Zoom Communications 2026 Q3 Earnings Record Net Income Surges 196% as Revenue Grows 4.4%

Zoom Communications (ZM) reported Q3 2026 results exceeding expectations, with revenue rising 4.4% to $1.23 billion and EPS surging 206% to $2.05. The company guided Q4 revenue of $1.23–$1.235 billion (4.1% YoY growth) and FY26 revenue of $4.852–$4.857 billion. Despite strong earnings, shares fell 5.06% month-to-date, reflecting mixed post-earnings market sentiment.

Revenue

Zoom’s total revenue climbed to $1.23 billion in Q3 2026, a 4.4% increase from $1.18 billion in the prior-year period. The growth was driven by AI-driven product innovations and platform expansion, including Zoom Phone surpassing 10 million paid seats.

Earnings/Net Income

Earnings per share (EPS) soared 206% to $2.05, compared to $0.67 in 2025 Q3, while net income hit a record $612.87 million, up 196% from $207.05 million. The 8-year high net income underscores the company’s profitability acceleration through AI adoption and cost discipline.

Post-Earnings Price Action Review

The strategy of buying Zoom shares following a revenue growth quarter and holding for 30 days underperformed significantly, with a CAGR of 0.22% and excess return of -68.57%, lagging the 69.21% benchmark. The approach faced a maximum drawdown of 34.04% and a Sharpe ratio of 0.01, highlighting poor risk-adjusted returns and volatility.

CEO Commentary

CEO Eric Yuan emphasized AI innovation as a core growth driver, noting AI Companion 3.0’s 4x YoY adoption and high double-digit ARR growth in customer experience. Strategic priorities include scaling AI offerings like Custom AI Companion and AI-first customer experience through acquisitions such as BrightHire. Yuan expressed confidence in monetizing AI across verticals and partnerships.

Guidance

Zoom guided Q4 revenue of $1.23B–$1.235B (4.1% YoY growth at midpoint) and FY26 revenue of $4.852B–$4.857B. Non-GAAP EPS for Q4 is projected at $1.48–$1.49, with FY26 EPS of $5.95–$5.97. CFO Michelle Chang announced a $1B share repurchase program, raising full-year free cash flow to $1.86B–$1.88B, with FY26 operating margin targeting 40.3%.

Additional News

1. Share Buyback Expansion: Zoom announced a $1 billion share repurchase program, signaling confidence in its financial strength and growth prospects.

2. AI Integration: AI Companion 3.0 adoption surged 4x YoY, while Zoom Phone reached 10 million paid seats, reflecting product innovation.

3. Competitive Pressures: The company acknowledged challenges in the contact center market, including peers adopting consumption-based pricing models and post-COVID seat contraction.