8-K: Zoom Reports Strong FY26 Earnings, Eyes $5B Revenue in FY27

Zoom Communications announced robust financial results for fiscal year 2026, with accelerated revenue growth and significant GAAP EPS increases, while projecting over $5 billion in revenue for fiscal year 2027.

Summary

• Total revenue for fiscal year 2026 reached $4,868.8 million, marking a 4.4% year-over-year increase (4.2% in constant currency).
• Fourth quarter fiscal year 2026 total revenue was $1,247.0 million, up 5.3% year-over-year (4.8% in constant currency).
• Enterprise revenue grew 6.5% year-over-year to $2,934.1 million for the full fiscal year and 7.1% to $757.3 million in the fourth quarter.
• GAAP diluted EPS for fiscal year 2026 surged 92.5% to $6.18, and non-GAAP diluted EPS increased 6.9% to $5.92.
• The company repurchased approximately 20.4 million shares of common stock during the full fiscal year.
• Zoom expects total revenue for fiscal year 2027 to be between $5.065 billion and $5.075 billion.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive report, driven by strong GAAP profitability, accelerated revenue growth, and a clear focus on AI integration and shareholder returns, despite some softness in online churn and Q4 cash flow.

Positives

• Accelerated revenue growth in FY26, up 130 basis points to 4.4%.
• Significant increase in GAAP EPS for both Q4 (91.4% YoY to $2.22) and full FY26 (92.5% YoY to $6.18).
• Strong GAAP operating margin improvement for full FY26, up 570 bps to 23.1%.
• Growth in Enterprise revenue, up 7.1% in Q4 and 6.5% for the full fiscal year.
• Increase in high-value customers, with 4,468 customers contributing over $100,000 in trailing 12 months revenue, up 9.3% year-over-year.
• Robust cash position with $7.8 billion in cash, cash equivalents, and marketable securities as of January 31, 2026.
• Increased free cash flow for FY26, up 6.4% year-over-year to $1,924.1 million.
• Continued share repurchase program, with approximately 20.4 million shares bought back in FY26 and $1.0 billion remaining authorization.
• High-double-digit growth in Zoom Customer Experience in Q4, with paid AI included in top 10 CX deals.

Negatives

• Non-GAAP operating margin for Q4 decreased by 20 bps year-over-year to 39.3%.
• Online revenue growth was modest, up 2.6% in Q4 and 1.2% for the full fiscal year.
• Online average monthly churn slightly increased to 2.9% in Q4 FY26 from 2.8% in Q4 FY25.
• Net cash provided by operating activities for Q4 decreased to $354.5 million from $424.6 million in Q4 FY25.
• Free cash flow for Q4 decreased to $338.4 million from $416.2 million in Q4 FY25.
• Enterprise net dollar expansion rate of 98% indicates slight contraction among existing enterprise customers.

Risks

• Declines in new customers, renewals, or upgrades, or a decline in demand for the platform.
• Difficulties in evaluating future prospects and results due to limited operating history.
• Competition from other providers of communications platforms.
• The effect of macroeconomic conditions on the business, including tariffs, trade tensions, inflationary pressures, and market volatility.
• Lengthened sales cycles with large organizations.
• Delays or outages in services from co-located data centers.
• Failures in internet infrastructure or interference with broadband access.
• Compromised security measures, including those of Zoom and its third-party reliance.
• Global security concerns and their potential impact on regional and global economies and supply chains.

Future Outlook

Zoom projects total revenue for the first quarter of fiscal year 2027 to be between $1.220 billion and $1.225 billion, with non-GAAP diluted EPS between $1.40 and $1.42. For the full fiscal year 2027, the company anticipates total revenue between $5.065 billion and $5.075 billion, non-GAAP diluted EPS between $5.77 and $5.81, and free cash flow between $1.700 billion and $1.740 billion, expecting to surpass the $5 billion revenue milestone.

Management Comments

• "In FY26, revenue growth accelerated 130 basis points to 4.4%, reflecting the growing adoption of Zoom as a system of action for modern work."
• "As work increasingly starts in conversations, customers are choosing Zoom to turn those conversations into completed workflows across customer-facing and internal use cases."
• "In Q4, we saw accelerating, high-double-digit growth in Zoom Customer Experience, with paid AI included in each of our top 10 CX deals, underscoring the value of live context and automated follow-through."
• "As we enter FY27, we expect to surpass the $5 billion revenue milestone and remain focused on delivering durable, profitable growth and long-term shareholder returns."

Industry Context

StockSavvy.ai notes that Zoom's continued growth in Enterprise revenue and focus on AI-driven customer experience solutions align with broader industry trends emphasizing integrated communication platforms and the adoption of artificial intelligence to enhance productivity and customer engagement. The slight contraction in the Enterprise net dollar expansion rate to 98% suggests a competitive landscape where retaining and expanding existing customer spend remains a key challenge, a common theme among SaaS providers post-pandemic.

Comparison to Industry Standards

• NA

Stakeholder Impact

• Shareholders: Positive impact due to strong GAAP EPS growth, increased free cash flow, and ongoing share repurchase program, indicating management's commitment to returning value.
• Employees: Continued focus on growth and innovation (e.g., AI Companion) suggests stability and potential for new opportunities.
• Customers: Continued product development, especially with AI integration in CX, aims to enhance user experience and workflow efficiency.
• Competitors: Zoom's accelerated growth and strategic focus on AI may intensify competition in the unified communications and collaboration market.

Next Steps

• Host a Zoom Video Webinar for investors on February 25, 2026, at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time to discuss financial results, business highlights, and financial outlook.
• Continue focusing on delivering durable, profitable growth and long-term shareholder returns.
• Surpass the $5 billion revenue milestone in FY27.
• Continue the authorized share repurchase program, with $1.0 billion remaining.

Key Dates

Recommendation

The filing demonstrates strong financial performance with significant GAAP EPS growth and accelerated revenue, particularly in the Enterprise segment. The company's strategic focus on AI integration and commitment to shareholder returns through share repurchases, coupled with a positive revenue outlook for FY27, suggests a favorable investment opportunity. While online churn and Q4 cash flow saw minor dips, the overall trajectory and management's clear vision for durable, profitable growth make it an attractive buy for long-term investors.

Keywords

Zoom Communications, ZM, Financial Results, Earnings, Fiscal Year 2026, Q4 2026, Revenue, EPS, Operating Margin, Enterprise Growth, Share Repurchase, Free Cash Flow, Customer Experience, AI Companion, Video Conferencing, Collaboration Software