Zoom stock sentiment

• EPS: $1.43 actual vs. $1.31 estimate → +9.2% beat

• Revenue: $1.175B actual vs. $1.17B estimate → +0.4% beat

Zoom reported Q1 FY26 revenue of $1.175 billion, up 2.9% year-over-year, with non-GAAP EPS of $1.43, beating the Street’s $1.31 estimate by 9%. GAAP EPS came in at $0.81, a 19% YoY improvement. Enterprise revenue rose 5.9% to $705 million, while Online revenue dipped 1.2% to $470 million — consistent with the ongoing shift toward larger, more durable contracts.

Operating margins were strong across the board: GAAP operating margin hit 20.6%, while non-GAAP operating margin reached 39.8%. Customer momentum was solid, with 4,192 customers now contributing over $100,000 in trailing 12-month revenue, up 8% YoY. However, net dollar expansion for enterprise accounts slipped to 98%, suggesting slower upsell activity.

Zoom repurchased 5.6 million shares and ended the quarter with $7.8 billion in cash. Free cash flow was $463 million, down YoY, but still healthy.

Guidance was slightly above expectations: Q2 revenue is projected at $1.195–$1.200 billion with EPS of $1.36–$1.37. FY26 revenue is guided to $4.80–$4.81 billion and non-GAAP EPS of $5.56–$5.59 — modestly higher than previous estimates.

Zoom’s earnings have been a model of consistency, but that consistency has done little to lift the stock. All four most recent quarters featured solid EPS beats — yet post-earnings movement has been largely neutral.

To break this pattern, Zoom will need to show a shift in narrative: enterprise expansion, monetization of AI tools, or improving RPO. Absent that, even another beat may leave the stock treading water.

Zoom’s last earnings call was all about balance: management emphasized durable enterprise growth while acknowledging ongoing pressure in the online/SMB segment. CEO Eric Yuan spoke at length about Zoom Phone and Zoom Contact Center as long-term growth engines, but didn’t provide revenue breakouts or attach metrics for either.

The tone was calm, consistent, and arguably too cautious. Analysts pressed the company for clarity on AI monetization through its Zoom AI Companion rollout, but received only directional answers. CFO Kelly Steckelberg reaffirmed guidance but flagged slower renewals in EMEA and higher competition in the public sector.

This quarter, Zoom needs to show that AI tools aren’t just a product enhancement but a revenue driver. Investors also want more segmentation of growth — especially between the enterprise and online business lines.

What to watch this quarter:

• Revenue contribution or attach rate updates from AI tools

• Net expansion trends across enterprise accounts

• Specific metrics around Zoom Phone/Contact Center growth

• Any signal of stabilization in churned regions

Zoom’s product roadmap continues to evolve, with the company pushing hard into AI-driven enhancements through its AI Companion tools, as well as deeper investments in Contact Center and Zoom Phone. But these offerings have yet to move the needle meaningfully on top-line growth.

On last quarter’s call, management flagged strong enterprise adoption but admitted that online customer churn remained a drag. Gross margin was stable above 78%, but free cash flow dipped, and revenue growth slowed to just 2% YoY.

This quarter, investors want to see if enterprise net expansion is holding and whether AI products are leading to measurable upsell. Any shift in RPO trajectory or commentary on upsell momentum will be closely dissected.

Watch for:

• Growth in Zoom Phone or Contact Center revenue

• RPO and deferred revenue trends

• AI Companion monetization signals

• Margin stability and cash flow commentary

Zoom’s macro challenge is no secret — the pandemic boom is long over, and the company now competes in a price-sensitive, saturated UCaaS market. While management has leaned into new verticals like Zoom Phone and AI Companion tools, those segments remain too small to drive top-line acceleration on their own.

The last four earnings reports have all beaten EPS expectations, yet the stock reaction has been minimal. Why? Because Zoom hasn’t been able to show a compelling growth reacceleration or defend market share against bundled platforms like Microsoft Teams.

Heading into this print, investors will want updates on enterprise net retention, contribution from Contact Center, and whether AI features are leading to actual monetization. Flat or declining RPO could signal continued stagnation — while even a modest uptick might spark renewed interest if paired with margin stability.