Zoom’s first quarter of 2026 was marked by better-than-expected top and bottom-line results, with strong enterprise momentum and rising adoption of AI-powered products. Management attributed the outperformance to broad-based growth in Zoom Workplace and Zoom Phone, as well as accelerating traction for new AI Companion features. CEO Eric Yuan highlighted that My Notes, an AI-driven note-taking solution, reached over 1.5 million monthly active users just months after launch, and noted that 15 of the company’s top 20 customer wins included either Zoom Workplace or Zoom Phone, underscoring the value of its integrated platform.
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Zoom (ZM) Q1 CY2026 Highlights:
- Revenue: $1.24 billion vs analyst estimates of $1.22 billion (5.5% year-on-year growth, 1.3% beat)
- Adjusted EPS: $1.55 vs analyst estimates of $1.42 (9.5% beat)
- Adjusted Operating Income: $508.7 million vs analyst estimates of $490.5 million (41.1% margin, 3.7% beat)
- The company slightly lifted its revenue guidance for the full year to $5.09 billion at the midpoint from $5.07 billion
- Management raised its full-year Adjusted EPS guidance to $5.98 at the midpoint, a 3.3% increase
- Operating Margin: 25.1%, up from 20.6% in the same quarter last year
- Customers: 4,534 customers paying more than $100,000 annually
- Net Revenue Retention Rate: 99%, up from 98% in the previous quarter
- Annual Recurring Revenue: $4.96 billion (5.5% year-on-year growth, beat)
- Billings: $1.31 billion at quarter end, up 4.9% year on year
- Market Capitalization: $29.31 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Zoom’s Q1 Earnings Call
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Aleksandr Zukin (Wolfe Research) asked how AI product pull-through is affecting customer wallet share. CEO Eric Yuan highlighted that paid AI features are involved in most top deals and that flexible pricing models are resonating with customers seeking value.
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Sitikantha Panigrahi (Mizuho) questioned the durability of AI-driven growth given guidance for deceleration later in the year. CFO Michelle Chang explained that while AI monetization is contributing, some growth was aided by foreign exchange, and enterprise momentum remains robust.
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Josh Baer (Morgan Stanley) inquired about conversion drivers for custom AI Companion and sources of future margin expansion. Yuan pointed to workflow automation as a key adoption driver, while Chang said ongoing cost discipline and internal AI use are supporting strong margins.
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James Fish (Piper Sandler) asked about competitive pressures from Salesforce in customer experience. Yuan responded that Zoom’s platform integrates unified communications and contact center, differentiating it from CRM-focused competitors, while Chang noted increasing competitive displacements.
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William Power (Baird) sought details on the improvement in enterprise net revenue retention and renewal trends. Chang attributed gains to ongoing AI monetization, product diversification, and disciplined pricing practices during renewals.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) the pace of adoption and monetization for new AI-powered products like custom AI Companion and Zoom AI Services, (2) the success of Zoom’s multiproduct platform in winning and retaining large enterprise contracts, and (3) the impact of flexible pricing models on deal size and revenue predictability. Execution on awareness-building for new AI capabilities and continued innovation in customer experience solutions will also be important to track.
Zoom currently trades at $100.00, up from $96.75 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).
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