AI drives strong Zoom second quarter
Comms and collaboration service provider reveals robust first half of 2025 fiscal year, outperforming guidance across the board and with marked strength in large accounts
Hot on the heels of a major expansion in the capacity of its single-use webinar offering as it continued to evolve and show growth beyond its roots in core video conferencing, Zoom Video Communications has posted second-quarter financial results showing it exceeded expectations driven by strong demand for its artificial intelligence (AI)-powered collaboration tools to meet the evolving demands of hybrid and remote work models.
For the second fiscal quarter ended 31 July 2024, the company generated total revenue of $1.163bn, up 2.1% year-on-year as reported, and 2.4% in constant currency. Second-quarter Enterprise revenue was $682.8m, up 3.5% on an annual basis, while Online revenue was flat on a 12-month basis to 479.7m.
GAAP income from operations for the second quarter was $202.4m, compared with GAAP income from operations of $177.6m in the second quarter of fiscal year 2024.
After adjusting for stock-based compensation expense and related payroll taxes, acquisition-related expenses, restructuring expenses and litigation settlements, net, non-GAAP income from operations for the second quarter was $455.5m, marginally down from the $461.7m posted a year earlier.
For the second quarter, GAAP operating margin was 17.4% and non-GAAP operating margin was 39.2%. Second-quarter operating cash flow was $449.3m, up 33.7% compared with the same quarter a year ago.
Drivers of total revenue included new customer acquisition. At the end of the second quarter, Zoom had 3,933 customers contributing more than $100,000 in trailing 12-month revenue, up approximately 7.1% from the same quarter last fiscal year. It also had approximately 191,600 Enterprise customers, for whom it had a trailing 12-month net dollar expansion rate of 98%.
Online business average monthly churn was 2.9% for the second quarter, down 30 bps from the second quarter fiscal year 2024. The percentage of monthly recurring revenue from Online customers with a continual term of service of at least 16 months was 74.4%, up 160 bps annually.
Read more about Zoom
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The company said its Q2 performance principally reflected a positive response to its commitment to efficient growth through its investment in AI integration.
“In Q2, we outperformed our guidance across the board and grew operating cash flow and free cash flow by 33.7% and 26.2% year over year, respectively, demonstrating our continued commitment to efficient growth,” said Eric S Yuan, Zoom founder and CEO.
“We also saw strength in large accounts, with customers contributing more than $100,000 in trailing 12 months revenue increasing by 7.1% year over year, and resilience in our Online business, with Online average monthly churn reaching its lowest ever rate.
“Zoom Contact Centre racked up several marquee customers, including its largest single order deal to date, highlighting our ability to win competitive deals for full-scale, customer-facing deployments with our higher-end packages that utilise advanced AI features to enhance agent performance,” he said.
Looking forward, Zoom expects third-quarter fiscal year total revenue to be between $1.16bn and $1.165bn, and non-GAAP income from operations is expected to be between $438m and $443m. For the full fiscal year 2025, total revenue is projected to be between $4.63bn and $4.64bn, and revenue in constant currency is expected to be between $4.641bn and $4.65bn.
