01—Abstract
Summary
Summary of the 10-Q filed August 26, 2026. Cited figures are marked; the original filing is the authoritative source.
Zoom Communications, Inc. reported revenue of $1,277.2 milliona for the three months ended July 31, 2026, up 4.9% from $1,217.2 million a year earlier, and $2,516.2 million for the six months, up 5.2% from $2,391.9 million.
Income from operations was $314.3 millionb for the quarter, versus $321.7 million in the prior-year quarter. Net income was $1,542.4 million for the quarter, compared with $358.6 million, and was driven mainly by a $1,614.2 million gain on strategic investments, net, which includes a $1,612.7 million increase in the fair value of the company's Anthropic investment. Diluted net income per share was $5.15 for the quarter and $6.56 for the six months.
Operating results were steadier than the headline net income suggests. Gross margin was 77.2% in the quarter versus 77.6% a year earlier, as third-party hosting costs rose $24.4 millionc on higher platform usage, including AI-related consumption. Research and development expense grew 17.5% for the quarter on AI investment, while sales and marketing expense fell 2.5%, helped by a change in the amortization period for deferred contract acquisition costs from three years to five years.
Net cash provided by operating activities was $1,016.4 milliond for the six months, and free cash flow was $972.9 million. The company repurchased 3,740,213 Class A shares for $351.9 million in the quarter, and $1.3 billion of its repurchase authorization remained available at July 31, 2026. The filing also highlights the company's balance sheet and open legal matters.
Cash, cash equivalents, and marketable securities totaled $7.2 billion, and strategic investments reached $3,785.9 million, of which $3,134.5 million is the Anthropic preferred stock. The company acquired Common Room, Inc. in July 2026 for $266.8 million and made a $300.9 million additional investment in Anthropic during the six months.
The EDNY investigation remains ongoing, and the company cannot estimate a range of possible loss. The Northern District of California has concluded its investigation without further action.
02—Key points
Key Highlights
- Quarterly revenue of $1,277.2 million rose 4.9% year over year; six-month revenue of $2,516.2 million rose 5.2%.
- Net income of $1,542.4 million for the quarter reflects a $1,614.2 million gain on strategic investments, net, mainly from the Anthropic investment, versus $358.6 million a year earlier.
- Income from operations was $314.3 million for the quarter, down slightly from $321.7 million, while gross margin was 77.2% versus 77.6%.
- Research and development expense rose 17.5% for the quarter on AI investment, and third-party hosting costs increased $24.4 million on higher AI-related platform usage.
- Net cash provided by operating activities was $1,016.4 million for the six months, and free cash flow (non-GAAP) was $972.9 million.
- The company repurchased $351.9 million of Class A stock in the quarter, with $1.3 billion of authorization remaining; it acquired Common Room, Inc. for $266.8 million in July 2026.
- The EDNY investigation remains ongoing, and the company states it cannot predict the ultimate outcome or reasonably estimate a range of possible loss.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2027, Zoom Communications kept $1.21.
- Revenue$1.28B100.0%
- Cost of revenue−$291.7M22.8%
- Gross profit$985.5M77.2%
- Operating costs−$671.2M52.6%
- Operating income$314.3M24.6%
- Interest, other & tax$1.23B96.2%
- Net income$1.54B120.8%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2027filed August 26, 2026Financial Statements
Q2 FY2027 against Q2 FY2026
| Line item | Q2 FY2027Q2 FY2026 | Change |
|---|---|---|
| Revenue | $1.28B$1.22B | +4.9% |
| Cost of Revenue | $291.72M$273.17M | +6.8% |
| Gross Profit | $985.50M$944.06M | +4.4% |
| R&D Expenses | $242.50M$206.45M | +17.5% |
| Operating Expenses | $671.18M$622.33M | +7.8% |
| Operating Income | $314.32M$321.74M | −2.3% |
| Net Income | $1.54B$358.59M | +330.1% |
| EPS (Basic) | $5.27$1.19 | +342.9% |
| EPS (Diluted) | $5.15$1.16 | +344.0% |
| Shares Outstanding (Basic) | 292.88M301.78M | −2.9% |
| Shares Outstanding (Diluted) | 299.75M308.22M | −2.8% |
05—Questions
Frequently Asked Questions
What drove the large jump in net income this quarter?
Net income was $1,542.4 million for the three months ended July 31, 2026, compared with $358.6 million a year earlier. The filing attributes the increase primarily to a $1,614.2 million gain on strategic investments, net, which includes a $1,612.7 million increase in the fair value of the Anthropic investment. Income from operations was roughly flat at $314.3 million.
How is the core business performing?
Revenue grew 4.9% to $1,277.2 million in the quarter, with Enterprise customer revenue up 7.8% and Online customer revenue up 0.6%. Gross margin slipped to 77.2% from 77.6%, mainly due to higher third-party hosting costs linked to AI-related usage.
What is the company's liquidity position?
As of July 31, 2026, cash, cash equivalents, and marketable securities totaled $7.2 billion. Management believes these balances plus operating cash flow will be sufficient for at least the next 12 months.
What legal risk remains outstanding?
The Department of Justice's Eastern District of New York investigation into interactions with foreign governments and user data handling is ongoing. The company says a negative outcome could result in substantial fines, penalties, or other financial exposure, and it cannot predict the outcome or estimate a range of possible loss. The Northern District of California informed the company on August 17, 2026 that it will take no further action.
06—Continue