Zoom Sees Revenue Growth Pick Up As AI Push Gains Momentum
Zoom has delivered its strongest revenue growth in nearly three years during the second quarter of 2025, with a total revenue of US$1.2bn, up 4.7% year on year.
The video conferencing company's performance marked a notable acceleration from recent quarters, prompting management to raise its full-year outlook across multiple metrics.
Enterprise revenue led the growth story, climbing 7% to US$730.7m, while online revenue increased more modestly by 1.4% to US$486.6m.
"AI is transforming the way we work together and Zoom is at the forefront, driving innovation that helps people get more done, reduce costs and deliver better experiences for customers and employees alike," says Eric S. Yuan, Zoom's Founder and CEO.
Profitability metrics show robust expansion
The company's profitability metrics painted an encouraging picture for investors, with GAAP operating margin expanding to 26.4% from 17.4% in the prior year period.
Non-GAAP operating margin reached 41.3%, demonstrating Zoom's ability to extract increasing value from its revenue base.
GAAP earnings per share surged 65.7% to US$1.16, while non-GAAP earnings per share rose 10.0% to US$1.53.
Free cash flow generation remained strong at US$508.0m, substantially higher than the US$365.1m it recorded in the same quarter last year.
Customer metrics reveal mixed signals
The company's customer base continues to mature, with 4,274 customers now contributing more than US$100,000 in trailing 12-month revenue, representing 8.7% growth year-over-year.
However, the trailing 12-month net dollar expansion rate for enterprise customers fell to 98%, indicating that existing customers are not expanding their Zoom usage as aggressively as in previous periods.
Online customer behaviour showed stability, with average monthly churn holding steady at 2.9%.
The percentage of total online monthly recurring revenue from customers with at least 16 months of continuous service increased to 74.9%, suggesting improved customer retention in the consumer segment.
AI is transforming the way we work together and Zoom is at the forefront, driving innovation that helps people get more done, reduce costs and deliver better experiences for customers and employees alike.
Share buyback programme accelerates
Zoom appears to be very confident in its financial position right now.
The firm has six million shares during the quarter, bringing total buybacks under the current programme to 27.4 million shares.
The video-calling giant ended the quarter with US$7.8bn in cash, cash equivalents and marketable securities, providing substantial financial flexibility.
Management authorised US$724.7m in additional share repurchases remaining as of 31 July 2025.
Forward guidance reflects optimism
Looking ahead, Zoom raised its full fiscal year 2026 revenue guidance to between US$4.825bn and US$4.835bn.
"With our robust performance, we are happy to raise our full year outlook for revenue, non-GAAP operating income, as well as free cash flow, which we now expect to be in the range of US$1.74bn to US$1.78bn," Eric says.
The company expects third-quarter revenue of between US$1.210bn and US$1.215bn.
Non-GAAP diluted earnings per share for the full year is projected at US$5.81 to US$5.84.
Zoom's emphasis on AI capabilities appears central to its growth strategy as the company positions itself for the next phase of workplace collaboration evolution.