ZM delivered a clean beat-and-raise on FY27Q1 with revenue of $1.24B (+5.5% YoY, +4.6% in constant currency) — its fastest growth in recent years and $14M above the high end of the prior guide. Non-GAAP gross margin came in at 79.9% (+70bps YoY) and non-GAAP operating margin expanded 130bps to 41.1%, producing $509M of non-GAAP operating income ($17M above the high end of guide). Non-GAAP EPS of $1.55 beat consensus by $0.13. Enterprise revenue grew 7.2% YoY to $755.7M (61% of total, +1pp YoY), trailing-twelve-month enterprise NDR ticked up to 99% from 98% — the first modest inflection — and customers >$100K TTM revenue grew 8% YoY. AI Companion paid MAUs grew 184% YoY, My Notes surpassed 1.5M MAUs four months after launch, and 15 of the top 20 deals included Workplace or Phone. Management raised both Q2 and FY27 guidance and the Board authorized an incremental $1B buyback on top of the $370M remaining.

Key Metrics Trends

Metric	FY25Q1	FY25Q2	FY25Q3	FY25Q4	FY26Q1	FY26Q2	FY26Q3	FY26Q4	FY27Q1
Revenue ($M)	$1.1B	$1.2B	$1.2B	$1.2B	$1.2B	$1.2B	$1.2B	$1.2B	$1.2B
Revenue ($M) YoY %	-	-	-	-	+3.0%	+4.6%	+4.4%	+5.3%	+5.4%
Enterprise revenue ($M)	$666M	$683M	$699M	$707M	$705M	$731M	$741M	$757M	$756M
Enterprise revenue ($M) YoY %	-	-	-	-	+5.9%	+7.0%	+6.0%	+7.1%	+7.2%
Online revenue ($M)	$476M	$480M	$479M	$477M	$470M	$487M	$488M	$490M	$483M
Online revenue ($M) YoY %	-	-	-	-	-1.3%	+1.5%	+1.9%	+2.7%	+2.8%
Enterprise NDR (TTM)	99.0%	98.0%	98.0%	98.0%	98.0%	98.0%	98.0%	98.0%	99.0%
Non-GAAP gross margin	79.3%	78.6%	78.9%	78.8%	79.2%	79.8%	80.0%	79.8%	79.9%
Non-GAAP operating margin	40.0%	39.2%	38.9%	39.5%	39.8%	41.3%	41.2%	39.3%	41.1%
Non-GAAP diluted EPS	$1.35	$1.39	$1.38	$1.41	$1.43	$1.53	$1.52	$1.44	$1.55
Non-GAAP diluted EPS YoY %	-	-	-	-	+5.9%	+10.1%	+10.1%	+2.1%	+8.4%
FCF margin (non-GAAP)	49.9%	31.4%	38.9%	35.2%	39.4%	41.7%	50.0%	27.1%	40.4%

ZM is showing a modest but real inflection: revenue growth accelerated to 5.5% (FY27Q1) from 5.3% (FY26Q4), 4.4% (FY26Q3), and 4.7% (FY26Q2) — the fastest growth since the post-pandemic normalization. Enterprise NDR ticked to 99% from a year-long 98% floor. Operating margin at 41.1% and FCF margin at 40.4% are best-in-class for SaaS at this scale. The bear case (Teams bundling structural headwind, Online segment churn) is intact but partially offset by AI monetization scaling (Custom AI Companion, ZVA Receptionist, AI Services) and ZCX growing high-double-digits. Watch items: NDR inflection above 100%, AI revenue disclosure (mgmt deliberately holding back), and the FY27Q2 guide (4.1% YoY) which implies H2 deceleration the company attributes mostly to FX and tougher Online comps.

Beat/Miss

Guidance

Catalysts

Street Q&A

Contradictions

Read-Throughs

This Quarter vs Consensus

Metric	Consensus	Actual	Variance	Beat/Miss
Revenue	$1,224M Street / $1,222M guide mid	$1,239M	+$15M / +1.2% vs Street; +$17M vs guide mid	Beat
Non-GAAP EPS	$1.42 Street / $1.41 guide mid	$1.55	+$0.13 / +9.3% vs Street	Beat
Non-GAAP gross margin	~79.4%	79.9%	+50bps vs Street	Beat
Non-GAAP operating margin	~39.7%	41.1%	+140bps vs Street	Beat
Enterprise NDR (TTM)	98%	99%	+1pp — first inflection	Beat
FCF	n/a (FCF margin guide)	$500M (40.4% margin)	+8% YoY	Beat

Pattern: ZM is a consistent beater on EPS (avg +9% over L8Q) with steady ~1–1.5% revenue beats. EPS beat magnitude: FY27Q1 +9.3%, FY26Q4 -3.2% (only miss in 9 quarters — and a small one tied to higher SBC absorption), FY26Q3 +5.6%, FY26Q2 +11.1%, FY26Q1 +9.2%, FY25Q4 +8.1%, FY25Q3 +5.7%, FY25Q2 +14.4%, FY25Q1 +13.5%. The FY27Q1 revenue beat of +1.2% extends the streak of 9 consecutive revenue beats (~1.0–1.6% range). NDR inflection from 98% → 99% is the strongest qualitative signal — mgmt has been telegraphing this for 3+ quarters. L12Q Beat Rate: Revenue ~92%, EPS ~92%.

