Summary
Zoom Video Communications reported first quarter fiscal 2025 total revenue of $1,141.2 million, up 3.2% year over year. GAAP operating income was $203.0 million, and GAAP operating margin rose to 17.8% compared with the prior-year quarter. GAAP net income was $216.3 million, or $0.69 per diluted share. Gross profit was $867.9 million, and gross margin was flat at 76.1% compared with the prior-year quarter. On a non-GAAP basis, income from operations was $456.6 million, non-GAAP operating margin was 40.0%, non-GAAP net income was $426.3 million, and non-GAAP diluted earnings per share was $1.35. The gap between GAAP and non-GAAP profitability remains wide, with stock-based compensation and related payroll taxes, litigation settlements, acquisition-related expenses, and restructuring expenses among the adjustments listed in the reconciliation.
Cash generation was a clear highlight. Operating cash flow was $588.2 million, up 40.6% year over year. Free cash flow, defined as operating cash flow less purchases of property and equipment, was $569.7 million, up 43.6%. Capital expenditures were $18.5 million, down 15.2% year over year. Deferred revenue, current portion, was $1.34 billion, flat compared with the prior-year quarter. Remaining performance obligations were $3.67 billion, up 5.3% year over year. Zoom repurchased approximately 2.4 million shares of common stock during the quarter, and the company said $1.350 billion of its authorized share repurchase program remained available as of April 30, 2024. The company ended the quarter with a large cash balance.
Customer metrics showed a business still growing at the large-customer end but facing pressure in smaller accounts. Zoom had 3,883 customers contributing more than $100,000 in trailing 12 months revenue, up approximately 8.5% year over year. The company ended the quarter with approximately 191,000 Enterprise customers. That total reflects a transition of approximately 26,800 Enterprise customers with lower monthly recurring revenue away from direct sales, resellers, or strategic partners; those customers are now counted as Online customers. The trailing 12-month net dollar expansion rate for Enterprise customers was 99%, down from 112% a year earlier. Online average monthly churn was 3.2%, up 10 basis points from the same quarter last fiscal year. The percentage of total Online monthly recurring revenue from Online customers with a continual term of service of at least 16 months was 73.8%, up 180 basis points year over year. Zoom also continued to push AI and platform expansion, including Zoom Workplace, AI Companion, Zoom Contact Center, and planned products such as Zoom Docs and an enhanced AI Companion expected to be generally available in 2024.
Guidance points to continued profitability management. For the second quarter of fiscal 2025, Zoom expects non-GAAP income from operations between $415.0 million and $420.0 million, and non-GAAP diluted EPS between $1.20 and $1.21, with approximately 316 million weighted average shares outstanding. For the full fiscal year 2025, the company guides non-GAAP income from operations between $1.740 billion and $1.750 billion, and non-GAAP diluted EPS between $4.99 and $5.02, with approximately 319 million weighted average shares outstanding. The company also issued revenue guidance for the second quarter and the full fiscal year, on both a reported and a constant currency basis. The EPS and share count figures do not include the impact from the remaining $1.350 billion share repurchase authorization.
