, for total liquidity of $7.7 billion as stated in the filing. Strategic investments grew to $1,876.4 million, including a $46.0 million additional investment in Anthropic preferred stock that brought that holding to $1,266.9 million.
The company repurchased 4,169,208 Class A shares for $361.7 milliond during the quarter, and in May 2026 its Board authorized an additional $1.0 billion of repurchases, with $625.0 million remaining under the existing authorization as of April 30, 2026. Management cites macroeconomic uncertainty, including the conflict involving Iran and energy price volatility, as contributing to variability in sales cycles and continued caution in enterprise spending.
Trailing 12-month net dollar expansion for Enterprise customers was 99%, compared with 98% a year earlier, and online average monthly churn was 3.0%, compared with 2.8%. The company also disclosed ongoing EDNY and NDCA government investigations, for which it states it cannot reasonably estimate a range of possible loss.
02—Key points
Key Highlights
- Revenue rose 5.5% to $1,239.0 million for the quarter ended April 30, 2026, versus $1,174.7 million a year earlier.
- Gross margin improved to 77.9% from 76.3%, and income from operations increased to $310.5 million from $241.6 million.
- Net income was $425.7 million, or $1.42 per diluted share, versus $254.6 million, or $0.81, in the prior-year quarter; the result includes $152.3 million of net gains on strategic investments.
- Net cash from operations was $521.6 million and free cash flow was $500.5 million (non-GAAP), both higher than the prior-year quarter.
- The company held $7.7 billion of cash, cash equivalents and marketable securities, and repurchased $361.7 million of Class A stock during the quarter.
- Strategic investments reached $1,876.4 million, including Anthropic preferred stock carried at $1,266.9 million.
- The Board authorized an additional $1.0 billion of share repurchases in May 2026, with $625.0 million remaining under the prior authorization as of April 30, 2026.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2027, Zoom Communications kept $0.34.
- Revenue$1.24B100.0%
- Cost of revenue−$274.3M22.1%
- Gross profit$964.7M77.9%
- Operating costs−$654.2M52.8%
- Operating income$310.5M25.1%
- Interest, other & tax$115.2M9.3%
- Net income$425.7M34.4%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2027filed May 22, 2026Financial Statements
Q1 FY2027 against Q1 FY2026
| Line item | Q1 FY2027Q1 FY2026 | Change |
|---|---|---|
| Revenue | $1.24B$1.17B | +5.5% |
| Cost of Revenue | $274.29M$278.40M | −1.5% |
| Gross Profit | $964.72M$896.31M | +7.6% |
| R&D Expenses | $227.93M$205.42M | +11.0% |
| Operating Expenses | $654.25M$654.72M | −0.1% |
| Operating Income | $310.47M$241.59M | +28.5% |
| Net Income | $425.68M$254.60M | +67.2% |
| EPS (Basic) | $1.45$0.84 | +72.6% |
| EPS (Diluted) | $1.42$0.81 | +75.3% |
| Shares Outstanding (Basic) | 294.43M304.91M | −3.4% |
| Shares Outstanding (Diluted) | 300.23M312.78M | −4.0% |
05—Questions
Frequently Asked Questions
What drove the increase in net income this quarter?
Net income rose to $425.7 million from $254.6 million, driven by higher income from operations ($310.5 million versus $241.6 million) and a swing to $152.3 million of net gains on strategic investments from a $13.6 million loss a year earlier. The filing attributes the gains mainly to privately held investments other than Anthropic. Other income, net declined to $68.8 million from $87.8 million.
How is Zoom's customer base trending?
Customers contributing more than $100,000 of trailing 12-month revenue rose to 4,534 from 4,192, and these customers represented 32.7% of revenue versus 31.9%. Trailing 12-month net dollar expansion for Enterprise customers was 99%, up from 98%. Online average monthly churn increased to 3.0% from 2.8%.
What are the main risks management highlights for the business?
Management points to macroeconomic uncertainty, including geopolitical conflict, energy price volatility and interest rates, which it says has contributed to longer and more variable sales cycles and cautious enterprise spending. The filing also identifies competition from larger platforms, AI-related risks, and ongoing EDNY and NDCA government investigations for which it says it cannot predict the outcome or reasonably estimate a range of loss.
How much capital does Zoom have available for buybacks and investments?
As of April 30, 2026, cash, cash equivalents and marketable securities totaled $7.7 billion, and $625.0 million remained under the repurchase authorization. In May 2026 the Board authorized an additional $1.0 billion. The company also has $1,876.4 million of strategic investments, which it notes are privately held and subject to valuation volatility.
06—Continue