Executive Summary

Q1 FY26 delivered modest top-line growth and strong profitability: revenue $1.1747B (+2.9% YoY) and non-GAAP EPS $1.43; both exceeded internal guidance, with non-GAAP operating margin at 39.8% .
Against Wall Street consensus, Zoom posted a beat on both revenue ($1.1747B vs $1.1661B*) and EPS ($1.43 vs $1.305*); enterprise revenue rose 5.9% YoY to $704.7M while online declined 1.2% YoY to $470.0M .
Management raised full-year FY26 guidance (revenue to $4.800–$4.810B; non-GAAP operating income to $1.865–$1.875B; non-GAAP EPS to $5.56–$5.59) and guided Q2 revenue to $1.195–$1.200B and EPS to $1.36–$1.37 .
Capital return accelerated: 5.6M shares repurchased for $418M in Q1; $1.2B buyback remains authorized, supporting share count reduction and EPS leverage .
Stock-relevant catalysts: raised FY guidance, accelerating buybacks, improving online churn (2.8% record low for a first quarter), and momentum in AI-first CX (Zoom Contact Center and Virtual Agent upsell strength) .

What Went Well and What Went Wrong

What Went Well

Enterprise strength and mix shift: enterprise revenue +5.9% YoY to $704.7M; enterprise now 60% of total revenue, up ~200bps YoY .
AI-first momentum across products: “We delivered another solid quarter, exceeding guidance in both revenue and profitability — a testament to the strength of our platform and AI-first innovation” — Eric Yuan . Monthly active users of AI Companion grew ~40% QoQ, and custom AI Companion began monetization trials .
CX and Virtual Agent traction: Contact Center customers grew 65% YoY; Virtual Agent saw its largest upsell quarter; CX is now a “triple-digit million ARR business, growing in high double digits” .

What Went Wrong

Online revenue was down 1.2% YoY and billings showed prudence in enterprise given “elongation” and higher scrutiny at larger U.S. customers; TTM enterprise net dollar expansion rate held at 98% (below 100%) .
Gross margin headwind from AI investments: non-GAAP GM was 79.2%, slightly below the long-term 80% target, with management reiterating efficiency goals despite continued AI spend .
Operating cash flow and FCF declined YoY on timing of tax payments: OCF $489.3M vs $588.2M; FCF $463.4M vs $569.7M .

Financial Results

Metric	Q3 2025	Q4 2025	Q1 2026 Actual	Q1 2026 Consensus
Revenue ($USD Billions)	$1.178	$1.184	$1.1747	$1.1661*
Non-GAAP Diluted EPS ($)	$1.38	$1.41	$1.43	$1.305*
Non-GAAP Operating Margin %	38.9%	39.5%	39.8%	—
GAAP Net Income ($USD Millions)	—	—	$254.6	—
Cash from Operations ($USD Millions)	$483	$425	$489.3	—
Free Cash Flow ($USD Millions)	$458	$416	$463.4	—

Values with an asterisk (*) retrieved from S&P Global.

YoY comparables for Q1:

Revenue Q1 FY26 vs Q1 FY25: $1.1747B vs $1.1412B (+2.9% YoY) .
Non-GAAP diluted EPS Q1 FY26 vs Q1 FY25: $1.43 vs $1.35 (+6.0% YoY) .

Segment breakdown (Q1 FY26):

Segment	Q1 FY26 Revenue ($USD Millions)	YoY Change
Enterprise	$704.7	+5.9%
Online	$470.0	-1.2%

KPIs (Q1 FY26):

KPI	Q1 FY26	YoY / Context
Customers >$100K TTM	4,192	+8.0% YoY
TTM Net Dollar Expansion (Enterprise)	98%	Stable QoQ
Online Avg Monthly Churn	2.8%	-40 bps YoY; record low for Q1
Online MRR ≥16 months tenure	74.2%	+40 bps YoY
Deferred Revenue	~$1.43B	+5% YoY
RPO (Total)	~$3.9B	61% to be recognized in next 12 months
Cash, Equivalents & Marketable Securities	~$7.8B	—

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Revenue ($B)	Q2 FY26	N/A	1.195–1.200	N/A
Non-GAAP Operating Income ($M)	Q2 FY26	N/A	460–465	N/A
Non-GAAP Diluted EPS ($)	Q2 FY26	N/A	1.36–1.37 (≈310M shares)	N/A
Total Revenue ($B)	FY26	4.785–4.795	4.800–4.810	Raised
Non-GAAP Operating Income ($B)	FY26	1.85–1.86	1.865–1.875	Raised
Non-GAAP Diluted EPS ($)	FY26	5.34–5.37	5.56–5.59 (≈312M shares)	Raised
Free Cash Flow ($B)	FY26	1.68–1.72	1.680–1.720	Maintained
Deferred Revenue YoY Growth	Q2 FY26	N/A	+4% to +5%	N/A

Note: EPS/share count figures exclude impacts from remaining $1.2B repurchase authorization .

