Video communications platform Zoom (NASDAQ:ZM) reported Q2 CY2026 results exceeding the market’s revenue expectations, with sales up 4.9% year on year to $1.28 billion. The company expects next quarter’s revenue to be around $1.28 billion, close to analysts’ estimates. Its non-GAAP profit of $1.55 per share was 5% above analysts’ consensus estimates.
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Zoom (ZM) Q2 CY2026 Highlights:
- Revenue: $1.28 billion vs analyst estimates of $1.27 billion (4.9% year-on-year growth, 0.7% beat)
- Adjusted EPS: $1.55 vs analyst estimates of $1.48 (5% beat)
- Adjusted Operating Income: $510.3 million vs analyst estimates of $512.4 million (40% margin, in line)
- The company slightly lifted its revenue guidance for the full year to $5.09 billion at the midpoint from $5.09 billion
- Management raised its full-year Adjusted EPS guidance to $6.10 at the midpoint, a 2% increase
- Operating Margin: 24.6%, down from 26.4% in the same quarter last year
- Customers: 4,625 customers paying more than $100,000 annually
- Net Revenue Retention Rate: 99%, in line with the previous quarter
- Annual Recurring Revenue: $5.11 billion (4.9% year-on-year growth, beat)
- Billings: $1.35 billion at quarter end, up 5.9% year on year
- Market Capitalization: $29.59 billion
StockStory’s Take
Zoom’s Q2 results reflected ongoing momentum in its Enterprise segment, powered by strong adoption of AI-driven solutions and product diversification. Despite exceeding Wall Street’s revenue and non-GAAP earnings expectations, the market response was negative, with management citing increased investment in AI infrastructure and a modest decline in operating margin as contributing factors. CEO Eric Yuan highlighted the successful integration of AI features across Zoom Workplace and customer experience products, noting that “AI is becoming increasingly embedded in how users work throughout the communication and collaboration lifecycle.”
Looking ahead, Zoom’s updated guidance is shaped by expectations of continued Enterprise growth fueled by AI product adoption, while management acknowledges near-term headwinds in its online business. CFO Michelle Chang emphasized that Enterprise strength is supported by “product diversification, AI monetization, moving up market, building out a channel, and keeping churn low.” Management remains focused on expanding AI features, optimizing pricing models, and leveraging acquisitions like Common Room to drive future revenue, but cautioned that ongoing investments in AI and evolving customer discovery trends may temper near-term growth.
Key Insights from Management’s Remarks
Management credited the quarter’s Enterprise acceleration to product diversification, rising AI adoption, and success in upmarket and large-deal segments.
- Enterprise momentum: The Enterprise segment saw its strongest growth in three years, driven by large customer wins, increased product bundling, and new AI capabilities integrated across the platform. Management noted that 8% growth in $100,000+ revenue customers and longer-term contracts were central to this performance.
- AI-driven product uptake: AI features became more widely adopted, with licensed monthly active users of Workplace AI features up 125% year over year. Paid AI was present in the majority of the largest Zoom CX deals, demonstrating direct monetization opportunities.
- Zoom Phone and Contact Center: Zoom Phone maintained mid-teens growth, acting both as an add-on for existing customers and as an entry point for broader platform adoption. Over half of the top Phone deals included Contact Center, signaling strong UCaaS (Unified Communications as a Service) and CCaaS (Contact Center as a Service) integration momentum.
- Expanding product portfolio: The acquisition of Common Room is expected to complement Zoom Revenue Accelerator by providing buyer intelligence and enhancing end-to-end sales workflows. Management expects this combination to offer deeper value to sales teams and drive adoption of AI-powered solutions.
- Margin and cost dynamics: Non-GAAP operating margin declined modestly as higher AI compute usage increased costs. Management attributed margin stability to efficiency improvements in AI infrastructure but acknowledged that ongoing investment in AI products may weigh on margins in the near term.
Drivers of Future Performance
Zoom’s guidance is anchored by continued Enterprise expansion and AI monetization, alongside prudent expectations for online business recovery and margin discipline.
- Enterprise growth and product diversity: Management expects continued outperformance in Enterprise, supported by increased adoption of AI-powered products, product bundling, and successful upmarket moves. The expansion into larger, multi-product deals and the deepening integration of AI across the portfolio are set to drive revenue and customer retention.
- AI infrastructure and pricing models: Ongoing investment in AI technology, including federated AI and outcome-based pricing, is anticipated to enhance product value while introducing margin variability. Management believes flexible pricing models for AI products, such as per-user and consumption-based options, will help attract diverse customer segments and drive incremental revenue.
- Online segment and macro trends: While the Enterprise segment is expected to lead growth, management remains cautious on the online business, citing changing customer discovery behaviors and a need for product expansion to reignite momentum. Efforts to improve conversion and offer a broader AI product suite to online customers will be closely monitored for signs of stabilization.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will watch (1) the pace of Enterprise customer expansion and sustained AI adoption across Zoom’s portfolio, (2) the evolution of margin performance as AI investments scale, and (3) the stabilization and potential reacceleration of the online segment. The impact of the Common Room integration and continued innovation in AI pricing models will also be key signposts for execution.
Zoom currently trades at $94.16, down from $101.29 just before the earnings. Is there an opportunity in the stock? Find out in our full research report (it’s free).
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