Zoom’s AI Growth Story Faces a Big Test in Q2 Earnings Tonight

That wraps up our initial coverage of Zoom’s Q2 results. Thank you for stopping by!

Zoom’s AI push is beginning to produce measurable commercial traction. Zoom Virtual Agent’s customer count soared 256% year over year, helping the company’s AI-first Customer Experience portfolio deliver high-double-digit annual recurring revenue growth.

Management is now expanding AI beyond meetings and customer support. New products such as ZoomMate, My Notes, and AI Productivity Suite are being joined by the acquisitions of Common Room and BrightHire, extending Zoom into sales orchestration and recruiting.

The stock’s next major re-rating would likely depend on whether these products can lift companywide growth beyond its current pace.

Zoom’s enterprise business is finally showing signs of meaningful acceleration. Enterprise revenue increased 7.8% year over year to $787.5 million, its strongest growth rate in three years, while the number of customers generating more than $100,000 in annual revenue climbed 8.2% to 4,625.

Customer expansion also moved in the right direction, with Zoom’s enterprise net dollar expansion rate improving to 99% from 98% one year ago.

That still means existing customers are spending slightly less overall, but the gap is closing. If Zoom can push expansion back above 100% while sustaining high-single-digit enterprise growth, the company may finally have a credible path beyond its post-pandemic slowdown.

Zoom just reported Q2 earnings, with shares initially down 3.9% following the report. Here are the key numbers:

• Revenue: $1.28 billion vs. $1.27 billion expected
• Adjusted EPS: $1.55 vs. $1.48 expected
• Operating Margin: 24.6%
• Adjusted Operating Margin: 40.0%

Guidance:

• Revenue: $5.09 billion to $5.10 billion vs. $5.09 billion expected
• Adjusted EPS: $6.08 to $6.12 vs. $6.04 expected
• Free Cash Flow: $1.78 billion to $1.82 billion

Quick Read:

Zoom beat second-quarter estimates and raised its full-year earnings outlook, but the largely in-line revenue forecast left shares down after hours.

Zoom Virtual Agent customers soared 256% year over year, while the Common Room and BrightHire acquisitions expand Zoom’s AI offerings into sales and recruiting.

Bull Case: AI Traction Meets Beat-and-Raise Pattern

• Zoom (NASDAQ:ZM) has delivered four consecutive EPS beats, and Polymarket puts a 0.94 probability on another one tonight.
• AI Companion paid users grew 184% year over year, with MyNotes at 1.5 million monthly active users.
• Q1 non-GAAP operating margin reached 41.1%, and the board added a $1 billion buyback.
• Enterprise revenue rose 7.2%, with NDR improving to 99%.

Bear Case: Elevated Bar, Guidance Step-Down

• Q2 EPS guidance of $1.45 to $1.47 sits below Q1’s $1.55 print.
• Revenue growth remains modest at 5.47%, and Online churn ticked to 3%.
• Shares are up 19.14% in a month, raising the bar.
• Insider net direction is selling, and NDR is still below 100%.

Top 5 Analyst Questions:

• AI Companion monetization: pricing, attach rates, and disclosed revenue contribution
• Path back above 100% on Enterprise net dollar expansion, currently 99%
• Zoom Customer Experience sustainability versus Five9, NICE, and Genesys
• Whether online churn drift to 3.0% signals structural SMB weakness
• Buyback cadence under the new $1.0 billion repurchase authorization

Key Topics, Buzzwords, and Red Flags:

• Key Topics Management Must Address: any raise to FY27 revenue guidance of $5.08–$5.09 billion, durability of the 41.1% non-GAAP operating margin amid AI investment, and whether the Q1 $10.2 million FX tailwind persists.
• Buzzwords: “AI-first system of action,” Custom AI Companion, agentic retrieval, “durable, profitable growth,” and constant-currency revenue.
• Red Flags: Enterprise NDR stuck below 100%, further online churn deterioration, lengthening sales cycles, vague AI revenue commentary, or any trim to FY27 free cash flow of $1.700–$1.740 billion.