Zoom's AI-First Strategy Shows Early Promise as Q3 Results Beat Estimates

Can AI secure Zoom's future? Early enterprise traction offers hope amidst sluggish growth

Zoom's third quarter results show the collaboration platform's AI-first strategy beginning to gain traction, though revenue growth remains modest at 4.4% year-over-year as the company continues navigating post-pandemic market realities and intensifying competition from Microsoft Teams. The company reported revenue of $1.23 billion for the quarter ended October 31, 2025, slightly ahead of guidance but reflecting the sluggish growth trajectory that has characterized its performance since pandemic-era demand subsided. Enterprise revenue of $741.4 million grew 6.1% year-over-year, while online revenue increased just 2.0% to $488.4 million - though notably, online churn hit a record low of 2.7%. What's more interesting than the top-line figures is Zoom's progress in translating its aggressive AI push into tangible business outcomes. CEO Eric Yuan, speaking via his AI avatar for the third time on an earnings call, emphasized the company's evolution beyond basic video conferencing: We delivered strong results this quarter with broad momentum across products, industries and customer segments from online to our largest enterprise accounts. This performance reflects the durability of our business, driven by the growing value we are delivering for customers as we evolve from a communications leader to an AI-first platform for work and customer experience. The company's AI Companion continues to show growth, with monthly active users up 4x year-over-year. More significantly, Zoom is seeing early traction with Custom AI Companion, its premium AI offering that carries additional monetization potential. The quarter saw several Fortune 200 wins and broad interest, with Oracle and Salesforce both deepening their partnerships by adding Custom AI Companion. CFO Michelle Chang outlined the company's three strategic priorities during the call: elevating workplace products with AI, driving growth of new AI products, and scaling AI-first customer experience. On the monetization question that has dogged Zoom's AI announcements, Yuan was characteristically optimistic but acknowledged the breadth of the challenge: It's not a single thing, right? a single product, we want to monetize. It's almost everywhere across the entire product portfolio. The customer experience business delivered what executives called "a phenomenal quarter" with ARR continuing to grow in the high double digits - though specific figures weren't disclosed. Notably, 9 of the top 10 CX deals involved paid AI features such as Zoom Virtual Agent or AI Expert Assist, suggesting enterprises are willing to pay for AI capabilities when they address clear pain points. Zoom's push beyond video conferencing is producing varied outcomes across the portfolio. Zoom Phone surpassed 10 million paid seats early in the quarter and continues delivering consistent ARR growth in the mid-teens with sizable wins in financial services and healthcare. The employee experience offering, Workvivo, saw logos grow nearly 70% year-over-year to 1,225 customers. The company also announced plans to acquire BrightHire, an AI-powered hiring intelligence platform, extending Zoom's strategy of targeting what Yuan calls "business mission-critical use cases" adjacent to collaboration. When asked whether this signals broader expansion into enterprise workflows, Yuan was direct: Zoom would become more than just Zoom, right? And that's actually our strategy over the past few years: double down on Zoom Phone, launched Zoom Contact Center, leverage our technology to focus on those business mission-critical use cases. We are already doing that already over the past few years. BrightHire acquisition is just another way for us to double down on business mission-critical applications. We cannot build everything by ourselves, right? We do not have a great remote hiring solution to target HR remote high-end use case, right? BrightHire fits very well to our strategy. However, the company's net dollar expansion rate remains stuck at 98% - below the crucial 100% threshold that indicates existing customers are expanding spending. Chang acknowledged this whilst emphasizing stabilization as progress: We're pleased after 6 quarters to see the net dollar expansion stabilizing...but certainly inflection is the goal. These results represent Zoom's clearest evidence yet that its AI-first strategy might actually work - though "might" remains the operative word. The combination of 4x AI Companion adoption growth, high double-digit CX revenue increases, and AI attachment in major deals suggests enterprises see value in Zoom's approach beyond free features. What's particularly notable is the company's progress with Custom AI Companion among Fortune 200 companies. Getting Oracle and Salesforce to deepen partnerships by adding premium AI capabilities sends a market signal that could influence other enterprise buyers (if Zoom can execute on delivering measurable value, which remains to be seen). However, the fundamental challenge persists: Microsoft's bundling of Teams creates enormous switching costs that impressive AI features alone may not overcome. The BrightHire acquisition makes strategic sense within Zoom's stated goal of owning business-critical workflows adjacent to collaboration (which could make it more competitive with Microsoft) but it also highlights how the company must pursue M&A to fill gaps in its platform. The AI capabilities are real, the customer interest appears genuine, but translating that into accelerated growth that justifies premium valuations? That story is still developing.

