Zoom (ZM) Q2 2025 earnings summary

Executive summary

• Q2 FY25 revenue reached $1,163 million, up 2.1% year-over-year, driven by Enterprise growth and robust AI integration across products.

• Net income rose to $219 million ($0.70 per diluted share), reflecting improved profitability and strong cash flow.

• AI Companion and Contact Center adoption accelerated, with over 1.2 million accounts enabled and significant customer wins.

• Ended Q2 with $7.5 billion in cash, cash equivalents, and marketable securities, and continued active share repurchases.

• Macroeconomic headwinds, elongated sales cycles, and increased IT spending scrutiny impacted growth rates, especially in SMB and EMEA.

Financial highlights

• Q2 revenue was $1,162.5 million, up from $1,138.7 million year-over-year; non-GAAP gross margin was 78.6%, GAAP gross margin 75.5%.

• Non-GAAP operating income was $456 million (39.2% margin); GAAP operating margin was 17.4%.

• Non-GAAP EPS was $1.39, $0.18 above guidance; GAAP EPS was $0.70, up 19% year-over-year.

• Operating cash flow grew 34% year-over-year to $449 million; free cash flow up 26% to $365 million.

• Deferred revenue grew 3% year-over-year to $1.41 billion; RPO increased 8% to $3.78 billion.

Outlook and guidance

• Q3 FY25 revenue expected at $1.16–$1.165 billion; non-GAAP EPS at $1.29–$1.31.

• Full-year FY25 revenue guidance raised to $4.63–$4.64 billion; non-GAAP EPS $5.29–$5.32.

• FY25 non-GAAP operating income expected at $1.79–$1.8 billion; free cash flow at $1.58–$1.62 billion.

• Guidance excludes impact from $1.062 billion of authorized share repurchase remaining as of July 31, 2024.

• Management expects moderated revenue growth due to macroeconomic uncertainty and competition.