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Zoom Communications (ZM) delivered a strong Q1, with revenue and EPS both beating expectations, a solid increase in enterprise demand, and accelerating adoption of its AI products. The key takeaway is that ZM is increasingly positioning itself as an AI-powered “system of action,” while still maintaining excellent profitability and cash generation.

• Q1 adjusted EPS was $1.55, beating the FactSet consensus by $0.13, while revenue rose 5.5% yr/yr to $1.24 bln, also ahead of estimates.
• Enterprise revenue increased 7.2% to $755.7 mln and accounted for 61% of total sales, highlighting continued mix shift toward higher-value customers and products.
• ZM ended the quarter with 4,534 customers generating more than $100,000 in trailing 12-month revenue, up 8.2% yr,/yr while enterprise net dollar expansion improved to 99%.
• AI momentum was a standout, with paid monthly active users for AI Companion up 184% yr/yr and My Notes surpassing 1.5 mln licensed users in just four months.
• The company’s new and expanded AI monetization layers - including Custom AI Companion, ZVA Receptionist, Seer by Workvivo, and Zoom AI Services - suggest a broader opportunity to deepen wallet share across collaboration, CX, and developer use cases.
• ZM’s backlog and billings trends were healthy, with RPO up 11% to about $4.3 bln and non-current RPO up 19%, signaling strength in larger, longer-duration platform deals.
• Profitability remained excellent, with Q1 non-GAAP operating margin at 41.1% and free cash flow margin at 40.4%, while the company also authorized an additional $1.0 bln share repurchase program.
• Guidance was mixed near term but constructive longer term. Q2 EPS guidance of $1.45-$1.47 was below consensus, Q2 revenue guidance of $1.265-$1.270 bln was roughly in line, and FY27 EPS guidance of $5.96-$6.00 and revenue guidance of $5.08-$5.09 bln were both above consensus.

Briefing.com Analyst Insight:

ZM’s Q1 report reinforced that the company’s enterprise transition is progressing, with stronger deal activity, better net dollar expansion, and expanding traction in contact center and AI-driven products. The standout strategic point was management’s insistence that ZM is evolving beyond meetings into a broader workflow platform, where conversation data becomes actionable through AI. That vision is still early, but the call showed real evidence of product-market pull, especially in AI Companion, Custom AI Companion, and ZCX. At the same time, ZM continues to generate elite margins and cash flow, and the new buyback authorization underscores confidence in the durability of the business. Overall, the quarter suggested that ZM’s growth engine is becoming more diversified and that AI is starting to translate into both customer adoption and monetization.