Guidance Deep Dive

Metric	Prior Guide (Feb 2026)	New Guide (May 2026)	Consensus	Signal
Revenue Q2 (FY27Q2)	n/a	$1,265M–$1,270M (mid $1,267.5M; +4.1% YoY)	$1,266M	In line with Street; implies modest deceleration from Q1's 5.5% (FX + tougher comps)
Non-GAAP EPS Q2 (FY27Q2)	n/a	$1.45–$1.47 (mid $1.46)	$1.49	$0.03 below Street — conservative pattern
Revenue FY27	$5,065M–$5,075M (mid $5,070M)	$5,080M–$5,090M (mid $5,085M; +4.4% YoY)	$5,082M	Raised $15M; matches Street
Non-GAAP EPS FY27	$5.77–$5.81 (mid $5.79)	$5.96–$6.00 (mid $5.98)	$5.91	Raised $0.19 / +3.3%; $0.07 above Street
FY27 non-GAAP op income	n/a explicit	$2.065B–$2.075B (40.7% margin)	~$2.02B	Implies ~+50bps op-margin lift vs FY26
FY27 free cash flow	$1.70B–$1.74B	$1.70B–$1.74B (reaffirmed)	$1.71B	Unchanged — translates to ~33.5% FCF margin
Q2 deferred revenue YoY	1–2%	2–3%	n/a	Up modestly; grace-period dynamics still cause variability

**Tone: Confident with measured language.** CFO Michelle Chang framed Q1 as "a strong start to FY27" and used "durable" 4+ times to describe enterprise revenue. CEO Eric Yuan emphasized AI as the system-of-action — paid AI was involved in 9 of the top 10 ZCX deals, MongoDB and Raymond James cited as expansion wins. The Q2 EPS guide of $1.45–$1.47 ($0.03 below Street) preserves ZM's pattern of conservative guides + beats. Importantly, mgmt **declined to break out AI revenue** in response to Citi's question — Chang said the focus is on AI monetization "inflecting" the core business rather than on AI as a standalone disclosure. Source: ZM FY27Q1 transcript (May 21, 2026).

Upcoming Catalysts

Catalyst	Timing	Consensus / Watch	Implication
June 2026 AI product release	June 2026	Yuan teased "exciting new product/solution announcement next month, all our AI-driven product"	Could re-rate Custom AI Companion narrative if quality jump is meaningful
Custom AI Companion expansion	FY27 ongoing	Raymond James ~10,000 seats; MongoDB upgrade; financial-services traction	Monetization path for AI inside Workplace; key to NDR > 100% thesis
ZVA Receptionist (Phone AI)	FY27 ongoing	AI-powered call routing; new monetization layer on Phone (mid-teens ARR growth)	Adds AI ARPU lift to Phone book; key to Phone re-acceleration
Zoom AI Services (Scribe API)	Launched March 2026	Top open ASR leaderboard on Hugging Face; BPO/developer adoption (InflexionCX)	Platform-style AI revenue with developer leverage; small base
$1B incremental buyback	Authorized May 2026	On top of $370M remaining; 4.2M shares for $362M repurchased Q1; $7.7B cash	$1.37B total authorization vs ~$24B mkt cap = ~5.7% — supportive of EPS
NDR inflection above 100%	Watch FY27 quarters	TTM Enterprise NDR ticked from 98% to 99% in Q1 — first move in 5+ quarters	Single most important fundamental signal — needed for re-rating
ZCX share gains	FY27 ongoing	High-double-digit growth, 9 of top 10 ZCX deals included paid AI	Diversification away from UC into CC TAM
FY27Q2 print	Late Aug 2026	Guide $1.265B–$1.27B / $1.45–$1.47 EPS — implies decel + tougher Online comp	Watch enterprise NDR trajectory and AI Companion paid MAU growth