Zoom tops estimates with stronger enterprise sales and higher AI adoption - SiliconANGLE

Zoom tops estimates with stronger enterprise sales and higher AI adoption Shares in Zoom Communications Inc. were up nearly 4% in late trading today after the online communication company reported earnings and revenue beats in its fiscal 2026 third quarter. For the quarter that ended on Oct. 31, Zoom reported adjusted earnings per share of $1.52, up from $1.38 per share in the same quarter of the previous fiscal year, on revenue of $1.23 billion, up 4.4% year-over-year. Both figures were ahead of the $1.44 per share and revenue of $1.21 billion expected by analysts. Zoom saw enterprise revenue in the quarter of $741.4 million, up 6.1% year-over-year, adjusted income from operations of $507 million, up from $457.8 million in the same quarter of the previous fiscal year and cash flow of $629.3 million, up from $483.2 million the year prior. Key to the strong figures was customer growth, with Zoom seeing its number of customers contributing more than $100,000 in trailing 12-month revenue grow 9.2% year-over-year to 4,353. Business highlights in the quarter included Zoom launching its AI Companion 3.0 in September. The artificial intelligence companion is designed to help users deliver high-quality work by providing insights and intelligent assistance and includes a number of updates that enhance its AI agent capabilities with new custom agents, a new low-code builder platform and lifelike AI avatars. Zoom also held its annual Zoomtopia Conference that saw a major shift in focus toward generative and agentic AI across the company's platform. Along with the Zoom AI Companion 3.0, Zoom unveiled a new assistant called Zoomie that is designed for meeting rooms and hybrid-work scenarios, featuring voice controls, photorealistic avatars, and proactive suggestions for meeting preparation. The company also revealed new customer service and sales workflows with several updates: webinars now include an "Ask AI Companion" feature enabling late-arriving or returning attendees to ask for summaries and context and its contact-center suite obtained enhanced analytics across customer experience channels to surface insights and drive staffing or self-service recommendations. "This quarter we announced AI Companion 3.0 and we're thrilled to see AI Companion adoption grow meaningfully," said Eric S. Yuan, founder and chief executive officer of Zoom, in the company's earnings release. "We're also seeing strong momentum with Custom AI Companion and our AI‑first Customer Experience suite, which helped make this one of our best CX quarters, with broad AI adoption across major deals." For its fiscal 2026 fourth quarter, Zoom expects adjusted earnings per share of $1.48 to $1.49 on revenue of $1.23 billion to $1.235 billion. For its full fiscal year, the company expects adjusted earnings of $5.95 to $5.97 per share and revenue of $4.852 billion to $4.857 billion.

Zoom's AI offerings drive new deals during Q3, but analysts await more growth (ZM:NASDAQ)

Zoom Communication's (ZM) latest Q3 fiscal 2026 results surpassed estimates as it continues to make strides with its artificial intelligence offerings with enterprises and medium-sized businesses. Shares had increased 8% by early Tuesday trading. However, some analysts surmise the beat was AI Companion usage has risen 4x year-over-year, contributing to improved enterprise deal wins and supporting monetization, cited as defense against seat decline. Analysts are uncertain, noting Q3 growth was partially driven by price increases and expressing doubts about accleration durability into fiscal 2027. Most maintain cautious ratings, citing strong AI traction and cost controls but remaining cautious on long-term growth; some raised price targets and noted the buyback boost to shares.

Zoom outlines FY26 raised revenue and earnings guidance as AI momentum accelerates across enterprise and mid-market (NASDAQ:ZM)

Earnings Call Insights: Zoom Communications Inc. (ZM) Q3 2026 Management View * CEO Eric Yuan reported "strong results this quarter with broad momentum across products, industries and customer segments from online to our largest enterprise accounts." He emphasized the transformation "from a communications leader to Zoom is investing heavily in AI with new products like AI Companion 3.0, acquisitions (BrightHire), and strengthening enterprise partnerships, aiming to transform into an AI-driven platform for work and customer experience. Zoom reported 4.4% year-over-year revenue growth, margin expansion, strong free cash flow, increased share buyback authorization, and raised guidance for full-year revenue and profitability. Management and analysts viewed enterprise and AI adoption as strong and stabilizing, but future sustainability depends on ongoing AI innovation, product diversification, and maintaining low churn, with some one-time free cash flow benefits addressed.

