What drove the strong billings outperformance, and what are the dynamics behind the slight uptick in online churn?

Michelle attributed billings strength to product diversification, AI monetization, churn reduction, and moving upmarket in enterprise. She explained the deferred revenue beat by fewer contracts requiring grace periods than expected. She dismissed the online churn uptick as nominal, stating the online business is stabilized. “We saw a 5% growth versus the sort of 1% to 2% that we guided at because we just didn't see the need with the nature of the customer contracts to kind of leverage those early grace periods that I mentioned in February.”

Given current high operating and free cash flow margins, where can margins go, and what are the largest sources of leverage?

Michelle expressed satisfaction with 40%+ operating margins and strong FCF. She cited continued COGS optimization, internal capital allocation to best ROI, and being 'customer zero' for AI, using it to reduce internal costs (e.g., in contact center, improving CSAT while removing costs) as key drivers for potential future expansion. “I would say a lot of internal capital allocation, making sure that every dollar and headcount that we deploy is sort of to its best ROI and is oriented around those 3 priorities of growth that we talk about with investors.”

How does Zoom CX compete against Salesforce's native voice, and what is the significance of the increasing number of 'boomerang deals'?

Eric differentiated Zoom CX by its UC integration and conversation-centric approach, contrasting it with Salesforce's CRM focus. Michelle added that win-backs are often due to the 'better together' UC+CX approach and the displacement of on-premise legacy systems, rather than a specific quarter's event. “We entered into this market based on our customer feedback because many customers already deploy our UC solutions, our meeting solutions. Naturally, the next step really about the contact center, right?”

Zoom (ZM) Q1 FY27 earnings call: guidance and Q&A

Earnings call· Apr 2026 (Q1 FY27)· Information Technology· May 21, 2026

Source: earnings call transcript

Executive summary

Zoom Q1 FY27 — Strong Enterprise Growth and AI Monetization Momentum

Zoom delivered a strong Q1 FY27, driven by robust enterprise performance and accelerating AI monetization across its platform. The company exceeded revenue and profitability guidance, showcasing the increasing value of its AI-first system of action for modern work. Strategic investments in AI and product diversification are reinforcing durable growth and expanding customer relationships, particularly in customer experience solutions.

Highlights

Q1 revenue grew 5.5% year-over-year to $1.24 billion, exceeding the high end of guidance.
Enterprise revenue grew 7.2% year-over-year, representing 61% of total revenue.
Non-GAAP operating margin was 41.1%, up 130 basis points from Q1 last year.
Non-GAAP diluted EPS increased to $1.55, $0.13 above the high end of guidance.
RPO increased 11% year-over-year to approximately $4.3 billion, driven by 19% noncurrent RPO growth.
Free cash flow grew 8% year-over-year to $500 million, representing a 40.4% margin.
AI Companion paid MAUs grew 184% year-over-year.

Concerns

Online business average monthly churn was 3% in Q1, compared to 2.8% in Q1 FY26.

Guidance & targets

Category	Target	Timeline	Confidence
Q2 FY27 Revenue	$1.265 billion to $1.27 billion high materiality	Q2 · FY27	High
Q2 FY27 Non-GAAP Operating Income	$508 million to $513 million medium materiality	Q2 · FY27	High
Q2 FY27 Non-GAAP Earnings Per Share	$1.45 to $1.47 high materiality	Q2 · FY27	High
Full-Year FY27 Revenue	$5.08 billion to $5.09 billion high materiality	FY27	High
Full-Year FY27 Non-GAAP Operating Income	$2.065 billion to $2.075 billion medium materiality	FY27	High
Full-Year FY27 Non-GAAP Earnings Per Share	$5.96 to $6 high materiality	FY27	High
Full-Year FY27 Free Cash Flow	$1.7 billion to $1.74 billion high materiality	FY27	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Enterprise Enterprise business continues to be strong, representing 61% of total revenue, up 1 point year-over-year. Growth in customers contributing over $100,000 in TTM revenue. Percentage of total revenue: 61%Customers contributing >$100K TTM revenue growth: 8% YoYCustomers contributing >$100K TTM revenue as % of total revenue: 33%	$756.4M	7.2%	—	—
Online Online business saw a slight uptick in average monthly churn but is considered stabilized. Revenue growth was 2.8% in Q1, with some FX impact and an easier comparable. Percentage of total revenue: 39%Average monthly churn: 3% (Q1 FY27) vs 2.8% (Q1 FY26)	$483.6M	2.8%	—	—
Americas Revenue grew 5% year-over-year.	—	5%	—	—
EMEA Revenue grew 5% year-over-year, predominantly driven by year-over-year changes in foreign exchange rates.	—	5%	—	—
APAC Revenue grew 6% year-over-year.	—	6%	—	—

