Key Takeaways:
- Enterprise revenue rose 7.8% to $787.5M, fastest growth in three years
- Non-GAAP EPS of $1.55 beat estimates; FY27 EPS guidance raised to $6.08-$6.12
- Shares fell 6.9% after hours as Q3 revenue guidance came in nearly flat
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Zoom enterprise growth hits 3-year high as stock falls 6.9%
Zoom reported Q2 revenue of $1.277B, up 4.9%, with enterprise revenue climbing 7.8% to $787.5M, its fastest growth in three years.
"FY27 continues to progress well... Total revenue grew 4.9% year over year, anchored by 7.8% growth in Enterprise revenue, its strongest growth rate in three years," CEO Eric Yuan said.
Non-GAAP EPS of $1.55 beat the $1.48 consensus. Online revenue rose just 0.6% to $489.7M. GAAP operating income fell 2.3% to $314.3M. Free cash flow declined 7% to $472.4M.
Shares fell 6.9% after hours to $97.63 as Q3 revenue guidance of $1.275B-$1.280B came in roughly flat versus the prior quarter, and the full-year revenue midpoint moved up only $5M. The company raised FY27 non-GAAP EPS guidance to $6.08-$6.12.
Enterprise supplied 61.7% of quarterly sales and nearly all incremental revenue. Online added only $3.1M from a year earlier. Enterprise net dollar expansion reached 99%, still below the 100% threshold that indicates existing customers are expanding overall.
Zoom Virtual Agent's customer count rose 256% year over year, and customer-experience annual recurring revenue expanded at a high-double-digit rate, Yuan said. The company also completed acquisitions of Common Room and BrightHire to extend its AI strategy into revenue orchestration and recruiting.
GAAP net income reached $1.542B, but $1.614B came from gains on strategic investments, equal to 81% of pretax income. Non-GAAP net income slipped 1.5% to $464.0M.
Zoom repurchased 3.7M shares during the quarter and retained $1.3B of buyback authorization at July 31. The company ended the quarter with 4,625 customers generating more than $100,000 annually, an 8.2% increase. StockAnalysis lists a Buy consensus from 30 analysts with an average target of $116.80.
The guidance raise signals management expects AI-driven enterprise adoption to continue. Investors will watch whether enterprise net dollar expansion crosses 100% in coming quarters, which would confirm existing customers are spending more overall.
This article is for informational purposes only and does not constitute investment advice.
[1] Zoom Communications Revenue Rises on Enterprise Growth[2] Zoom Q2 FY2027: Enterprise growth hits a three-year high[3] Did Zoom Communications Inc (ZM) Exceed Q2 Expectations with EPS[4] Zoom Stock Falls 6.9% as AI Growth Leaves Revenue Outlook Nearly Flat[5] ZM Looks 24.0% Overvalued on GF Value™
