Zoom Communications increased enterprise revenue by 7.8% to $787.5 million in its fiscal second quarter, its fastest growth rate in three years. A separate $1.61 billion gain on strategic investments pushed reported net income to $1.54 billion, making the profit increase much larger than the improvement in the software business.
The quarter ended on July 31, 2026. Zoom calls it the second quarter of fiscal 2027 because its financial year ends in January.
Total revenue rose 4.9% from a year earlier to $1.28 billion. Enterprise sales provided most of the momentum, while revenue from customers who buy directly through Zoom’s website increased just 0.6% to $489.7 million.
Average monthly churn among online customers held at 2.9%. Customers with at least 16 months of continuous service generated 75.6% of online monthly recurring revenue, up from 74.9% a year earlier. Monthly recurring revenue is the subscription revenue run rate at a given point in time. The figures describe a stable but slow-growing online business, making enterprise sales increasingly important to Zoom’s growth.
Enterprise customers drive the expansion
Zoom ended the quarter with 4,625 customers that had generated more than $100,000 each in revenue during the previous 12 months. That customer count increased by 8.2% from a year earlier.
The company also reported a 99% net dollar expansion rate for enterprise customers, up from 98%. This measure compares the annual recurring revenue from an existing group of customers with the revenue from the same group one year later, after upgrades, reductions and cancellations.
A figure below 100% means the existing customer group was still spending slightly less overall. The combination of 7.8% enterprise revenue growth and a 99% expansion rate suggests that new customers and newly added business are helping Zoom grow faster than spending within its established customer base.
Chief Executive Eric Yuan said Zoom Virtual Agent, an automated customer-service product, increased its customer count by 256% from a year earlier. Zoom did not disclose the starting customer number or the product’s revenue, so the percentage shows adoption rather than its financial contribution.
The company is trying to extend its position beyond video meetings by selling workplace, customer-service, recruiting and sales tools that use artificial intelligence. That strategy differs from the approach taken by information providers such as Thomson Reuters, which has built a specialized model for professional products, but both companies face the same commercial test: turning AI features into recurring enterprise revenue.
Investment gain explains the profit surge
Zoom’s net income under generally accepted accounting principles, or GAAP, rose from $358.6 million to $1.54 billion. GAAP is the standard set of US accounting rules used in company financial statements.
The increase did not come mainly from day-to-day operations. Zoom recorded $1.61 billion in net gains on strategic investments, compared with $45.1 million a year earlier. The earnings release did not identify which investments produced the gain.
Operating income, which excludes that investment gain, declined 2.3% to $314.3 million. The GAAP operating margin narrowed from 26.4% to 24.6%, while research and development spending increased by about 17% to $242.5 million.
Zoom’s adjusted net income, which removes investment gains and several other items, fell to $464.0 million from $471.3 million. Adjusted diluted earnings per share nevertheless edged up from $1.53 to $1.55, helped by a lower share count following stock repurchases.
Zoom raises its full-year forecast
Zoom now expects fiscal 2027 revenue of between $5.085 billion and $5.095 billion. That lifts both ends of the range by only $5 million from the forecast issued in May.
The company raised its adjusted earnings forecast more substantially, from $5.96 to $6.00 per share to $6.08 to $6.12. It also increased its expected free cash flow range to between $1.78 billion and $1.82 billion, up from $1.70 billion to $1.74 billion.
For the third quarter, management forecasts revenue of $1.275 billion to $1.280 billion. The next results will show whether faster enterprise growth is beginning to lift spending among existing customers, or whether Zoom must continue relying primarily on new accounts and products to move the business forward.