Zoom lifts annual outlook on growing demand for AI tools in hybrid work

Zoom Communications raised its annual revenue and profit forecasts on Monday, benefiting from hybrid work trends and the integration of artificial intelligence into its products. Shares of the company rose 3.5 per cent in extended trading. Zoom has intensified its push to embed AI functionalities across its products and broaden its service offerings to capitalize on the demand for hybrid work solutions. New products such as Phone, Contact Centre and Virtual Agent, are driving the majority of Zoom's growth. "We're also seeing strong momentum with Custom AI Companion and our AI-first Customer Experience suite, which helped make this one of our best CX quarters, with broad AI adoption across major deals," CEO Eric Yuan said. Demand for AI agents, which are programs that can act autonomously to perform specific tasks, has been growing as companies embrace the new technology to automate workflows and improve efficiency. "As companies move beyond AI science projects to demanding clear business outcomes, Zoom's AI companion is included in eligible paid plans, making it an attractive foundation for future AI monetization efforts while driving adoption," said Rebecca Wettemann, CEO of industry analyst firm Valoir. Zoom expects fiscal 2026 revenue between US$4.85 billion and US$4.86 billion, compared with its earlier forecast of US$4.83 billion to US$4.84 billion. It expects annual adjusted profit per share between US$5.95 and US$5.97, compared to a prior view of US$5.81 and US$5.84. The company increased its share repurchase authorization by US$1 billion. It has also partnered with Nvidia to include the chipmaker's Nemotron open technologies to support AI Companion 3.0 across industries such as finance, healthcare and government. Revenue for the third quarter was US$1.23 billion, ahead of estimates of US$1.21 billion, according to data compiled by LSEG. Zoom earned US$1.52 per share on an adjusted basis compared with estimates of US$1.44. ---

