Zoom Communications, Inc. Q1 FY2026 earnings call

• Eric introduced the new Custom Avatar for Zoom Clips, highlighting AI innovation and trust/safety measures. - AI-powered innovations include Zoom Tasks, calendar manager, Custom AI Companion, and launches of Zoom Workplace for Frontline and Clinicians. AI Companion MAU up nearly 40% Q/Q. - Zoom Workplace drives value with customers like the Boston Celtics and a leading financial institution adopting. - Zoom Phone revenue growing mid-teens, integrated with Microsoft Teams. - Customer Experience: Zoom Contact Center customers grew 65% Y/Y, Zoom Virtual Agent had largest deal to date. Workvivo customer count grew 106% Y/Y. - New CMO Kim Storin, strategic partnership with Bell Canada, and channel system transformation.

Total revenue in Q1 grew approximately 3% year-over-year to $1.175 billion. Enterprise revenue grew approximately 6% year-over-year, representing 60% of total revenue. Online business had average monthly churn of 2.8%, a 40 basis point improvement year-over-year. The number of Enterprise customers contributing more than $100,000 in trailing 12 month revenue grew 8% year-over-year, making up 32% of total revenue. Americas revenue grew 4% Y/Y, EMEA 1%, APAC 2%. Non-GAAP gross margin in Q1 was 79.2%. Non-GAAP income from operations grew 2% year-over-year to $467 million. Deferred revenue at the end of the period grew 5% year-over-year to $1.43 billion. RPO increased 6% year-over-year to approximately $3.9 billion. Operating cash flow in Q1 was $489 million, free cash flow was $463 million. The company purchased 5.6 million shares for $418 million in Q1 as part of the share buyback plan.

• Raised full-year revenue guidance to $4.8 billion to $4.81 billion (3% Y/Y growth midpoint). - Raised full-year non-GAAP operating income to $1.865 billion to $1.875 billion (38.9% margin midpoint). - Raised non-GAAP EPS for FY ’26 to $5.56 to $5.59. - Q2 revenue expected $1.195 billion to $1.2 billion (3% Y/Y growth midpoint), non-GAAP operating income $460 million to $465 million, EPS $1.36 to $1.37.

Forward-looking statements are subject to risks and factors detailed in SEC filings. Macro environment uncertainty may affect enterprise deals. Competitive dynamics in video meetings and CCaaS pose risks.

Q: About Zoom AI Companion adoption in SMB segment and paid AI SKU revenue contribution.

A: Eric mentioned AI Companion has healthy active users growth, with customers like Raymond James using it. Customized AI Companion has strong interest from Global 2000 trial customers.

Q: On Contact Center higher priced SKUs and Enterprise outlook.

A: Eric said Zoom Contact Center had largest quarter in ARR contribution with upsell of Zoom Virtual Agent. Michelle said enterprise had some prudent sales elongation with more scrutiny on deal terms but strong fundamentals.

Q: On competitive dynamics of Zoom in video meetings and new customer acquisition.

A: Eric stated Zoom's offering is valued by employees, has lower TCO vs competitors, and an employee choice factor. Michelle added on Teams integration helping with new customer wins.

Q: On Zoom Contact Center deal sizes and competitive environment.

A: Eric said Contact Center customers grew 65% Y/Y, top deals not replacing existing cloud vendors and many via channels. Michelle noted 10% mix shift towards Elite SKUs.

Q: On online monthly pro pricing increase and sensitivity.

A: Michelle said the price increase reflects incremental value, doubled storage limit, and no plans for other increases soon with record low churn.

Q: On macro impact on enterprise and online churn.

A: Michelle said online had no impact from macro, enterprise had deal pausing and elongation in specific customer scenarios.

Q: On Zoom Phone growth and competitive outlook.

A: Eric said opportunity in on-premise migration, Michelle added on Mitel partnership and channel motion aiding growth.

Q: On Workvivo growth and Meta migration.

A: Eric and Michelle said Workvivo had 106% Y/Y growth, driven by Meta partnership, with 90% new to Zoom customers.

Q: On buyback acceleration.

A: Michelle said buyback acceleration reflects confidence, with remaining $1.2 million planned to be used in fiscal '26.

Q: On billings outlook and new customer acquisition.

A: Michelle said enterprise deals had elongation, online had strong new customers and churn.

Q: On channel transformation and feedback.

A: Michelle said channel transformation focused on expanding ecosystem, changing incentives, and speeding quote to cash, with positive feedback on phone and Contact Center deals.

Q: On international focus and products.

A: Michelle said global strategy with broad growth thesis resonating in EMEA, with focus on better together and employee experience.

Q: On enterprise churn and CCaaS disclosure.

A: Michelle said continued low churn in enterprise and online, with focus on holistic value and Meta trends.

Q: On AI avatars and AI role.

A: Eric talked about AI's role in business workflows, integrating with systems, and the federate AI approach for cost and value balance.

Q: On frontline workers product and custom AI Companion monetization.

A: Michelle said frontline worker product targets on-ship comms, workforce mgmt, and AI assistant, with custom AI Companion seeing excitement but not material revenue in FY '26 yet.

Q: On AI and NVIDIA impact.

A: Eric said Zoom's federate AI approach balances cost and value, offering free AI Companion due to optimization, and customized AI Companion is more system integration focused.