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Zoom’s Enterprise Business Drives Q1 FY2026 Growth as Online Revenue Falls

Zoom’s Q1 fiscal 2026 showed enterprise-led growth, with large-account revenue rising while online sales declined. Strong margins and AI adoption offered promise, but did not yet prove a broad return to faster growth.
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Zoom’s first-quarter fiscal 2026 results were strongest in enterprise: revenue from business customers rose 5.9% while online revenue fell 1.2%. For the quarter ended April 30, 2025, total revenue grew 2.9% to $1.1747 billion, making the “strong Q1” headline accurate mainly for enterprise performance and profitability—not for the business as a whole.

What Zoom reported for Q1 fiscal 2026

Zoom announced its results on May 21, 2025. Revenue was $1.1747 billion, up 2.9% year over year. Enterprise revenue reached $704.7 million, up 5.9%, while online revenue was $470.0 million, down 1.2%. Enterprise therefore accounted for about 60% of quarterly revenue. The split is more revealing than the company-wide growth rate: enterprise gains outweighed a small contraction in online sales. Zoom’s earnings release filed with the SEC reports the segment and total figures.

Profitability was substantial under both accounting measures. Zoom reported GAAP operating income of $241.6 million and GAAP operating margin of 20.6%; non-GAAP operating income was $467.3 million, with a 39.8% margin. GAAP net income was $254.6 million, or $0.81 per diluted share. Non-GAAP net income was $448.3 million, or $1.43 per diluted share. Non-GAAP measures exclude specified costs, including stock-based compensation and acquisition-related expenses; they offer a different view of results, not a replacement for GAAP reporting.

The earnings release also reported $454.4 million in operating cash flow and $398.3 million in free cash flow for the quarter. Zoom repurchased approximately 5.6 million shares, compared with 4.3 million in the preceding quarter. Buybacks return capital to shareholders, but do not by themselves address the central operating question: whether revenue growth can accelerate.

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Why enterprise was the main growth story

Zoom counted 4,192 customers generating more than $100,000 in trailing-12-month revenue, an 8% year-over-year increase. That is a count of a large-customer cohort, not the total number of enterprise customers. Its growth, alongside enterprise revenue growth, indicates that the business is building its larger-account base.

Zoom’s enterprise net dollar expansion rate was 98%. This measures revenue from an existing customer cohort against that cohort’s revenue in the comparable prior-year period, accounting for expansions, contractions and churn; it does not count revenue from newly acquired customers. A rate below 100% means the measured existing cohort generated slightly less revenue in aggregate than before. It is not evidence that existing customers, taken together, expanded their spend, even as the large-customer count grew.

The combination matters: new and larger accounts can lift enterprise revenue while the existing-customer cohort does not fully retain its prior revenue. Enterprise made up roughly 60% of the quarter’s sales, but the reported figures do not establish that every enterprise product or customer grew.

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Online retention improved, but revenue still declined

Online revenue fell 1.2% year over year. At the same time, online average monthly churn improved to 2.8%, down 40 basis points year over year, and customers with at least 16 months of continuous service generated 74.2% of online monthly recurring revenue. These are useful retention signals: fewer customers were leaving month to month, and a greater share of recurring revenue came from longer-tenured users.

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Better retention did not yet translate into online growth in this quarter. The segment’s decline means it is more accurate to describe the trend as improved retention than as a recovery.

AI and adjacent products support a broader platform strategy

Zoom presented the results as part of a transition from a video-meeting provider to a broader, AI-enabled work platform. The product strategy links its core meetings and collaboration offering with Zoom Phone, contact-center capabilities, Zoom Customer Experience, Zoom Revenue Accelerator and Workvivo, its employee-engagement platform. The business logic is to deepen relationships with enterprise accounts by serving more communication and work needs, rather than relying on meetings alone.

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Zoom said AI Companion usage grew nearly 40% year over year, as reported in Computer Weekly’s May 23, 2025 coverage. That is an adoption signal, not a disclosed measure of AI revenue. Usage can help attract or retain customers, but the financial question is whether AI features lead to paid adoption, larger contracts or stronger renewals. The quarter’s results do not quantify that conversion.

For buyers, a wider platform may support consolidation of meetings, voice, customer service and employee communications. It can also add procurement and administration complexity, especially for organisations already committed to Microsoft, Google or Cisco products. Zoom’s earnings figures do not establish a product advantage over those alternatives.

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What Zoom forecast—and what to watch

Zoom’s guidance was a forecast issued in May 2025, not a report of subsequent results. For fiscal Q2 2026, it expected revenue of $1.195 billion to $1.200 billion, or $1.196 billion to $1.201 billion on a constant-currency basis; non-GAAP operating income of $460 million to $465 million; and non-GAAP diluted EPS of $1.36 to $1.37.

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For full fiscal 2026, Zoom forecast revenue of $4.8 billion to $4.81 billion, or $4.808 billion to $4.818 billion at constant currency. It projected non-GAAP operating income of $1.865 billion to $1.875 billion, non-GAAP diluted EPS of $5.56 to $5.59 and free cash flow of $1.68 billion to $1.72 billion. Constant-currency figures adjust for exchange-rate movements and should not be mixed with reported-dollar figures.

To judge whether the enterprise-led performance was becoming a durable growth phase, the most informative indicators are whether enterprise revenue continues to outpace total revenue, whether net dollar expansion moves toward or above 100%, whether large-customer growth persists, and whether online revenue returns to growth. AI monetisation and expansion in contact-center and customer-experience products also matter, but usage alone is not proof of incremental sales.

There are execution risks as well as opportunity. Zoom’s SEC-filed release identifies competition, macroeconomic conditions, longer sales cycles at large organisations, security issues, service outages and fluctuating demand among risks that can affect expectations. Enterprise deals can take longer to close, while a broader catalogue can increase the value of an account but complicate purchasing and deployment.

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How the result looks with a later Q1 comparison

The May 2025 figures describe Q1 fiscal 2026, not Zoom’s latest Q1. In its Q1 fiscal 2027 results, announced May 21, 2026, Zoom reported total revenue of $1.239 billion, enterprise revenue of $755.7 million growing 7.2%, and online revenue growth of 2.8%. Enterprise net dollar expansion was 99%. The later quarter showed enterprise growth continuing and online revenue returning to growth, but the 99% expansion rate remained below full dollar retention for the measured existing-customer cohort. Zoom’s Q1 fiscal 2027 announcement and its SEC-filed earnings release provide those updated figures.

That later result should not be substituted for the 2025 quarter when assessing the original headline. It does, however, underline the strategic test: whether a larger enterprise business and broader product platform can sustain growth while the online segment stabilises.

Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.

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