Investor Outlook: Zoom's AI push fuels fresh optimism after strong Q3 results

Zoom shares climbed after the company beat third-quarter profit and revenue expectations, supported by rising demand for its artificial intelligence features. The results mark another step in Zoom's strategic shift away from its pandemic-era reliance on videoconferencing toward a broader AI-driven platform. BNN Bloomberg spoke with Catharine Trebnick, senior research analyst at Rosenblatt Securities, who said the company's momentum reflects stronger adoption of newer products, improving channel execution and growing customer interest in its AI capabilities. Key Takeaways * Zoom delivered a broad third-quarter beat, with revenue, earnings and margins surpassing expectations. * Adoption of AI features rose sharply, helping the company win larger customer experience and enterprise deals. * Newer products such as Zoom Phone, the contact centre platform and Workvivo are contributing to revenue growth. * Improved channel strategy and faster R&D execution are helping Zoom respond more effectively to competitive bids. * Analysts say multiple growth engines are emerging as the company pivots toward an AI-first platform with expanding cash flow. Read the full transcript below: ROGER: Shares of Zoom are up after the company reported a beat on profit and revenue, and as analysts look at its development in AI features for sustained revenue and profit now that demand for the communications platform has dipped since COVID. Here to talk more about it is Catharine Trebnick, senior research analyst at Rosenblatt Securities. Catharine, thanks very much for joining us. CATHARINE: You're very welcome. Thank you for having me today, and happy Thanksgiving. ROGER: We'll take it. We had our Thanksgiving a month ago, but we always want to celebrate with more turkey and with our good friends to the south of the border. CATHARINE: Okay. Thank you. ROGER: Some good numbers there for Zoom. CATHARINE: Yes. They really delivered a clean sweep across revenue. They beat by US$60 million, EPS by eight cents, margins by 130 basis points, and then free cash flow at 50 per cent free cash flow margins. I mean, it's incredible. I think it's a quarter that shows the company is seeing real product momentum, real AI adoption, and their maturing channel strategy is really kicking in. Plus, they raised guidance for the year across all the key indexes. ROGER: What are some of the new products you're liking and that are helping drive this? CATHARINE: I estimate roughly 20 per cent of revenue is with the cohort group they've been aggressively developing. Zoom Phone is roughly 10 per cent of revenue and growing about 15 per cent year over year. The newer product introduced in 2023 is the contact centre. They discussed that growing in high double digits -- I'd say roughly 90 to 100 per cent year over year. The contact centre is one of the areas really helping them drive AI innovation. They talked a lot about how the newer products built on top of the contact centre are helping them win deals and position themselves. They also have what they call Zoom Companion AI, which quadrupled year over year. They landed two new customers with that and expanded with Oracle and Salesforce. Then there's Workvivo, and with that product they're taking a lot of Meta's customers and transferring them over. Those are three of the main ones driving growth. When you talk to the channel and ask how they're positioning, you hear that the R&D piece and their ability to translate technology quickly into a product or feature to help them land larger customers is really helping them. One example: if there's a big RFP and someone says Ring or NICE or Cognigy is number one, they'll say Zoom can't do A, B, C or D. Zoom will come back and say, "We can do A, B, C and D, and we can deliver that to you in the next two quarters." Then the company checks with sales, channel and service people, and they all say yes. That's an untold part of the story -- how aggressive they are in R&D, how they've matured the channel, and how they've remained profitable. ROGER: With the channel, what makes them so good at it? Is it their leadership? What's driving it? CATHARINE: They've had fits and starts with the channel over the years. I was rather frustrated with them three years ago. In the last two years, they brought in deep expertise. The company started out online -- everything was done online -- but now 60 per cent of revenue is from the enterprise. They retooled the program. They took everyone out of California a year ago and said, "If you're a channel rep, you need to be in-region." They put people in-region, redeveloped their sales portal, revamped how they bundle products, and made pricing easier. Those are major changes. They've also been aggressive with product breadth, and they're much easier to work with than they were two years ago. Channel enablement, access to information, and speed through the RFP process are really helping them. ROGER: It's been quite the transformation. Everyone learned about Zoom during the pandemic. Their numbers spiked, and some would say they're down, but the stock is almost back to where it was value-wise before the pandemic. CATHARINE: Yes. It's no longer a pandemic stock. It's shifted to an AI story -- an AI-first automation platform now. The fact is they have growing new businesses, expanding margins and strong cash generation. We didn't talk about the US$8 billion on the balance sheet. ROGER: We can talk about it now. CATHARINE: Yes. ROGER: They've raised their guidance for 2026 and announced a US$1-billion buyback. CATHARINE: My take is that I see multiple growth engines firing -- the cohort groups, Zoom Phone, the contact centre, Workvivo and the other products, including AI Companion and chat. I think it's a strong set-up, and the valuation doesn't reflect where they're headed. That's my view on the stock. ROGER: All right, Catharine, thank you very much for joining us. We appreciate it. CATHARINE: Thank you. ROGER: That's Catharine Trebnick, senior research analyst at Rosenblatt Securities.

Zoom Communications lifts annual outlook on accelerated demand for AI tools in hybrid work

(Reuters) -Zoom Communications raised its annual revenue and profit forecast on Monday, benefiting from hybrid work trends and the integration of artificial intelligence into its products. Shares of the company were up 3.7% in extended trading. Zoom has intensified its push to embed AI functionalities across its products and broaden its service offerings to capitalize on the demand for hybrid work solutions. New products, such as Phone, Contact Center and Virtual Agent, are driving the majority of Zoom's growth. "We're also seeing strong momentum with Custom AI Companion and our AI-first Customer Experience suite, which helped make this one of our best CX quarters, with broad AI adoption across major deals," CEO Eric Yuan said in a statement. Demand for AI agents, which are programs that can act autonomously to perform specific tasks, has been growing as companies embrace the new technology to automate workflows and improve efficiency. Zoom had witnessed rapid growth in users and subscribers as organizations turned to online video-conferencing platforms during the pandemic-led lockdowns. It has also partnered with Nvidia to include the chipmaker's Nemotron open technologies to support AI Companion 3.0 across industries such as finance, healthcare and government. The company now expects fiscal 2026 revenue between $4.85 billion and $4.86 billion, compared with its earlier projection of $4.83 billion and $4.84 billion. It forecast annual adjusted profit per share between $5.95 and $5.97, compared to a prior view of $5.81 and $5.84. Revenue for the third quarter, ended October 31, was $1.23 billion, ahead of estimates of $1.21 billion, according to data compiled by LSEG. Zoom earned $1.52 per share on an adjusted basis during the quarter, compared with estimates of $1.44 apiece. (Reporting by Juby Babu in Mexico City; Editing by Alan Barona)