Zoom Communications has issued a revenue forecast for the first quarter (Q1) and full fiscal year 2026 (FY26) that falls short of Wall Street expectations, reflecting ongoing shifts in workplace models. The company expects full-year revenue to be between $4.78bn and $4.79bn, compared with analysts’ estimates of $4.81bn. First-quarter revenue is projected between $1.16bn and $1.16bn, also below expectations.
The forecast underscores the impact of a changing work environment as businesses scale back remote and hybrid arrangements. Large corporations, including JPMorgan Chase, Amazon, and AT&T, have directed employees to return to the office more frequently. Additionally, US federal employees are now required to work in person five days a week following a government directive. These changes have affected demand for video conferencing tools, raising questions about long-term growth prospects for platforms like Zoom.
Following the announcement, Zoom’s shares declined by nearly 2% in extended trading, reflecting investor concerns over slowing momentum. For fiscal 2026, Zoom expects non-GAAP income from operations to range between $1.85bn and $1.86bn, with non-GAAP diluted EPS projected between $5.34 and $5.37. Free cash flow is anticipated to be between $1.68bn and $1.72bn.
Fourth-quarter performance
Despite concerns about future growth, Zoom’s fourth quarter (Q4) financial results aligned with expectations. Revenue reached $1.18bn, marking a 3.3% increase year-over-year, with enterprise revenue growing 5.9% to $706.8m. The company’s online segment saw a slight decline of 0.4%. Operating income improved, with GAAP earnings rising to $225.1m from $168.5m a year earlier. On an adjusted basis, non-GAAP income from operations grew to $468m, while the non-GAAP operating margin stood at 39.5%. The company’s free cash flow increased by 25% year-over-year, reaching $416m. Zoom’s earnings per share (EPS) came in at $1.41, exceeding analyst expectations of $1.3.
Zoom has been positioning AI as a key growth driver, but the financial impact of the technology remains uncertain. CEO Eric Yuan highlighted the company’s AI expansion during the earnings call, noting a 68% quarter-over-quarter increase in monthly active users for its AI Companion tool. An upgraded version of Zoom AI Companion is set to launch in April, with enhanced automation capabilities designed to streamline workplace tasks. The new version will feature custom AI agents that integrate with Microsoft and Google services, allowing businesses to connect AI tools with existing workflows.
“Growth in monthly active users of Zoom AI Companion accelerated to 68% quarter over quarter, demonstrating the real value AI is providing customers,” Yuan said. “We are focused on our key strategic priorities, expanding AI capabilities to drive customer value, rapidly innovating within Zoom Workplace, and building momentum in new products such as Contact Center and WorkRevivo.”
Enterprise customers have remained a strong revenue driver for Zoom, with approximately 192,600 reported at the end of the fourth quarter. The company has emphasised growth in this segment, noting that business customers continue to account for a larger share of overall revenue. However, starting in fiscal 2026, Zoom will no longer report enterprise customer numbers as a standalone metric. The company cited increased overlap between enterprise and online customers as the reason for discontinuing the reporting, though it will continue to provide the metric in investor materials through fiscal 2026.
Zoom continues to face pressure from Microsoft Teams and other collaboration tools that are integrated into enterprise software ecosystems. The company has been expanding its product portfolio beyond video conferencing, investing in AI-powered solutions and workplace communication tools. Despite these efforts, Zoom’s overall growth has slowed compared to its competitors. While the company remains focused on expanding its enterprise offerings and AI capabilities, the long-term challenge will be maintaining relevance as workplace dynamics continue to evolve.
Read more: Zoom reports Q3 beat, raises FY25 guidance amid enterprise momentum
