Zoom's 2026 Q1 Earnings Call: Unpacking Contradictions in AI Strategy, Monetization, and Market Dynamics
Earnings DecryptWednesday, May 21, 2025 8:55 pm ET
2min read
AI investment strategy and impact on growth, AI Companion adoption and monetization strategy, impact of macroeconomic conditions on enterprise business, and Contact Center growth and strategy are the key contradictions discussed in Zoom Communications' latest 2026Q1 earnings call.
Revenue and Product Innovation:
- Zoom Communications reported total revenue of $1.175 billion for Q1 FY 2026, exceeding the high end of their guidance by $8 million.
- The growth was driven by strong innovation and the integration of AI-powered productivity tools, such as Zoom AI Companion, which increased monthly active users by nearly 40% quarter-over-quarter.
Enterprise Revenue and Customer Retention:
- Enterprise revenue grew approximately 6% year-over-year, representing 60% of total revenue, up 2% year-over-year.
- The growth was supported by a record low churn rate of 2.8% for the first quarter and a 98% trailing twelve-month net dollar expansion rate for Enterprise customers, indicating strong customer retention and stability.
Zoom Phone and Contact Center Performance:
- Zoom Phone revenue grew in the mid-teens, driven by its integration with Microsoft Teams and other productivity suites, expanding its market reach.
- The number of Zoom Contact Center customers grew 65% year-over-year, supported by the adoption of Zoom Virtual Agent, which is integrated into the Contact Center platform, enhancing efficiency and cost savings.
AI and Customization Revenue:
- Zoom's AI innovations, including Zoom AI Companion and Custom AI Companion, are now being monetized, with strong interest from Global 2000 customers.
- The customization and integration of AI capabilities with customer data indexes and dictionaries are expected to drive significant revenue contributions in the future.
Revenue and Product Innovation:
- Zoom Communications reported total revenue of $1.175 billion for Q1 FY 2026, exceeding the high end of their guidance by $8 million.
- The growth was driven by strong innovation and the integration of AI-powered productivity tools, such as Zoom AI Companion, which increased monthly active users by nearly 40% quarter-over-quarter.
Enterprise Revenue and Customer Retention:
- Enterprise revenue grew approximately 6% year-over-year, representing 60% of total revenue, up 2% year-over-year.
- The growth was supported by a record low churn rate of 2.8% for the first quarter and a 98% trailing twelve-month net dollar expansion rate for Enterprise customers, indicating strong customer retention and stability.
Zoom Phone and Contact Center Performance:
- Zoom Phone revenue grew in the mid-teens, driven by its integration with Microsoft Teams and other productivity suites, expanding its market reach.
- The number of Zoom Contact Center customers grew 65% year-over-year, supported by the adoption of Zoom Virtual Agent, which is integrated into the Contact Center platform, enhancing efficiency and cost savings.
AI and Customization Revenue:
- Zoom's AI innovations, including Zoom AI Companion and Custom AI Companion, are now being monetized, with strong interest from Global 2000 customers.
- The customization and integration of AI capabilities with customer data indexes and dictionaries are expected to drive significant revenue contributions in the future.
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