Zoom Video Communications reported Q2 2025 with revenue of $1.1625 billion, up 2.1% year over year and 1.9% quarter over quarter. The gross margin of 75.48% remained elevated, supported by a stable mix of high-margin services and a continued emphasis on value-added offerings such as Zoom Phone, Zoom Rooms and Zoom Events. EBITDA of $231.5 million yielded an EBITDA margin near 20%, while net income reached $219.0 million and diluted EPS of $0.70-$0.71. Free cash flow was $365.1 million, and the company ended the period with a robust liquidity position, including cash and short-term investments of roughly $7.52 billion and net negative debt (net cash) of about $1.48 billion. These metrics signal strong profitability and cash generation even as top-line growth remains modest in a competitive UCaaS landscape.
Management’s emphasis on profitability, disciplined cost management, and continued monetization of value-added products aligns with a durable cash-flow story. However, growth remains dependent on continued platform adoption, expansion of Zoom Phone and enterprise collaborations, and optimization of the event and developer ecosystems. The market backdrop—intense competition from large incumbents (e.g., Microsoft, Cisco/Webex) and ongoing macro uncertainty—suggests Zoom’s next leg of upside will hinge on product innovation, customer retention, and higher ARPU from premium offerings. Investors should monitor ARR growth, customer mix, churn, and the trajectory of cash conversion and operating leverage as indicators of sustainable profitability.
Key Performance Indicators
Revenue
1.16B
QoQ: 1.87% | YoY:2.09%
Gross Profit
877.43M
75.48% margin
QoQ: 8.74% | YoY:0.61%
Operating Income
202.37M
QoQ: -26.73% | YoY:13.94%
Net Income
219.02M
QoQ: 1.25% | YoY:20.36%
EPS
0.71
QoQ: 1.43% | YoY:16.39%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $1.1625B; YoY +2.09%; QoQ +1.87% (YoY and QoQ growth from the reported revenue figure in the QQ2 2025 results).
Net Income: $219.015M; Net Margin 18.84%; YoY +20.36%; QoQ +1.25%.
Financial Highlights
Key metrics snapshot (USD unless noted):
- Revenue: $1.1625B; YoY +2.09%; QoQ +1.87% (YoY and QoQ growth from the reported revenue figure in the QQ2 2025 results).
- Gross Profit: $877.431M; Gross Margin 75.48%; YoY margin change +0.61%; QoQ +8.74% in gross profit.
- Operating Income: $202.37M; Operating Margin 17.41%; YoY +13.94%; QoQ -26.73% (reflecting seasonality and expense timing).
- EBITDA: $231.454M; EBITDA Margin ≈ 19.91%.
- Net Income: $219.015M; Net Margin 18.84%; YoY +20.36%; QoQ +1.25%.
- EPS (Diluted): $0.70; Basic $0.71; YoY +16.39%; QoQ +1.43%.
- Free Cash Flow: $365.1M; Cash Flow from Operations: $449.334M; Capex: $84.234M.
- Cash and investments: Cash and Cash Equivalents $1.539B; Short-Term Investments $5.980B; Total Cash & Short-Term Investments approximately $7.520B.
- Balance sheet: Total Assets $10.507B; Total Liabilities $1.982B; Total Stockholders’ Equity $8.525B; Current Ratio 4.56; Quick Ratio 4.56; Cash Ratio 0.836.
- Deferred Revenue: Current portion $1.391B; Non-Current $0.015B; Total Deferred Revenue ≈ $1.406B.
- Net Debt: approximately -$1.475B (net cash).
- Revenue Quality: High mix of high-margin software and services with a stable around-75% gross margin.
Note: All figures sourced from the QQ2 2025 financial data and ratios provided in the data set.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
1.16B
2.09%
1.87%
Gross Profit
877.43M
0.61%
8.74%
Operating Income
202.37M
13.94%
-26.73%
Net Income
219.02M
20.36%
1.25%
EPS
0.71
16.39%
1.43%
Key Financial Ratios
currentRatio
4.56
grossProfitMargin
75.5%
operatingProfitMargin
17.4%
netProfitMargin
18.8%
returnOnAssets
2.08%
returnOnEquity
2.57%
debtEquityRatio
0.01
operatingCashFlowPerShare
$1.43
freeCashFlowPerShare
$1.16
priceToBookRatio
2.25
priceEarningsRatio
21.91
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Transcript-derived highlights could not be generated because the earnings transcript data is not provided in the input. As a result, no direct management quotes or categorized quote-based themes (strategy, operations, market conditions) are available. If you supply the QQ2 2025 earnings call transcript, I will extract 2-3 key quotes and group them by theme with context and significance.
