Zoom financials reveal moderate growth in AI sector push

Zoom Communications has reported its third quarter financial results for the fiscal year 2025, showcasing a moderate yet notable growth trajectory.

The company, previously known as Zoom Video Communications, announced its official name change to Zoom Communications, reflecting its evolution towards an AI-first platform. Highlighting key achievements, Eric S. Yuan, founder and CEO, stated: "At Zoomtopia we announced major milestones such as AI Companion 2.0 and paid add-ons for AI Companion and industry-specific AI customisation, further cementing our vision to deliver a differentiated AI-first work platform that empowers customers to achieve more than ever."

In terms of growth figures, Zoom's AI Companion saw a 59% increase in monthly active users quarter over quarter. Workvivo's customer base expanded by 72% year over year. Another significant development was in the Zoom Contact Center, which now has more than 1,250 customers—an increase of over 82% year over year—with the addition of its largest customer yet, incorporating more than 20,000 seats.

The financial highlights for the quarter show a total revenue increase of 3.6% year over year, reaching USD $1,177.5 million. The enterprise segment contributed USD $698.9 million, marking a 5.8% increase, while the online segment was flat at USD $478.7 million.

Income from operations improved, with GAAP income rising to USD $182.8 million from USD $169.4 million year over year. Non-GAAP income, which excludes various expenses, was USD $457.8 million, up from USD $447.1 million.

The operating margins reflected a GAAP margin of 15.5% and a non-GAAP margin of 38.9%. The net income for the quarter was USD $207.1 million, translating to USD $0.66 per share, compared to the previous USD $141.2 million or USD $0.45 per share. Non-GAAP net income per share was USD $1.38, up from USD $1.29 last year.

Cash and marketable securities at the end of the quarter amounted to USD $7.7 billion. The net cash from operating activities was slightly down to USD $483.2 million, with free cash flow marginally higher at USD $457.7 million.

Zoom's growth metrics indicate strategic customer acquisition, with 3,995 customers contributing over USD $100,000 in trailing 12-month revenue, reflecting a 7.1% increase. Enterprise clients numbered approximately 192,400 and exhibited a trailing 12-month net dollar expansion rate of 98%. Online services reported an average monthly churn at a record low of 2.7%.

Yuan noted the importance of these advancements by saying, "In Q3, we were pleased to see revenue and enterprise revenue growth improve to approximately 4% and 6% year over year, respectively, and Online monthly average churn reach an all-time low of 2.7%. Additionally, Zoom Contact Center set a record with an over 20,000-seat deal in EMEA, and Workvivo secured its largest deal ever with a Fortune 10 company, showing our success in landing and expanding with global enterprises that recognise the promise of our integrated Workplace and Business Services platform."

Looking ahead, Zoom anticipates fourth-quarter revenues between USD $1.175 billion and USD $1.180 billion, with non-GAAP income expected to fall within USD $443.0 million to USD $448.0 million. For the full fiscal year 2025, projected revenues are between USD $4.656 billion and USD $4.661 billion, maintaining a robust financial outlook.

Additionally, Zoom's Board of Directors approved a USD $1.2 billion further repurchase of Class A common stock, contributing to a total repurchase capacity of approximately USD $2.0 billion.