Zoom Communications Inc. (ZM) posted solid third-quarter results after the bell Monday, showing that the video conferencing giant is finding its footing beyond the pandemic boom years.
The Numbers Tell a Story
Zoom brought in $1.23 billion in revenue for the quarter, topping the Street's expectation of $1.21 billion. Adjusted earnings came in at $1.52 per share, comfortably ahead of the $1.44 analysts were anticipating.
Overall revenue grew 4.4% compared to the same quarter last year. Breaking that down: enterprise revenue jumped 6.1% year-over-year to $741.4 million, while online revenue edged up 2% to $488.4 million. The company kept its online monthly average churn rate at a respectable 2.7% during the quarter.
Here's an interesting metric: Zoom ended the period with 4,363 customers each generating more than $100,000 in trailing twelve-month revenue. That's up 9.2% year-over-year, suggesting the company is successfully moving upmarket and landing bigger deals.
On the cash front, Zoom generated $629.3 million from operating activities and $614.3 million in free cash flow during the quarter. The company closed out the period sitting on $7.0 billion in cash, cash equivalents, and marketable securities.
AI Takes Center Stage
"Zoom is continuing to build on our vision of an AI‑first platform that helps people connect and collaborate more seamlessly," said Eric Yuan, the company's founder and CEO.
Yuan highlighted the launch of AI Companion 3.0 and expressed enthusiasm about growing adoption rates. "We're also seeing strong momentum with Custom AI Companion and our AI‑first Customer Experience suite, which helped make this one of our best CX quarters, with broad AI adoption across major deals," he added.
Looking Forward
For the fourth quarter, Zoom expects revenue between $1.23 billion and $1.235 billion, right in line with the consensus estimate of $1.228 billion. The company anticipates adjusted earnings of $1.48 to $1.49 per share, comfortably above the $1.45 Wall Street is expecting.
More importantly, Zoom raised its full-year fiscal 2026 guidance. Revenue expectations now sit at $4.852 billion to $4.857 billion, up from prior guidance of $4.825 billion to $4.835 billion. Analysts had been modeling $4.834 billion.
The company also bumped up its full-year adjusted earnings outlook from $5.81 to $5.84 per share to a new range of $5.95 to $5.97 per share. That compares favorably to the analyst consensus of $5.88 per share.
Zoom's management team planned to discuss the results in more detail during an earnings call scheduled for 5 p.m. ET.
Market Reaction
Zoom shares climbed 3.56% in after-hours trading, reaching $81.39 at the time of the report.
