Zoom reported third‑quarter 2026 results that surpassed expectations, with total revenue of $1.23 billion, up 4.4% year‑over‑year, and adjusted earnings per share of $1.52, beating the consensus estimate of $1.44 by $0.08 (5.6%). Non‑GAAP gross margin expanded to 80%, up 117 basis points from 78.3% a year earlier, while operating cash flow reached $629.3 million, underscoring the company’s strong cash‑generating ability.
Enterprise revenue, the company’s core business, grew 6.1% to $741.4 million, representing 60% of total sales, and drove the majority of the revenue lift. Online revenue increased 2% to $488.6 million, reflecting steady demand for the company’s collaboration tools. The mix shift toward higher‑margin Enterprise contracts helped lift the overall margin profile.
Cost discipline and scale were key to the margin expansion. CFO Michelle Chang noted that “non‑GAAP gross margin in Q3 was 80%, up 117 basis points from Q3 of last year, primarily due to cost‑optimization efforts.” The company’s focus on reducing operating expenses and improving platform efficiency allowed it to maintain profitability even as it invested in AI capabilities.
Management raised its full‑year 2026 outlook, projecting revenue of $4.852 billion to $4.857 billion, up from the prior guidance of $4.825 billion to $4.835 billion, and adjusted EPS of $5.95 to $5.97, compared with the previous range of $5.81 to $5.84. The company also authorized an additional $1 billion share‑repurchase program, signaling confidence in its cash position and long‑term growth prospects.
CEO Eric Yuan emphasized the strategic importance of AI, stating that “Zoom AI Companion is becoming a key driver of our transformation into an AI‑first platform, and its adoption is growing meaningfully across major deals.” Together with the CFO’s remarks on cost optimization, these comments illustrate the company’s dual focus on monetizing AI while preserving margin health.
Investors responded favorably to the results, with the primary drivers being the EPS beat, the upward revision of full‑year guidance, the robust operating cash flow, the expanded margin, and the additional share‑repurchase authorization. The company’s continued progress in AI adoption also reinforced confidence in its future revenue trajectory.
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