N/A
— N/A
N/A
— N/A
Forward Guidance
No formal forward-looking guidance was published in the provided QQ2 2025 results dataset. Absent explicit numeric targets, the forward view rests on qualitative assessment of the growth trajectory and industry dynamics. In our assessment:
- Upside catalysts: Monetization of Zoom Phone and premium communications features; higher ARPU from Zoom Meetings/Video Communications; expansion of Zoom Events/OnZoom monetization; ongoing improvements in AI-driven collaboration tools; and cross-sell into enterprise accounts.
- Key risks to guidance: Competitive pressure from Microsoft Teams, Cisco Webex, Google Meet; enterprise renewal risk in a soft macro environment; potential churn from smaller customers; and longer sales cycles in large organisations.
- Monitoring points for investors: ARR growth, net revenue retention (NRR), customer concentration and renewal rates, adoption of AI-enabled features, mix shift toward higher-margin products, and cash-cost leverage as revenue scales.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
5ZM.F Focus
75.48%
17.40%
2.57%
21.91%
307.F
51.10%
11.80%
1.86%
121.88%
22UA.F
53.50%
-5.44%
-4.26%
-5.44%
SQ3.F
36.30%
4.98%
1.01%
49.92%
5CV.F
-2.17%
-5.10%
-19.30%
-2.42%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
With a solid balance sheet, strong gross margins, and meaningful free cash flow, Zoom sits in a favorable position to sustain profitability while pursuing growth initiatives. The QQ2 2025 results show resilience in profitability despite modest revenue growth, supported by efficient cost structure and robust cash generation. The primary near-term upside will depend on the company’s ability to monetize higher-margin offerings (Zoom Phone, Events, OnZoom) and to scale AI-enabled features that improve usage and retention. Relative to peers, Zoom’s balance sheet strength and cash generation provide optionality for strategic investments or shareholder returns, though the stock remains exposed to competitive dynamics and macro uncertainty. Investors should monitor ARR growth, retention, and the adoption rate of premium services, as well as execution on AI and events monetization to assess sustained upside potential.
Key Investment Factors
Growth Potential
Growth levers include increasing penetration of Zoom Phone in enterprise telephony, expansion of premium collaboration features, monetization of OnZoom events, and incremental upsell within the existing customer base. With a strong gross margin profile (~75.5%) and robust FCF, Zoom potentially expands margins through operating leverage as revenue scales, supported by AI-enhanced product capabilities.
Profitability Risk
Key risks include intensified competition from tech giants (MSFT, CSCO, GOOG) impacting share gains and pricing; macro weakness affecting enterprise spend; customer concentration in large accounts; potential deferral of spend into future periods; and potential cybersecurity/regulatory risks impacting user adoption.
Financial Position
Balance sheet remains strongly positive with net cash position (~$1.48B) and substantial liquidity (~$7.52B in cash and short-term investments). The company showcases healthy liquidity metrics (current ratio ~4.56) and a conservative debt profile, providing flexibility to invest in product development and strategic acquisitions or partnerships if desired.
SWOT Analysis
Strengths
High gross margin (≈75%), signaling a largely software-driven, scalable business model
Strong free cash flow generation (FCF ≈ $365.1M) and net cash position (~$1.48B)
Robust liquidity (≈$7.52B in cash and short-term investments) and prudent balance sheet management
Established, global UCaaS platform with diversified product suite (Meetings, Phone, Rooms, Events, OnZoom, Developer Platform)
Consistent profitability and healthy operating cash flow supports resilience in cyclical tech spend
Zoom Video Communications Inc (5ZM.F) QQ4 2025 Results: Solid Revenue Continuity, Strong Free Cash Flow, and a Prudent Balance Sheet on a Multiplatfor...