Summary
Zoom Communications reported first quarter fiscal year 2027 revenue of $1,239.0 million, up 5.5% year over year. Gross profit was $964.7 million, up 7.6%, and gross margin improved to 77.9%, up 1.6 percentage points. GAAP operating income was $310.5 million, up 28.5%, and GAAP operating margin rose to 25.1%, up 4.5 percentage points. Net income was $425.7 million, up 67.2%, and diluted EPS was $1.42, up 75.3%. The profit gains leaned on cost discipline. Stock-based compensation fell, and a change in the amortization period for deferred contract acquisition costs from three years to five years, effective January 31, 2026, reduced commissions expense. Non-GAAP operating margin was 41.1%, up 130 basis points year over year. Non-GAAP net income was $465.0 million, or $1.55 per diluted share, and non-GAAP income from operations was $508.7 million, compared with $467.3 million a year earlier.
Cash generation stayed solid. Net cash provided by operating activities was $521.6 million, up 6.6% year over year. Free cash flow, a non-GAAP measure, was $500.5 million. Capital expenditures were $21.1 million, down 18.5%. Deferred revenue, the current portion, was $1.48 billion, up 5.0%, and remaining performance obligations were $4.30 billion, up 10.9%. Cash, cash equivalents, and marketable securities, excluding restricted cash, totaled $7.7 billion at April 30, 2026. In May 2026 the Board authorized an additional $1.0 billion of Class A common stock repurchases, on top of $625.0 million remaining as of April 30, 2026. During the quarter the company repurchased and retired 4,169,208 shares for $361.7 million.
Customer metrics told a mixed story. Zoom ended the quarter with 4,534 customers contributing more than $100,000 in trailing 12 months revenue, up 8.2% from the same quarter last fiscal year. The trailing 12-month net dollar expansion rate for Enterprise customers was 99%, up from 98%. Online average monthly churn was 3.0%, compared with 2.8%. The share of total Online monthly recurring revenue from customers with a continuous term of service of at least 16 months was 74.4%, up 20 basis points. AI adoption was the headline. AI Companion paid users grew 184% year over year, and a personal AI note-taking product reached 1.5 million licensed users within four months of launch. Management also pointed to new AI monetization streams and Zoom Customer Experience, which continued to see accelerating high double-digit growth.
Guidance for the second quarter of fiscal year 2027 includes non-GAAP income from operations of $508.0 million to $513.0 million and non-GAAP diluted EPS of $1.45 to $1.47, on roughly 304 million weighted average shares outstanding. For the full fiscal year 2027, non-GAAP income from operations is guided to $2.065 billion to $2.075 billion, non-GAAP diluted EPS to $5.96 to $6.00, on roughly 304 million shares, and free cash flow to $1.700 billion to $1.740 billion. The EPS and share count outlook excludes the share repurchase authorization. Management described the quarter as continued momentum in AI-led products while it works to turn that innovation into durable growth.
Risks remain familiar and largely external. The company cites geopolitical tensions, tariffs and trade tensions, interest rate and foreign currency volatility, and inflation as factors that can shift corporate spending, lengthen sales cycles, and affect upsell, downsell, or renewal activity. It also flags competition, the pace of AI development and adoption, security compromises, and outages at co-located data centers or in internet infrastructure.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2027 | Q4 FY2026 | QoQ | Q1 FY2026 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.24B | $1.25B | -0.6% | $1.17B | +5.5% |
| Gross profit | $964.7M | $951.3M | +1.4% | $896.3M | +7.6% |
| Gross margin | 77.9% | 76.3% | +1.6 pp | 76.3% | +1.6 pp |
| Research & development | $227.9M | $222.9M | +2.2% | $205.4M | +11.0% |
| Sales & marketing | $330.1M | $359.5M | -8.2% | $347.0M | -4.9% |
| General & administrative | $96.3M | $119.0M | -19.1% | $102.3M | -5.9% |
| Total operating expenses | $654.2M | $701.4M | -6.7% | $654.7M | -0.1% |
| Operating income (loss) | $310.5M | $249.9M | +24.2% | $241.6M | +28.5% |
| Operating margin | 25.1% | 20.0% | +5.0 pp | 20.6% | +4.5 pp |
| Net income (loss) | $425.7M | $674.1M | -36.9% | $254.6M | +67.2% |
| Net margin | 34.4% | 54.1% | -19.7 pp | 21.7% | +12.7 pp |
| Diluted EPS | $1.42 | $2.19 | -$0.77 | $0.81 | +$0.61 |
Risks
Competition is intensifying as hyperscalers and bundled productivity suites such as Microsoft 365 with Teams and Google Workspace with Meet push AI communication and collaboration tools, and AI-powered offerings could make Zoom's platform obsolete. MD&A describes Zoom as investing in an AI-first platform with federated LLMs from OpenAI, Anthropic, and NVIDIA, but new AI features may require longer customer evaluations.
