TLDR
- Q1 2026 revenue grew 3% Y/Y to $1.175 billion.
- AI Companion usage jumped 40% quarter-over-quarter.
- Zoom Phone posted mid-teens revenue growth.
- Q1 non-GAAP EPS beat guidance at $1.43.
- Full-year guidance raised for revenue and EPS.
Zoom Communications Inc. (NASDAQ: ZM) traded at $82.02 as of 3:55 PM EDT on May 21, 2025, down 0.30%.
The video conferencing firm reported Q1 2026 earnings that met expectations, raised guidance, and highlighted growing AI integration despite a cautious enterprise outlook.
Total revenue rose 3% year-over-year to $1.175 billion, beating guidance by $8 million. Enterprise revenue grew 6% and now comprises 60% of the total.
Zoom Communications, $ZM, Q1-26. Results:
🟢 +1.4% Post-Market📊 Adj. EPS: $1.43 🟢
💰 Revenue: $1.17B 🟢
📈 Net Income: $254.6M
🔎 Zoom exceeded both revenue and profit guidance, with strong momentum in enterprise products and accelerated share repurchases. pic.twitter.com/MWlO5Fqbwp— EarningsTime (@Earnings_Time) May 21, 2025
AI Companion Sees Strong Adoption
Zoom’s AI Companion tool saw a 40% quarter-over-quarter surge in monthly active users, signaling rapid adoption. While monetization remains in early phases, the company sees long-term potential in custom features.
Zoom Contact Center customers grew 65% year-over-year, presenting strong upsell opportunities for products like Zoom Virtual Agent. Zoom Phone also delivered mid-teens revenue growth, suggesting share gains in a competitive market.
Margins Narrow as AI and Bonuses Impact Costs
Non-GAAP gross margin came in at 79.2%, slightly below last year due to AI investments. The long-term target remains 80%.
Non-GAAP income from operations rose 2% year-over-year to $467 million, while operating margin declined slightly to 39.8%, impacted by increased compensation and AI development costs.
Net income per share stood at $1.43, exceeding guidance by $0.12.
Guidance Boosted Despite Enterprise Caution
Zoom raised full-year revenue guidance to between $4.8 billion and $4.81 billion. Non-GAAP operating income is now projected at $1.865 billion to $1.875 billion, with earnings per share expected between $5.56 and $5.59.
For Q2 2026, Zoom forecasts revenue of $1.195 billion to $1.2 billion and EPS of $1.36 to $1.37.
While macroeconomic pressures persist, the company is seeing elongated sales cycles and more scrutiny from U.S. enterprise clients.
Strong Balance Sheet and Buybacks
Operating cash flow in Q1 was $489 million, representing a 41.6% margin. Free cash flow was $463 million.
Zoom ended the quarter with $7.8 billion in cash, cash equivalents, and marketable securities. The company repurchased 5.6 million shares for $418 million, signaling confidence in its financial health.
Zoom continues to navigate market headwinds while leaning into AI and enterprise solutions for long-term growth. Its next earnings date is expected between August 19 and August 25, 2025.
Despite recent gains, Zoom’s long-term returns lag the S&P 500, with a five-year decline of 52.05% compared to the index’s 97.93% growth, highlighting past performance challenges.