Street Q&A

Analyst (firm)	Question	Management response	Assessment
Alex Zukin (Wolfe)	What changed on deferred revenue (+5% vs 1–2% guide) and broader enterprise billings trend?	Chang: Enterprise diversification, churn improvement, AI monetization all driving durable enterprise growth. Deferred-rev outperformance was because fewer large competitive takeouts required grace-period structures this quarter — those terms are valuable when needed (less discount, longer deals) but mgmt won't take them if not needed. Online churn ticked up nominally to 3% — "don't read too much into it."	Well answered
Siti Panigrahi (Mizuho)	How much of the 5.5% revenue accel came from AI monetization vs broader enterprise activity? Why does FY27 guide imply H2 deceleration?	Chang: Some of the upside was FX-driven. Enterprise grew 7.2% (vs 7.1% prior) with a 60bp white-label churn headwind — so true underlying enterprise accel. Online had FX tailwind AND an easier comp (no price increase in prior Q1) — Online decel expected Q2–Q4 of FY27.	Well answered
Josh Baer (Morgan Stanley)	Where can margins go from here? 40%+ op and FCF margins look excellent.	Chang: FCF generation was particularly strong. Op margin lift was driven by accounting amortization change + gross-margin improvement, partially offset by year 2 of SBC → cash bonus shift. Long-term GM target 80% (essentially there). Mgmt comfortable with current op-margin level; won't push further at expense of growth investment.	Well answered
Jackson Ader (KeyBanc)	Online churn up but revenue accelerated — net new customers strong?	Chang: Online rev +2.8% in Q1; FX-aided. Online stable longer-term; quarter-to-quarter noise. RPO non-current growth of 19% reflects longer-duration multi-product platform deals — customer-led, not Zoom pushing.	Well answered
Peter Weed (Bernstein)	Pricing balance between consumption-based vs per-user in Contact Center given AI deflection pressure on seats?	Chang: "Different for Zoom than legacy players." Legacy CCaaS faces shrink risk because seats are core. ZM enters CC from UC adjacency — growth, not shrink, exposure. Yuan adds: if customers hire fewer agents and more virtual agents, Zoom still wins on ZCX seats + ZVA usage.	Well answered
Charlie (for Peter Levine, Evercore)	Rationale for the new $1B buyback authorization on top of $370M remaining?	Chang: Investors have asked for it. $7.7B cash balance; very FCF generative; large authorization signals commitment to consistent return-of-capital. Implies a higher run-rate of repurchases.	Well answered
Kylie Towbin (for Tyler Radke, Citi)	Rank order the AI monetization avenues by significance?	Chang: Declined to rank — "the most important thing is to ensure that AI monetization inflects" the core business. Won't put out a single AI revenue stat. Yuan teased June product announcement.	Partially deflected
James Fish (Piper Sandler)	Salesforce launched native voice within CX — competitive impact?	Yuan: Salesforce is partner + customer. ZM enters CX from different angle (UC heritage, system-of-action). Chang: "Better-together" with Workplace is the durable advantage; recent CX win-backs validate this.	Adequate

Contradictions

Indirect Read-Throughs

Theme	Commentary / Mention	Read-through
Microsoft Teams	ZM displaced Teams calling in a 7-figure government contractor deal that came back for full Workplace + Phone + Events + Webinars	Marginally negative for MSFT enterprise voice — Teams bundling power not infinite when security/quality requirements bite. Net neutral given MSFT scale.
Cisco	Same gov-contractor deal also displaced Cisco calling	Negative for CSCO Webex/calling franchise — continues share donation to ZM/MSFT in voice
Salesforce (CRM)	SFDC launched native voice within CX; Yuan: "great customer and partner" entering from CRM angle vs ZM's UC angle	Neutral for CRM (Voice is small add-on); modest competitive overhang for ZCX but mgmt confident in differentiation
MongoDB (MDB)	Upgraded to Workplace Enterprise Plus + ZCC + ZVA; using Custom AI Companion for IT/CRM workflow agents	Positive customer-validation point for ZM AI monetization; neutral read-through for MDB beyond "AI adoption inside enterprise customers"
HubSpot (HUBS)	BrightHire (ZM company) expanded into HUBS go-to-market hiring with AI Interviewer	Positive read-through for HUBS hiring efficiency; small but signal for AI in HR workflows
Hugging Face	ZM Scribe API ranked among top models on the open ASR leaderboard	Validates ZM speech-recognition stack as best-in-class outside the hyperscaler labs
FX / Macro	Reported rev +5.5% YoY; constant-currency +4.6% — ~90bps FX tailwind. EMEA growth "predominantly driven by year-over-year FX"	Modest FX tailwind underway in CY1H26 — supportive for global SaaS reporters this print cycle
Customer references (Chelsea FC, Caliber Collision, Baptist Health, Raymond James, Renza-Japan)	All cited as ZM customer wins / expansions in Q1	Validates multi-product platform thesis; Caliber Collision (1,800 sites) and Baptist Health (16,000 workers) are large-seat references
Pandemic-era darlings	ZM trading at 13x P/E and 3.4x EV/Rev on 40% FCF margins (per coverage screener)	Read-through to other pandemic-stigma names — quality FCF can rebuild multiples once growth re-accelerates and capital returns scale

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