Zoom faces pricing pressure and potential customer consolidation onto competitor platforms, and the filing states it has at times engaged in price-cutting or discounts to attract and retain customers. Competitors are described as having greater name recognition, larger budgets, broader product suites, and more established distribution relationships.
MD&A highlights macroeconomic uncertainty from geopolitical conflicts, energy market volatility, inflation, interest rates, and slower global growth, which have contributed to variability in sales cycles and caution in enterprise spending decisions. These dynamics may affect customer upsell, downsell, or renewal activity.
Zoom remains subject to DOJ subpoenas from the EDNY and NDCA regarding interactions with foreign governments, user data storage and access, and Chinese government law enforcement requests. These ongoing investigations could lead to substantial fines, penalties, reputational harm, and loss of customer confidence.
A significant portion of Zoom's research and development organization resides in China, and US-China geopolitical tensions may lead to increased scrutiny, restrictions on local operations, or interference with product development. APAC and EMEA represented 27.9% of total revenue for the three months ended April 30, 2026.
Zoom uses generative and agentic AI in its products, which may lead to legal liability, IP infringement claims, reputational concerns, and dependence on third parties for AI features. Zoom currently offers certain AI features at no additional cost, and if adoption benefits are not realized, the investment could negatively impact margins.
Sales to large organizations and new AI-enabled products require extensive technical, legal, and operational evaluations, and Zoom expects increased sales to large organizations to lead to higher up-front sales costs and greater unpredictability. MD&A notes enterprise customers contributing more than $100,000 of trailing 12 months revenue grew to 4,534 as of April 30, 2026 from 4,192 a year earlier.
Enterprise net dollar expansion rate was 99% as of April 30, 2026 and 98% as of April 30, 2025, remaining below 100%, and Online monthly average churn was 3.0% for the three months ended April 30, 2026 compared with 2.8% for the prior-year period. The filing attributes expansion pressure partly to macroeconomic headwinds and seat count downsells.
Gains on strategic investments, net were $152.3 million for the three months ended April 30, 2026 compared with losses of $13.6 million for the prior-year period, driven primarily by fair value changes in privately held securities. These fair value adjustments flow through the statement of operations and could create volatility or partial loss of invested capital.
The filing cites intense competition for software developers, sales personnel, and security personnel, and notes that recent restructuring actions may exacerbate hiring and retention difficulties. MD&A shows research and development expense increased 11.0% for the three months ended April 30, 2026 versus the prior-year period, mainly from higher personnel-related expenses as Zoom invested in AI innovation.
Zoom depends on co-located data centers and third-party cloud hosting services including Amazon Web Services, Oracle Cloud, and Microsoft Azure, and service interruptions or delays have in the past impaired delivery. The filing notes potential inability to bring additional data centers online in a timely manner, including due to current shortages for certain parts such as servers.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Free Cash Flow
Online Average Monthly Churn
Free Cash Flow Margin (Non-GAAP)
Summary, forecast, risks and KPIs are extracted from Zoom Communications, Inc.'s SEC filings for Q1 FY2027 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.