Zoom Communications Inc. reported fourth‑quarter 2026 results that included a $1.25 billion revenue beat and a non‑GAAP earnings‑per‑share miss of $0.05, falling short of the consensus estimate of $1.49. The company’s enterprise revenue rose 7.1% to $757.3 million, while the online segment grew 2.0%.
Revenue growth was driven by strong demand for Zoom’s AI‑powered offerings, which helped the company capture additional enterprise customers and expand usage within existing accounts. The 98% net dollar expansion rate indicates that most new revenue came from upsells and cross‑sell opportunities rather than new customer acquisition, underscoring the effectiveness of the AI‑first strategy.
The EPS miss was largely a result of higher operating expenses, including increased investment in research and development for AI capabilities and higher sales‑and‑marketing spend to support the expansion of the AI Companion 3.0 product line. These cost increases offset the revenue upside and compressed the non‑GAAP earnings margin, leading to the $0.05 shortfall relative to analysts’ expectations. The consensus estimate varied between $1.46 and $1.49, so the miss magnitude is modest but still breaks a streak of seven consecutive earnings beats.
Margin performance reflected a shift in the cost structure. The free‑cash‑flow margin for the quarter was 27.1% (or 28.4% in some reports), a significant drop from the 50% margin reported in the prior quarter, which was driven by the heavy investment in AI and go‑to‑market initiatives. Gross margin improved to 79.8%, up one percentage point from the same period last year, indicating that pricing power and higher‑margin product mix helped offset the cost pressure.
Guidance for fiscal 2027 remains unchanged, with revenue projected between $5.065 billion and $5.075 billion and non‑GAAP EPS between $5.77 and $5.81. The company’s forward outlook signals cautious confidence: revenue guidance is steady, but the EPS guidance is lower than the consensus range, reflecting the impact of ongoing AI investments and the expectation of continued margin compression. Zoom also reiterated its share‑buyback program, supported by a $7.9 billion cash balance and a free‑cash‑flow margin that, while lower than the prior quarter, still provides a solid cash generation base.
Investors reacted negatively to the earnings release, citing the EPS miss and the conservative EPS guidance for the full year as primary concerns. Analysts noted that while the revenue beat and AI momentum are positive signals, the shortfall in earnings and the lower guidance for profitability suggest that the company’s aggressive investment strategy may continue to weigh on near‑term profitability.
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