Zoom’s Q1 Earnings Defy Skepticism: A Contrarian Play on AI-Driven Resilience

Zoom Video Communications (ZM) delivered a Q1 2025 earnings report that starkly contrasts with its Zacks #4 “Sell” rating. Beneath Wall Street’s near-term pessimism lies a company fortifying its enterprise dominance, bolstered by RPO growth, high-value customer retention, and a stealthy AI arms race. For investors willing to look beyond quarterly noise, Zoom’s fundamentals signal a compelling contrarian opportunity.

The Metrics That Matter: Enterprise Strength and RPO’s Silent Rally

Zoom’s Q1 results revealed a stark dichotomy: while its stock languishes on macroeconomic jitters, key customer metrics are firing on all cylinders.

Enterprise Revenue Growth Hits 5.9% YoY, outpacing the flat online segment. The segment now represents 58% of total revenue, up from 57% a year ago, as Zoom transitions away from small-business volatility. Crucially, customers generating over $100k in trailing revenue rose 8% YoY to 4,192, surpassing analyst estimates. These high-value accounts now represent 30% of total revenue, a sign of deepening enterprise relationships.

Remaining Performance Obligation (RPO) delivered a quiet coup: total RPO hit $3.88 billion, exceeding estimates by $20 million. Current RPO ($2.36B) and non-current RPO ($1.52B) both beat consensus, signaling robust forward demand. Notably, 61% of RPO is expected to convert into revenue over the next year, up from 59% a year ago—a metric that should ease fears of stagnation.

The AI Tipping Point: Zoom’s Secret Weapon Against the Odds

Zoom’s skeptics cite a “saturated UCaaS market” and pricing pressures. But they’re missing the shift to AI-driven upselling, which is unlocking new value.

• Zoom Phone now has five customers with over 100,000 seats, including a financial titan that doubled its deployment.
• Zoom Contact Center added 246% YoY in customers exceeding $100k ARR, with wins at Major League Baseball and nonprofits.
• Zoom AI Companion usage surged 40% quarter-over-quarter, while Custom AI Companion is already integrated into Global 2000 workflows.

These products aren’t just incremental—they’re redefining Zoom’s role as an enterprise platform, not just a video tool. The $3.6B in total RPO isn’t just a number; it’s a runway for AI monetization.

Share Repurchases: Betting on the Future When Others Don’t

While Wall Street downgrades, Zoom is doubling down on its stock. The company spent $202 million on 5.6 million shares in Q1, a 30% increase over Q4. This isn’t just shareholder-friendly—it’s a strategic bet on undervaluation. At current prices (~$83), Zoom trades at ~25x forward non-GAAP EPS, a discount to its growth trajectory.

Why the Zacks #4 Rating Is Misplaced

The “Sell” rating hinges on near-term risks: APAC currency headwinds, online segment contraction, and macro uncertainty. But these are short-term storms, not existential threats.

• Enterprise resilience: The 98% net dollar retention rate means existing customers aren’t fleeing—even as Zoom tightens discounting.
• AI’s long tail: The $1.4B in free cash flow guidance shows Zoom can fund innovation without sacrificing profitability.
• Competitor displacement: Zoom is beating top CCaaS rivals in multi-thousand-seat deals, proving its platform has no peer.

The Contrarian Play: Buy the Dip, Own the Upside

Zoom’s Q1 results confirm it’s not a fading star but a reinvented one. The RPO beat and enterprise momentum suggest a 2026 revenue ramp to $4.8B+, with AI unlocking new pricing power.

For investors: Zoom is a buy at $83, with a $120+ price target if it executes on AI and RPO conversion. The Zacks rating is a gift—a chance to accumulate shares as the market underestimates Zoom’s reinvention.

The skeptics focus on what’s fading—Zoom’s past. The truth is in what’s growing: AI-powered enterprise dominance. This is a play for the next five years, not five quarters.

Investors should consider their own financial goals and risk tolerance before making any investment decisions.