In fiscal 2026 (the year to 31 January 2026) Zoom Communications reported revenue of $4,868.8 million, up 4.4%, income from operations of $1,123.6 million (a 23.1% margin) and net income of $1,900.1 million, lifted by $969.8 million of gains on strategic investments, according to its Form 10-K. Enterprise customers brought in 60.3% of revenue. In the quarter to 31 July 2026 revenue was $1,277.2 million, up 4.9%, and net income jumped to $1,542.4 million on a $1,612.7 million unrealized gain on its Anthropic stake.
Enterprise customers, served by sales teams, resellers and partners, were 60.3% of fiscal 2026 revenue, up from 59.0%. Online customers who buy on the website were 39.7%, and their average monthly churn was 2.8%.
02
Growth comes from larger accounts
Enterprise subscription revenue grew 6.5% in fiscal 2026 while Online revenue grew 1.2%. Customers paying more than $100,000 a year rose to 4,468 at 31 January 2026, from 4,088 a year earlier.
03
Margins widened
Gross margin rose to 77.0% from 75.8%, mainly on lower stock-based pay. Sales and marketing fell to 28.5% of revenue, and the operating margin reached 23.1%, against 17.4% in fiscal 2025.
04
Cash funds buybacks
Operating cash flow was $1,989.0 million and free cash flow $1,924.1 million in fiscal 2026. The board has authorised $4.7 billion of buybacks since February 2024, including $1.0 billion added in May 2026.
What changed in 2025-26
Second quarter of fiscal 2027
In the three months to 31 July 2026 revenue was $1,277.2 million, up 4.9%, with Enterprise revenue up 7.8% and Online up 0.6%. Income from operations was $314.3 million and customers above $100,000 reached 4,625.
An Anthropic gain on the books
Zoom holds preferred stock in Anthropic. It invested a further $300.9 million in the six months to 31 July 2026 and booked a $1,612.7 million unrealized gain in the quarter, after Anthropic’s funding round of 28 May 2026; the stake was carried at $3,134.5 million.
An AI-first platform
The 10-K describes Zoom Workplace with AI Companion and a federated approach that picks among models from OpenAI, Anthropic, NVIDIA and Zoom’s own for each task. Enterprise net dollar expansion was 98% at 31 January 2026 and 99% at 31 July 2026, still below 100%.
Leadership and board
Chief Operating Officer Aparna Bawa left on 8 May 2026. On the board, William McDermott resigned on 27 July 2026 and former Oracle CFO Jeff Epstein joined on 31 August 2026. Founder Eric Yuan remains CEO.
Zoom key financials (Form 10-K, years to 31 January)
Investors: separate operating income from investment gains; in the July 2026 quarter net income was $1,542.4 million while income from operations was $314.3 million.
Track Enterprise net dollar expansion each quarter: a move above 100% would mean existing customers are spending more, not just being replaced.
Watch the Online share of revenue, which fell to 38.3% in the July 2026 quarter, as a gauge of how much Zoom depends on small customers.
Buyers comparing meeting and phone platforms: Zoom's federated AI uses several model providers, so ask which model handles your data.
Analysts: treat the Anthropic carrying value as a mark that moves with each Anthropic funding round, not as recurring profit.
The Business Engineer lens
Zoom’s numbers show a mature software business that grows in single digits, earns wide margins and returns its cash through buybacks, while its largest profit swing now comes from owning part of an AI lab. The Business Engineer’s view is that the operating story depends on turning AI Companion into paid expansion inside large accounts, the line that has stayed below 100% net expansion.
$4,868.8 million in the year to 31 January 2026, up 4.4% from $4,665.4 million, according to its Form 10-K.
Is Zoom profitable?
Yes. Fiscal 2026 income from operations was $1,123.6 million and net income $1,900.1 million, which included $969.8 million of gains on strategic investments.
In the quarter to 31 July 2026 Zoom recorded a $1,612.7 million unrealized gain on its preferred stock in Anthropic, after Anthropic's 28 May 2026 funding round.
What is Zoom's net dollar expansion rate?
The trailing 12-month rate for Enterprise customers was 98% at 31 January 2026 and 99% at 31 July 2026.
The complete explainer, cleaned up and reformatted for mobile.
How Zoom Communications makes money, FY2026: the income statement as a flow, to scale. Sales-led Enterprise accounts now bring in 60% of Zoom's revenue. Source: Zoom Communications, Inc. (NASDAQ: ZM) Form 10-K for fiscal 2026 (filed 2026-02-27). Gross profit, margins and shares calculated. Full analysis: how Zoom makes money.Watch (57 seconds): Zoom: where the money comes from, step by step, with captions. Figures from the filing named at the end.
What Is Zoom Financials?
Zoom Financials refers to the comprehensive financial performance metrics, statements, and operational results of Zoom Video Communications, Inc., the publicly traded video conferencing platform founded by Eric S. Yuan. Zoom’s financials encompass revenue streams, profitability margins, user growth, and operational efficiency across its freemium and enterprise business segments.
Zoom Video Communications transformed from a niche video platform into a global communications infrastructure — as explored in the economics of AI compute infrastructure — company. The company’s financial trajectory reflects its strategic pivot from consumer-focused freemium services to enterprise-grade solutions. Zoom’s financial health directly influences investor confidence, market valuation, and its competitive positioning against Microsoft Teams, Google Meet, Cisco Webex, and GoToMeeting in the unified communications space.
Revenue generated from subscription-based enterprise accounts, freemium users converted to paid plans, and infrastructure services
Public company traded on NASDAQ under ticker symbol ZM with institutional and retail investor bases
Profitability measured through net income, operating margins, and cash flow generation from core video conferencing operations
User metrics tracked across free users, paying subscribers, enterprise customers, and total meeting participants
Geographic revenue diversification across North America, EMEA (Europe, Middle East, Africa), and Asia-Pacific regions
Annual financial reporting to the SEC including 10-K filings, quarterly earnings, and investor guidance
How Zoom Financials Works
Zoom’s financial model operates through a dual-track conversion strategy: freemium user acquisition generates network effects and brand awareness, while enterprise sales teams systematically convert high-value accounts into recurring revenue contracts. The company’s financial performance depends on managing customer acquisition costs against lifetime value of enterprise relationships.
The financial structure encompasses multiple operational components that drive revenue generation and cost management:
Freemium User Acquisition: Zoom provides unlimited free meetings for up to 40 minutes with two or more participants, creating a vast user base that generates viral adoption and brand recognition without immediate revenue
Enterprise Account Sales: Direct sales teams target mid-market and enterprise customers with custom contracts, volume licensing, and dedicated support, generating the highest revenue per customer
Platform Add-ons and Services: Revenue flows from Zoom Phone (VoIP system), Zoom Rooms (hardware solutions), Zoom Chat (messaging), and Zoom Mail services layered onto the core platform
Cost Management Structure: Infrastructure costs scale with user growth, while sales, marketing, and R&D expenses are managed as percentages of revenue to maintain profitability targets
Customer Retention and Expansion: Annual contract values increase through upsells to existing customers, reducing customer acquisition cost dependence and improving lifetime value metrics
Quarterly Financial Reporting: SEC filings, earnings calls, and guidance updates communicate performance metrics to investors, influencing Zoom’s stock price and market capitalization
Advantages and Disadvantages of Zoom Financials
Advantages
High-Margin Subscription Revenue: Zoom’s subscriptionmodel generates recurring revenue with gross margins exceeding 75%, providing predictable cash flows and reducing dependence on volatile one-time licensing deals, enabling consistent profitability and investor confidence
Cash Generation Capability: Zoom’s profitable operations generate positive free cash flow exceeding $1 billion annually, funding acquisitions, capital returns to shareholders, and balance sheet strength to weather competitive pricing pressure or macro economic headwinds
Disadvantages
Intense Competition and Pricing Pressure: Microsoft Teams’ bundled advantage within Microsoft 365 eliminates Zoom’s pricing power for enterprise customers, compressing margins and forcing Zoom to compete on feature differentiation rather than economics, reducing profitability upside
Freemium User Monetization Limits: Converting free users to paid plans requires critical mass of feature limitations, but excessive restrictions damage user experience and reduce engagement, creating a tension that limits the addressable market from the freemium base
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
