Zoom’s Q2 2027 earnings are an interesting example of a company in the midst of a transition from self-serving video-conferencing business towards a broader enterprise communications, CX and productivity platform, with strong signals of success alongside more cautious guidance. As is the way, the market is only really rewarding bullish numbers at the moment (largely due to the question marks around AI economics) - but I think there’s a more positive story in the midst of Zoom’s earnings that it’s perhaps not getting credit for. 

During and after the peaks of COVID-19, Zoom was a poster child for the technology industry. At the end of 2019 Zoom’s share price was hovering around $68. During the peak of the pandemic, when Zoom was synonymous with people connecting with each other from home, its share price soared to above $500 - an increase of over 700%. Of course, this was not sustainable, and the share price now sits at around $90-100. 

In the ‘post-COVID’ era, Zoom decided that its consumer popularity during that time likely wasn’t an enduring business model for growth and it decided to pursue the harder, more rewarding multi-product enterprise market. Since then the company has made a host of acquisitions around enterprise CX and EX, and is pursuing an agentic AI strategy to support enterprise collaboration. 

And this is why this set of results is telling - as the enterprise segment is showing signs of growth and strength (good!), but its online segment (the self-service side) has softened and is fairly flat. However, that mixed bag isn’t enough to convince investors and combined with some weaker guidance than expected, Zoom’s share price took a hit overnight. 

Before we get into Zoom’s leadership comments, the key figures for the quarter are: 

• Total revenue: $1.277 billion, up 4.9% year on year and $7 million above the top of Zoom’s guidance.

• