Summary
Zoom Communications closed fiscal 2026 with steady top-line growth and a sharp jump in GAAP profitability. Fourth quarter revenue was $1.25 billion, up 5.3% year over year. Full fiscal year revenue was $4.87 billion, up 4.4% year over year. Gross profit for the quarter was $951.29 million, up 6.1% year over year. Gross margin was 76.3%, up 0.6 percentage points from the prior-year quarter. For the full year, gross margin was 77.0%, up 1.2 percentage points. Operating income for the quarter was $249.89 million, up 11.0% year over year, and operating margin was 20.0%, up 1.0 percentage point. Full-year operating income was $1.12 billion, up 38.2% year over year, and full-year operating margin was 23.1%, up 5.6 percentage points. Net income for the quarter was $674.08 million, up 83.2% year over year. Full-year net income was $1.90 billion, up 88.1% year over year. Full-year diluted EPS was $6.18, up $2.97 or 92.5% year over year. Non-GAAP operating margin was 39.3% in the quarter, down 20 basis points, and 40.4% for the full year, up 100 basis points. Non-GAAP net income was $437.1 million in the quarter, and non-GAAP diluted EPS was $1.44, up 2.1% year over year. Full-year non-GAAP diluted EPS was $5.92, up 6.9% year over year.
The balance sheet and cash flow statement show some divergence. Deferred revenue, current portion, was $1.41 billion, up 5.6% year over year. Remaining performance obligations were $4.18 billion, up 10.1% year over year. Operating cash flow was $354.52 million in the quarter, down 16.5% year over year, while full-year operating cash flow was $1.99 billion, up 2.2% year over year. Capital expenditures were $16.08 million in the quarter, up 92.9% year over year, and $64.96 million for the full year, down 52.4% year over year. Free cash flow, a non-GAAP measure, was $338.4 million in the quarter, compared with $416.2 million in the prior-year quarter, and $1,924.1 million for the full year, compared with $1,808.7 million, up 6.4% year over year. The company repurchased approximately 3.8 million shares in the fourth quarter and approximately 20.4 million shares during the full fiscal year. As of January 31, 2026, $1.0 billion remained available under the repurchase authorization.
Customer metrics point to larger accounts driving growth. Customers contributing more than $100,000 in trailing 12 months revenue totaled 4,468, up approximately 9.3% year over year. The trailing 12-month net dollar expansion rate for Enterprise customers was 98%. Online average monthly churn was 2.9% for the fourth quarter, compared with 2.8% in the same quarter last fiscal year. The percentage of total Online MRR from Online customers with a continual term of service of at least 16 months was 74.9%, compared with 75.1% at the end of the same quarter last fiscal year. Management also highlighted accelerating high-double-digit growth in Zoom Customer Experience, with paid AI included in each of the top 10 CX deals. AI Companion 3.0 launched in December 2025 for all paid Zoom Workplace users at no additional cost, and Zoom acquired BrightHire to strengthen recruiting capabilities.
Guidance for fiscal 2027 calls for a milestone year. For the first quarter, total revenue is expected to be between $1.220 billion and $1.225 billion, and constant currency revenue is expected to be between $1.212 billion and $1.217 billion. Non-GAAP income from operations is expected to be between $487.0 million and $492.0 million. Non-GAAP diluted EPS is expected to be between $1.40 and $1.42 on approximately 304 million non-GAAP weighted average shares. For the full fiscal year, total revenue is expected to be between $5.065 billion and $5.075 billion, and constant currency revenue is expected to be between $5.054 billion and $5.064 billion. Non-GAAP income from operations is expected to be between $2.050 billion and $2.060 billion. Non-GAAP diluted EPS is expected to be between $5.77 and $5.81 on approximately 308 million non-GAAP weighted average shares. Full fiscal year free cash flow is expected to be between $1.700 billion and $1.740 billion. The guidance excludes any impact from the $1.0 billion of authorized share repurchase remaining as of January 31, 2026.
Risks remain familiar. The macroeconomic environment, geopolitical and trade uncertainties, changing monetary policy, and foreign currency volatility could weigh on demand. Elongated sales cycles and cautious enterprise spending may affect upsell, downsell, or renewal activity. Other risks include declines in new customers, renewals or upgrades, competition, data center outages, and security compromises. The One Big Beautiful Bill Act was not material to fiscal 2026 financial statements, though it had a favorable impact on cash taxes and increased the effective tax rate. The company also extended the amortization period for deferred contract acquisition costs from three years to five years, which is expected to reduce sales and marketing expenses by $90.0 million to $95.0 million in fiscal 2027.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2026 | Q3 FY2026 | QoQ | Q4 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.25B | $1.23B | +1.4% | $1.18B | +5.3% |
| Gross profit | $951.3M | $958.1M | -0.7% | $896.8M | +6.1% |
| Gross margin | 76.3% | 77.9% | -1.6 pp | 75.7% | +0.6 pp |
| Research & development | $222.9M | $210.1M | +6.1% | $217.1M | +2.7% |
| Sales & marketing | $359.5M | $342.8M | +4.9% | $358.9M | +0.2% |
| General & administrative | $119.0M | $94.7M | +25.6% | $95.7M | +24.3% |
| Total operating expenses | $701.4M | $647.7M | +8.3% | $671.7M | +4.4% |
| Operating income (loss) | $249.9M | $310.4M | -19.5% | $225.1M | +11.0% |
| Operating margin | 20.0% | 25.2% | -5.2 pp | 19.0% | +1.0 pp |
| Net income (loss) | $674.1M | $612.9M | +10.0% | $367.9M | +83.2% |
| Net margin | 54.1% | 49.8% | +4.2 pp | 31.1% | +23.0 pp |
| Diluted EPS | $2.19 | $2.01 | +$0.18 | $3.21 | -$1.02 |
Risks
Zoom faces intensifying competition from hyperscalers and AI-powered communication and collaboration tools, including Microsoft 365 with Teams and Google Workspace with Meet, whose bundling and AI features may make Zoom's platform less differentiated. MD&A says AI is core to product innovation and that AI Companion 3.0 launched in December 2025 for all paid Zoom Workplace users at no additional cost, increasing the need to monetize AI indirectly through retention and upsell.
The MD&A states that macroeconomic uncertainty, geopolitical and trade tensions, changing monetary policy, and foreign currency volatility contributed to elongated sales cycles and continued caution in enterprise spending, which may affect customer upsell, downsell, or renewal activity. Revenue for FY2026 year to date was up 4.4% versus FY2025 year to date.
Zoom's trailing 12 month net dollar expansion rate for Enterprise customers was 98% as of January 31, 2026 and 2025, down from 101% as of January 31, 2024, as macroeconomic headwinds caused slower hiring and higher seat count downsells. The rate remaining below 100% limits revenue expansion from existing Enterprise customers, who represented 60.3% of total FY2026 revenue.
Zoom states that its security measures and those of third parties have been compromised in the past and may be compromised in the future, with threats including ransomware, nation-state actors, deep fakes, and supply-chain attacks. It also notes DORA and similar UK operational resilience requirements may impose mandatory third-party risk management provisions, and a large-scale compromise could affect many customers simultaneously.
The communication and collaboration market is price sensitive, and competitors may offer lower-priced or free products, bundle broader suites, or acquire customers at lower cost, which has forced Zoom to use price-cutting initiatives or discounts. Zoom also notes that it sometimes offers free periods at the start of subscription terms, which can result in deferred billings or long-term accounts receivable and increase collection risk.
Zoom uses generative and agentic AI in its products, which may lead to operational, legal, reputational, and regulatory risks, including third-party IP infringement claims and disclosure of confidential data. The company offers certain AI features at no additional cost, and if adoption does not drive retention or revenue, the investment and delivery costs could further negatively impact margins.
Interruptions, delays, or outages in Zoom's co-located data centers or cloud hosting services have impaired and could impair service delivery, require credits or penalties, and harm customer retention. Zoom also cites capacity constraints and current shortages for certain parts, such as servers, as a risk to bringing additional data centers online in a timely manner.
Zoom must attract and retain highly qualified personnel, especially sales, software development, and security employees, and it says recent restructuring actions may exacerbate hiring and retention difficulties. The company also states it has limited budgetary and human resources for detecting and remediating vulnerabilities and has experienced difficulty hiring qualified security personnel after restructuring.
Zoom has significant and expanding operations outside the United States, including a sizable research and development presence in China, which exposes it to regulatory, geopolitical, and media scrutiny and possible interference with local operations. Revenue outside the Americas represented 27.9% of total FY2026 revenue, down from 28.2% in FY2025 and 28.7% in FY2024.
Zoom's strategic investments in publicly traded and privately held companies are remeasured through the statement of operations, creating volatility in reported results. The MD&A highlights gains on strategic investments, net, driven primarily by changes in fair value of privately held securities.
Revenue from customers contributing more than $100,000 of trailing 12 months revenue represented 32.8% of total FY2026 revenue, up from 31.0% in FY2025 and 29.2% in FY2024, and Enterprise customers represented 60.3% of total FY2026 revenue. Dependence on larger organizations increases exposure to lengthening sales cycles, deployment challenges, and pricing concessions.
Zoom says high inflation, recessionary or uncertain environments, tariffs, trade tensions, and bank failures could reduce IT spending, and it has experienced lost customers, longer payment cycles, and greater difficulty collecting accounts receivable. Current quarter operating cash flow was down 16.5% versus the prior-year quarter, while FY2026 year to date operating cash flow was up 2.2%.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Free Cash Flow
Online Average Monthly Churn
Customers Contributing More Than $100,000 in Trailing 12 Months Revenue
Free cash flow margin
Percentage of total Online MRR from Online customers with continual term of service of at least 16 months
Summary, forecast, risks and KPIs are extracted from Zoom Communications, Inc.'s SEC filings for Q4 FY2026 (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.