The risk section remains familiar but relevant. Management cited macroeconomic factors including geopolitical conflicts, a global economic slowdown, high inflation, increased interest rates, and foreign currency exchange rate fluctuations. The 10-Q also points to elongated sales cycles, a decrease in customers' overall corporate spending, higher market penetration, increased competition, slowing demand for the platform, and the maturation of the business as factors that could weigh on growth. Operational risks include delays or outages at co-located data centers, failures in internet infrastructure, compromised security measures, and dependence on third parties. The customer transition and the lower net dollar expansion rate add execution risk to the Enterprise expansion story. Against that backdrop, the quarter showed strong GAAP operating margin expansion, robust free cash flow, and a large cash balance, while revenue growth remained in the low single digits and guidance implies the company is managing for profitability and cash returns as much as top-line acceleration.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2025 | Q4 FY2024 | QoQ | Q1 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.14B | $1.15B | -0.5% | $1.11B | +3.2% |
| Gross profit | $867.9M | $870.1M | -0.3% | $841.4M | +3.2% |
| Gross margin | 76.0% | 75.9% | +0.1 pp | 76.1% | -0.1 pp |
| Research & development | $205.6M | $205.3M | +0.1% | $209.3M | -1.8% |
| Sales & marketing | $348.0M | $371.1M | -6.2% | $422.5M | -17.6% |
| General & administrative | $111.3M | $125.3M | -11.1% | $199.9M | -44.3% |
| Total operating expenses | $664.9M | $701.6M | -5.2% | $831.7M | -20.1% |
| Operating income (loss) | $203.0M | $168.5M | +20.5% | $9.7M | +1984.0% |
| Operating margin | 17.8% | 14.7% | +3.1 pp | 0.9% | +16.9 pp |
| Net income (loss) | $216.3M | $298.8M | -27.6% | $15.4M | +1300.6% |
| Net margin | 18.9% | 26.1% | -7.1 pp | 1.4% | +17.6 pp |
| Diluted EPS | $0.69 | $0.97 | -$0.28 | $0.05 | +$0.64 |
| Customers | 3,580 | — | — | 2,916 | +22.8% |
Risks
Macroeconomic factors such as high inflation, elevated interest rates, geopolitical conflicts, and foreign currency fluctuations have introduced uncertainty, and MD&A states Zoom has been experiencing elongated sales cycles and a decrease in customers' overall corporate spending. This may continue to pressure future demand for subscriptions.
Competition is intensifying from established companies with greater resources that offer AI and machine learning communication and collaboration tools, and new AI-powered tools could make Zoom's platform obsolete. MD&A emphasizes AI Companion, Zoom Docs, and an enhanced AI Companion as key growth initiatives, increasing execution and competitive importance.
As Zoom increases sales to large organizations, sales cycles have and could continue to lengthen, with greater deployment challenges and higher up-front sales costs. MD&A also notes elongated sales cycles as a macroeconomic impact.
Zoom's revenue growth rate has fluctuated and may continue to decline due to higher market penetration, increased competition, slowing demand, and business maturation. For the quarter ended April 30, 2024, revenue increased 3.2% year over year to $1.14 billion, and the trailing 12-month Enterprise net dollar expansion rate was 99%, compared with 112% as of April 30, 2023.
A significant portion of Zoom's research and development organization resides in China, exposing it to geopolitical and national security tensions; interference or restrictions from Chinese government agencies could impair product development and service delivery. Ongoing DOJ subpoenas from the EDNY and NDCA seek information about interactions with foreign governments, user data storage and access, and law enforcement requests.
Zoom and third parties it works with have faced and may again face security compromises; threats include ransomware, nation-state actors, deep fake phishing, supply-chain attacks, and vulnerabilities in products. Because Zoom is relied on by many companies worldwide, a compromise could simultaneously affect a significant number of customers and their data.
Zoom's business depends on retaining and upsizing existing customers and upgrading free users; Enterprise customers were approximately 191,000 as of April 30, 2024 compared with approximately 215,900 as of April 30, 2023, after transitioning approximately 26,800 lower-MRR Enterprise customers to Online. Online average monthly churn was 3.2% and 3.1% per month for the three months ended April 30, 2024 and 2023.
Use of generative AI in products poses operational, legal, reputational, competitive, and regulatory risks, including inaccurate or biased outputs, reliance on third-party AI features, intellectual property infringement claims, and disclosure of confidential data by employees. The investment required to bring AI features to market may be significant and may not be recovered if customers do not widely adopt them.
Interruptions, delays, or outages from co-located data centers and third-party cloud providers, including AWS, Oracle Cloud, and Microsoft Azure, could impair service delivery, require credits or penalties, and cause customers to terminate subscriptions. Zoom has experienced partial outages impacting a subset of users for a limited number of hours.
Zoom must attract and retain highly qualified personnel, especially software developers and sales representatives, and competition is intense. Recent restructuring actions have caused and may continue to cause employee turnover, and new hires take time to become productive.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Free Cash Flow
Online Average Monthly Churn
Enterprise Customers
Customers Contributing More Than $100,000 in Trailing 12 Months Revenue
Free Cash Flow Margin (Non-GAAP)
Summary, forecast, risks and KPIs are extracted from Zoom Communications, Inc.'s SEC filings for Q1 FY2025 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.