Zoom Communications, Inc. Q4 FY2026 earnings call

FY26 was pivotal. Growth reflects shift to AI-driven systems of action. Scaling AI-first customer experience: CX platform embedded in system of action, ZCX ARR growing in high double digits. Q4 customer wins include Aeroflow Health, MLB, OpenLane, major insurance provider, Surrey and Sussex Healthcare NHS Trust. Growing AI revenue streams: Zoom Revenue Accelerator had 50% year-over-year growth in number of customers, BrightHire closed in Q4. Custom AI Companion has new customers. Zoom Workplace saw growth in AI Companion MAUs, launched AI Companion 3.0. Zoom Phone had competitive wins, Phone ARR growing in mid-teens.

In Q4, total revenue grew 5.3% year-over-year to $1.25 billion. Enterprise business revenue grew 7.1%, representing 61% of total revenue. America's revenue grew 6%, EMEA 5%, and APAC 3%. Non-GAAP gross margin in Q4 was 79.8%. Deferred revenue at end of Q4 grew 5% year-over-year to $1.42 billion. RPO increased over 10% year over year to approximately $4.2 billion. Q4 operating cash flow was $355 million, free cash flow was $338 million. For full FY26, total revenue grew 4.4%, enterprise revenue grew 6.5%, non-GAAP gross margin was 79.7%, non-GAAP operating margin was 40.4%, free cash flow grew 6.4% to $1.9 billion.

Q1 revenue expected in range of $1.22 to $1.225 billion, non-GAAP operating income in range of $487 to $492 million, non-GAAP earnings per share $1.40 to $1.42. FY27 revenue expected to cross $5 billion, land in range of $5.065 to $5.075 billion, non-GAAP operating income in range of $2.05 to $2.06 billion, non-GAAP earnings per share $5.77 to $5.81, free cash flow in range of $1.7 to $1.74 billion.

Q: How think about AI and monetization progress in fiscal 2027?

A: Very optimistic, customized AI companion, leverage AI in various products like ZCX, ZRA, etc.

Q: Quantify impact from larger competitive takeouts on Q1 deferred revenue growth guidance?

A: Recent trend of wins in large and longer competitive markets with grace period, included 40-basis headwind from single large competitor white labeling.

Q: What structural barriers prevent AI models from disintermediating Zoom?

A: Mission criticality, reliability, security, ease of use, hard to replicate code for video audio, etc.

Q: Trends in international revenue growth and key initiatives?

A: International business growing, investing in contact center, phone, Workvivo, channel investments.

Q: Ownership structure of foundation model companies and durability of phone, contact center growth?

A: Zoom has Zoom Ventures Fund, minority stake in Anthropic; phone has mid-teens growth, contact center has high double digit growth with AI monetization.

Q: Balance addressing additional departments vs going deep in existing areas?

A: Can do both, leverage AI to penetrate new markets, vertical and horizontal use cases.

Q: Monetization of custom AI companion in FY27?

A: Already contributing, more innovations in Q3 and Q4, will help in FY27.

Q: Enterprise deceleration impact and what could cause enterprise to outperform?

A: Online growth with value addition, enterprise driven by meeting churn, phone growth, AI monetization.

Q: Quantifying credits and SMB opportunity?

A: Credits impact Q4 de minimis, SMB opportunity with AI and rich product portfolio.

Q: Pricing balance for fiscal 27?

A: Online guide includes 6% price increase for annual skew, enterprise focuses on total contract value.

Q: Product velocity improvements from AI coding tools?

A: Accelerated new product development, improved productivity for engineers, UI designers, etc.

Q: Channel enhancements and margin impact for fiscal 27?

A: Channel important for revenue growth, invest in incentives, etc. Margin guide due to amortization change and comp changes.

Q: Cisco displacements and sustainability of large opportunities?

A: AI driving migration from on-prem to cloud, deals reflect system of action.

Q: Channel buying pattern and go-to-market motion?

A: More bundled deals, system of action stitching, enterprise wanting platform with Zoom products