0001585521-26-000030
SEC filingZoom Communications, Inc. reported strong financial results for fiscal year 2026, ending January 31, 2026. Revenue grew 4.4% year-over-year to $4.87 billion, driven by product expansion and usage among existing Enterprise customers. Net income surged 88.1% to $1.90 billion, significantly boosted by $969.8 million in gains on strategic investments. Operating income increased 38.2% to $1.12 billion, reflecting improved operational efficiency with gross margin expanding to 77.0% from 75.8% in the prior year. The company generated $1.99 billion in operating cash flow and $1.92 billion in free cash flow, maintaining a strong liquidity position with $1.27 billion in cash and $6.54 billion in marketable securities. Strategic priorities centered on AI innovation, with Zoom AI Companion launched across the platform, and international expansion, with revenue outside the Americas representing 27.9% of total revenue.
Zoom Communications, Inc. delivered robust financial performance in fiscal year 2026, with revenue reaching $4.87 billion, representing 4.4% growth compared to $4.67 billion in fiscal 2025. Net income increased substantially to $1.90 billion from $1.01 billion in the prior year, an 88.1% increase, driven significantly by $969.8 million in gains on strategic investments. Operating income grew 38.2% to $1.12 billion from $813.3 million, reflecting improved operational efficiency. The company maintained strong profitability metrics with gross margin expanding to 77.0% from 75.8% and operating margin improving to 23.1% from 17.4%. Earnings per share (diluted) increased to $6.00 from $3.21 in the prior year. The company's balance sheet remained strong with total assets of $11.96 billion and stockholders' equity of $9.81 billion.
Revenue growth of 4.4% was primarily driven by higher product expansion and usage among existing Enterprise customers, with Enterprise subscription services growing 6.5% year-over-year. Revenue from Enterprise customers represented 60.3% of total revenue, while Online customers contributed 39.7%. Geographically, the Americas region generated $3.51 billion (72.1% of revenue), EMEA contributed $769.9 million (15.8%), and APAC accounted for $590.7 million (12.1%). The company's net dollar expansion rate for Enterprise customers was 98% for the trailing 12 months, indicating moderate expansion within the existing customer base. Large enterprise customers (contributing more than $100,000 of trailing 12 months revenue) increased to 4,468 from 4,088 in the prior year, representing 32.8% of total revenue.
Gross margin improved to 77.0% from 75.8% in the prior year, driven by a $28.3 million reduction in stock-based compensation and operational efficiencies, partially offset by $18.2 million in asset impairments. Operating expenses decreased to $2.63 billion from $2.72 billion, with research and development expenses declining 0.9% to $844.9 million, sales and marketing expenses decreasing 2.7% to $1.39 billion, and general and administrative expenses declining 11.2% to $392.9 million. These reductions were primarily due to decreases in stock-based compensation across all operating expense categories. The company's effective tax rate was 21.6% compared to 23.2% in the prior year.
The company generated strong operating cash flow of $1.99 billion, slightly higher than the $1.95 billion in the prior year. Free cash flow (non-GAAP) was $1.92 billion, calculated as operating cash flow less $65.0 million in purchases of property and equipment. Investing activities used $278.9 million net cash, primarily for purchases of marketable securities ($4.82 billion) offset by maturities ($4.06 billion) and sales ($684.4 million). Financing activities used $1.81 billion net cash, mainly for share repurchases of $1.62 billion. The balance sheet shows strong liquidity with $1.27 billion in cash and cash equivalents and $6.54 billion in marketable securities. Total current assets were $8.66 billion, while total current liabilities were $2.00 billion, resulting in a current ratio of approximately 4.3:1.
The company continues to focus on AI innovation as a core growth strategy, with Zoom AI Companion now integrated across the platform. International expansion remains a priority, with revenue outside the Americas representing 27.9% of total revenue. The company noted that macroeconomic conditions, including geopolitical uncertainties and foreign currency exchange rate volatility, have created uncertainty in demand for subscriptions and contributed to elongated sales cycles. Management highlighted continued investment in AI, focusing on three key areas: supporting individual productivity, powering better collaboration, and helping customer-facing teams deliver business value. The company's growth strategy includes keeping existing customers happy, driving new customer acquisition, continuous innovation across the platform, international expansion, strategic acquisitions, expansion within existing customers, and growing the developer ecosystem.