ZM operating KPIs by quarter

ZM operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Jan 2026 Q4 FY26	This call Apr 2026 Q1 FY27	Jul 2026 Q2 FY27	Change vs prior quarter
Average monthly churn rate Online	—	3% In our online business, Q1 average monthly churn was 3% as compared to 2.8% in Q1 of FY '26. Source: earnings call transcript	2.9% In our online business, Q2 average monthly churn was 2.9%, in line with Q2 of last year. Source: earnings call transcript	-0.1 pt
Remaining performance obligation (RPO)	~$4.2B Looking at both our build and unbilled contracts, our RPO increased over 10% year-over-year to approximately $4.2 billion. Source: earnings call transcript	~$4.3B Looking at both our billed and unbilled contracts, our RPO increased 11% year-over-year to approximately $4.3 billion, driven by noncurrent RPO growth of 19%. Source: earnings call transcript	~$4.5B Looking at both our billed and unbilled contracts, our RPO increased 14% year-over-year to approximately $4.5 billion, driven by noncurrent RPO growth of 25%. Source: earnings call transcript	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Total RPO $4.3B end of Q1 FY27

up 11% YoY

Includes both billed and unbilled contracts.

Noncurrent RPO Not stated end of Q1 FY27

up 19% YoY

Strong growth reflects continued success landing larger, longer-term multiproduct platform deals.

Product announcements

Product	Type	Timeline
Seer by Workvivo	launch	—
CX Insights	launch	March
AI Expert Assist 3.0	update	—
Customer Workflow Orchestration	update	—
Advanced Quality Management for Virtual Agent	update	—
New Workforce Management Capabilities	update	—
Zoom AI Services (Scribe API)	launch	March

Deals & partnerships

Major government contractor Deployment of full suite of Zoom Workplace, Phone, Events, and Webinars 7-figure ARR deal

Displaced Teams and Cisco calling. Customer chose Zoom for stringent government security requirements and to unlock insights from live communications data for broader AI workflows.

Baptist Health (Jacksonville, Florida) Deployment of Zoom Phone for 16,000 workers 7-figure ARR deal

Selected Zoom Phone to support 16,000 workers across more than 200 points of care due to its reliability, hybrid flexibility, and industry-specific integrations.

Raymond James Expansion to custom AI Companion

After adopting AI Companion for meeting summaries, expanded to custom AI Companion across approximately 10,000 seats for tailored AI workflows and customized summaries with security and compliance.

MongoDB Upgrade to Zoom Workplace Enterprise Plus, Zoom Contact Center, and ZVA; chose Custom AI Companion

Chose Custom AI Companion to translate live conversations into completed actions across IT ticketing, CRM, and other third-party systems.

InflexionCX Early adoption of Scribe API (Zoom AI Services)

Validating the real-world value of Zoom's ASR technology for BPOs.

Figma Landed on BrightHire core product

To help support consistent, objective, and calibrated hiring decisions.

HubSpot Expanded with BrightHire Screen (AI interviewer)

Expanded from its core interview intelligence product to support go-to-market hiring.

Chelsea FC Selected Zoom Phone, ZCC Elite, and ZVA Chat

To modernize fan engagement across touch points, deliver faster, more personalized experiences, and create a connected data foundation.

Caliber Collision Deploy Zoom Phone with ZCC Elite

To streamline customer experience across more than 1,800 repair centers and their central contact center, eliminate cold call experience, and provide unified CX analytics.

Renza (Japan) Selected Zoom Virtual Agent, Agentless Dialer, and ZCC Elite

To modernize high-volume customer interactions, using ZVA for outbound engagement (e.g., pre-confirmation calls for electricity/gas connections) to free teams for higher-value sales activity.

