Zoom raises fiscal 2027 forecast after Q1 beat

Zoom raised its fiscal 2027 revenue and adjusted profit forecasts after first-quarter revenue beat estimates, and its shares rose more than 7% in extended trading.

The company said demand for AI features in its meeting and communications products supported the stronger outlook.

Zoom now expects annual revenue of US$5.08 billion to US$5.09 billion.

It also adjusted EPS of US$5.96 to US$6, up from earlier forecasts of US$5.07 billion to US$5.08 billion and US$5.77 to US$5.81.

The company approved an additional US$1 billion share buyback.

First-quarter revenue for the period ended April 30 was US$1.24 billion versus analysts’ US$1.22 billion estimate.

Second-quarter guidance was US$1.26 billion to US$1.27 billion in revenue and US$1.45 to US$1.47 in adjusted EPS.

🔗 Source: Reuters

🧠 Food for thought

Implications, context, and why it matters.

AI is becoming a tool for bigger corporate contracts

The stronger outlook goes beyond AI Companion, which Zoom said comes at no extra cost for paid Zoom subscribers and commercial customers 1.
Zoom is also making money from AI through Custom AI Companion. Raymond James, the financial services firm, expanded to about 10,000 seats to build tailored AI workflows and customized summaries 2.
AI is helping Zoom land deals for newer products. Management said paid AI played a role in nine of the top 10 Zoom Customer Experience (ZCX) deals in Q1. ZCX is Zoom’s customer service software business 2.
Zoom still faces pressure in its business customer base. Its enterprise trailing 12-month net dollar expansion rate was 99% in Q1, which means slight contraction among existing enterprise customers on that measure 2.

Business software competition is moving toward AI workflows

Zoom’s strategy suggests a broader change in business software. Companies are moving past communications tools toward what Zoom calls a “system of action” that connects conversations to business results 2.
Management said the goal is agentic AI, meaning AI systems that can act on a user’s behalf, plus workflows that complete tasks in other software after a meeting ends 2.
That sets up tougher competition with Microsoft Teams, Microsoft’s workplace chat and video meeting product, which has a distribution advantage 3.
Zoom also cited a Q1 win at a government contractor for a full-suite contract that replaced Teams and Cisco calling products 2.
Zoom is turning internal technology into a product by offering speech-to-text through its Scribe application programming interface (API), which could add another source of revenue 2.