Earnings Call Themes & Trends

Topic	Q3 FY25 (prior two quarters)	Q4 FY25 (prior quarter)	Q1 FY26 (current)	Trend
AI/Technology Initiatives	Zoomtopia launch of AI Companion 2.0; democratize AI; roadmap for custom AI add-ons and frontline solutions	Continued AI investments; long-term GM target 80%; monetization expected to ramp later (custom Companion)	AI Companion MAU up ~40% QoQ; custom AI Companion monetization pilots; federated AI approach; efficiency focus	Strengthening
Customer Experience (Contact Center & Virtual Agent)	Largest-ever CC deal (>20k seats); channel-led wins; CC customers +82% YoY	Elite SKU mix strength; Fortune 100 win (15k+ agents)	CC customers +65% YoY; Virtual Agent largest upsell quarter; triple-digit million ARR, high double-digit growth	Strengthening
Zoom Phone	Strong traction; Mitel partnership expands reach	Continued growth; channel motion maturation	Mid-teens revenue growth; Teams integration adoption rising; large on-prem seat migration opportunity (~150M)	Strengthening
Workvivo (Employee Experience)	Customers +72% YoY; billion-scale deals; Meta migration partnership announced	Record bookings; customers +89% YoY; Meta migration driver; durable non-Meta expansion too	Customers +106% YoY; 90% new-to-Zoom; Meta migration normalizing in H2	Strengthening near term; normalization later
Channel Partnerships	Top CC deals via channel; expanding ecosystem	Upmarket push; accelerating channel for Phone/CC	Bell Canada partnership; improved quote-to-cash; channel-led wins in CC and Phone	Strengthening
Macro/Tariffs	Mixed macro backdrop assumed in guidance	“Mixed but stable to positive”; prudence maintained	Enterprise deal elongation/scrutiny at larger U.S. customers; prudence in outlook	Cautious
Online Business	Churn reached lowest ever (2.7%)	Record-low churn Q3/Q4; online flat to slightly down outlook	Q1 churn 2.8% (record low for a first quarter); $1 price increase on monthly Pro SKUs; doubled storage	Stabilizing
Regional Trends	Americas +4% YoY; EMEA +5%; APAC flat	Americas +4% YoY; EMEA +2%; APAC +3% (CC)	Americas +4% YoY; EMEA +1%; APAC +2%	Mixed

Management Commentary

“We delivered another solid quarter, exceeding guidance in both revenue and profitability — a testament to the strength of our platform and AI-first innovation” — Eric S. Yuan, CEO .
CFO on profitability and efficiency: non-GAAP GM 79.2% with continued AI investment; long-term GM target 80% reiterated .
Strategy: “Our AI-first strategy positions us to help customers stay ahead… while our platform approach delivers compelling TCO advantages” — Eric Yuan .
Capital allocation: accelerated buyback in Q1 (5.6M shares, $418M) with ~$1.2B remaining authorization in FY26 .

Q&A Highlights

AI Companion adoption and monetization: MAUs up ~40% QoQ; custom AI Companion pilots show enthusiasm, especially for BYO dictionary/index, summary templates, Jira integration; monetization expected to be modest in FY26, potentially more in FY27 .
Enterprise demand environment: larger U.S. customers seeing elongation/scrutiny; no losses but prudent outlook; deferred revenue expected +4–5% YoY in Q2 .
Online pricing: $1 increase for monthly Pro SKUs with doubled storage; no plans for additional increases; churn remains record-low .
Zoom Phone and Teams integration: mid-teens revenue growth, increased wins through Teams integration; large on-prem migration runway (~150M seats) .
Buyback cadence: Q1 acceleration reflects confidence; ~$1.2B remaining expected to be executed in FY26 .

Estimates Context

Metric	Q1 FY26 Consensus	Q1 FY26 Actual	Result
Revenue ($USD Billions)	$1.1661*	$1.1747	Beat
Primary EPS ($)	$1.305*	$1.43	Beat

Values retrieved from S&P Global.

Key Takeaways for Investors

Beat-and-raise quarter: Both revenue and EPS exceeded consensus, and FY26 guidance was raised across revenue, operating income and EPS — supportive for estimate revisions and sentiment .
Enterprise-led growth with stabilizing online: enterprise mix at 60% and online churn at record lows underpin durability, despite elongated enterprise deal cycles in pockets .
AI-first platform narrative gaining traction: measurable adoption in AI Companion, strong CX/Virtual Agent upsells, and federated AI approach suggest sustainable differentiation and margin-aware scaling .
CX and Phone as growth vectors: CC customers +65% YoY, Virtual Agent upsell momentum; Phone mid-teens growth with Teams integration — both aided by maturing channel motion .
Capital return enhances per-share metrics: accelerated buybacks reduced diluted share count; remaining $1.2B authorization offers ongoing EPS leverage .
Near-term trading implications: a clear beat vs consensus and raised FY guide are positive catalysts; monitor macro-related enterprise elongation and FX for Q2 pacing .
Medium-term thesis: platform consolidation, AI monetization ramp (custom Companion, vertical solutions), and CX/Phone penetration into on-prem bases (and via channel) position Zoom for steady top-line growth with disciplined margins .

Notes on Non-GAAP Adjustments

Non-GAAP excludes stock-based compensation, related payroll taxes, acquisition-related expenses, gains/losses on strategic investments, and associated tax effects; non-GAAP operating margin and EPS are defined accordingly .
GAAP EPS was $0.81 vs non-GAAP $1.43 in Q1 FY26, reflecting these adjustments .

Zoom Communications, Inc. (ZM)·Q1 2026 Earnings Summary