Zoom Raises Full-Year Revenue Outlook, Betting on AI Features to Drive Enterprise Demand

Zoom Communications (ZM.O) raised its full-year revenue and profit expectations on Thursday, hoping that strong demand for its artificial intelligence features will boost spending by businesses and consumers, propelling the video conferencing platform back onto a growth trajectory.

Following the announcement, Zoom's stock price jumped over 8% in after-hours trading, after the stock fell 2.7% in regular trading on Thursday, closing at $96.75. Year-to-date, Zoom's stock price has increased by about 12%.

AI Paying Users Soar by 184%

For the first fiscal quarter ending April 30, Zoom's adjusted earnings per share were $1.55, higher than the $1.43 of the same period last year and analysts' expectation of $1.42. Revenue grew by 5.5% year-over-year to $1.24 billion, exceeding Wall Street's forecast median of $1.22 billion.

The company stated that the revenue growth was due to an increase in the number of customers and the adoption rate of AI tools. Chief Executive Officer Yuan Zheng (Eric Yuan) said in the performance statement, "Customers are increasingly adopting Zoom as an AI-first action system for modern work."

Yuan added that the number of paying users of Zoom's "AI Companion" increased by 184% on a year-over-year basis, and the AI transcription tool "My Notes" reached a scale of 1.5 million authorized users within just four months of its launch. "We have also made strong progress in new AI monetization channels and the Zoom customer experience business, which continues to achieve high double-digit acceleration," he said.

Full-Year Guidance Slightly Raised, Authorization of $1 Billion for Buyback

Zoom raised its revenue forecast for the fiscal year 2027 to a range of $50.8 billion to $50.9 billion, higher than the previous range of $50.7 billion to $50.8 billion. The adjusted earnings per share guidance was raised to between $5.96 and $6.00, significantly higher than the previous expectation of $5.77 to $5.81, and also above analysts' average forecast of $5.88.

Meanwhile, the company announced an additional authorization of a $1 billion stock repurchase plan.

For the second fiscal quarter, Zoom expects revenue to be between $1.265 billion and $1.27 billion, essentially in line with analysts' expectations of $1.266 billion. The adjusted earnings per share are expected to be between $1.45 and $1.47, slightly below Wall Street's expectation of $1.49.

Yuan stated, "With strong profitability, cash flow, and the increased authority for stock buybacks, we continue to focus on transforming AI innovation into sustainable growth, quantifiable customer value, and long-term shareholder returns."