Zoom Communications Q2 Earnings Show Strong Growth Amid Share Repurchase Plan

Zoom Communications' Q2 earnings showed a 12% year-over-year growth in sales and net income, boosting investor confidence. The company repurchased 6 million shares, and the S&P 500's climb to record highs and the tech sector's bullishness contributed to the stock's positive performance. Despite a 12% short-term share price rise, Zoom's current share price remains below the consensus analyst price target, indicating a potential opportunity for investors.

Zoom Video Communications (ZM) reported robust second-quarter (Q2) earnings for the fiscal year 2026, demonstrating a 12% year-over-year (YoY) growth in sales and net income. The company's earnings per share (EPS) of $1.53 surpassed analyst forecasts of $1.37, while total revenue reached $1.22 billion, exceeding expectations of $1.20 billion [1].

Key highlights from the Q2 results include:
- Total revenue of $1.22 billion, up 4.7% YoY and 4.4% in constant currency.
- Enterprise revenue of $730.7 million, up 7.0% YoY.
- GAAP operating margin of 26.4% and non-GAAP operating margin of 41.3%.
- GAAP EPS of $1.16, up 65.7% YoY, and non-GAAP EPS of $1.53, up 10.0% YoY.
- Repurchase of approximately 6.0 million shares of common stock in Q2, bringing the total repurchased under the current plan to 27.4 million.
- Number of customers contributing more than $100,000 in trailing 12 months (TTM) revenue up 8.7% YoY.

Zoom's founder and CEO, Eric S. Yuan, commented on the strong Q2 performance, stating, "AI is transforming the way we work together, and Zoom is at the forefront, driving innovation that helps people get more done, reduce costs, and deliver better experiences for customers and employees alike" [1].

The company also provided guidance for the third quarter of FY26, expecting total revenue between $1.210 billion and $1.215 billion and non-GAAP income from operations between $465.0 million and $470.0 million. For the full FY26, Zoom expects total revenue between $4.825 billion and $4.835 billion, non-GAAP income from operations between $1.905 billion and $1.915 billion, and non-GAAP diluted EPS between $5.81 and $5.84 [1].

Following the earnings release, Zoom's shares rose by 5% in after-hours trading, reflecting investor confidence in the company's performance and guidance. However, the stock remains below the consensus analyst price target of $85, indicating a potential opportunity for investors [2].

The S&P 500's climb to record highs and the tech sector's bullishness also contributed to Zoom's positive performance. Despite the 12% short-term share price rise, the company's current share price remains below the consensus analyst price target, indicating a potential opportunity for investors [2].

Investors should continue to monitor Zoom's future earnings reports and analyst ratings to gauge the company's performance and potential for growth. The ongoing development of its AI-powered tools and products positions Zoom as a significant player in the video communications market.

References:
[1] https://www.ainvest.com/news/zoom-video-communications-reports-q2-earnings-beat-raises-guidance-2508/
[2] https://www.ainvest.com/news/citi-raises-zoom-communications-price-target-85-neutral-rating-2508/