Risks & headwinds

Online business churn increase Q1 FY27

Average monthly churn was 3% in Q1 FY27, up from 2.8% in Q1 FY26.

Mitigation:Management views this as a nominal uptick and believes the online business is stabilized, with continued progress on low churn.

Quarter-to-quarter variability in deferred revenue Q2 FY27 and ongoing

Deferred revenue guidance for Q2 FY27 is 2% to 3% YoY growth, compared to 5% YoY growth in Q1 FY27.

Mitigation:Management expects variability based on the timing and structure of larger deals, particularly those with grace periods for competitive takeouts in phone and contact center.

What to watch in Q2 FY27

Online Average Monthly Churn

next quarter

Current 3%

Target Stabilization or decrease

Why it matters

An uptick was noted this quarter; monitoring for stabilization is key for the online business's health.

In our online business, Q1 average monthly churn was 3% as compared to 2.8% in Q1 of FY '26.

Find out whether ZM delivers this. Inve re-checks your case every morning.

Q&A highlights

How are AI solutions driving incremental wallet expansion, particularly in ZCX, and what is the pull-through from these products?

Eric highlighted that paid AI was involved in 9 out of 10 top ZCX deals, and ZVA in 4 out of 10, indicating AI's significant role. He noted flexible pricing models (usage-based, Autocon-based) and co-innovation with customers as key drivers.

“So speaking of ZCX, right, if you look at the now out of the top 10 deals. [ Paid AI ] was involved, right? And it's meaning AI has really helped our ZCX.”

asked by Aleksandr Zukin · answered by Eric Yuan

2 min read 5 chapters

Detailed narrative

AI-First Product Strategy and Adoption

Zoom is actively pursuing an AI-first roadmap, integrating AI Companion 3.0 capabilities across its platform to connect conversations, workflows, and outcomes. AI Companion usage scaled significantly, with paid MAUs growing 184% year-over-year. My Notes, a personal AI note-taker, has rapidly gained traction with over 1.5 million monthly active users (excluding trial users) within four months of launch, demonstrating strong early adoption of AI-driven productivity tools.

Enterprise Platform Expansion and Competitive Wins

The company is seeing significant wins by offering a secure, integrated multiproduct platform, often displacing competitors like Teams and Cisco. Key deals include a 7-figure ARR contract with a major government contractor for the full suite of Zoom Workplace, Phone, Events, and Webinars.

Baptist Health also selected Zoom Phone to support 16,000 workers across more than 200 points of care in a 7-figure ARR deal, highlighting the platform's reliability and industry-specific integrations.

New AI Monetization Streams and Vertical Workflows

Zoom is expanding its monetization avenues beyond core collaboration with custom AI Companion, ZVA Receptionist, and Seer by Workvivo. Raymond James expanded to custom AI Companion for approximately 10,000 seats, enabling tailored AI workflows. ZVA Receptionist turns Zoom Phone into an AI-powered front door for businesses, qualifying callers and routing requests.

Zoom AI Services, including the Scribe API, extends speech recognition technology to customers and developers, with early adoption from BPOs like InflexionCX.

Scaling AI-First Customer Experience (ZCX)

ZCX is accelerating with high double-digit growth, driven by paid AI in 9 out of 10 top ZCX deals. Zoom's unique position bridging UC and CX with AI-powered tools like CX Insights, AI Expert Assist 3.0, and advanced quality management is leading to competitive displacements and larger deals.

Customers like Chelsea FC, Caliber Collision, and Renza (Japan) are consolidating systems for unified AI workflows and analytics, leveraging Zoom for fan engagement, streamlined customer experience, and outbound engagement with ZVA.

Strong Financial Performance and Capital Allocation

Q1 FY27 saw total revenue growth of 5.5% to $1.24 billion and a non-GAAP operating margin of 41.1%, up 130 basis points year-over-year, reflecting effective cost management and gross margin improvements. The company generated $500 million in free cash flow, representing a 40.4% margin.

Zoom's Board authorized an incremental $1 billion share repurchase, bringing the total authorized to $4.7 billion, demonstrating confidence in future performance and commitment to shareholder returns.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.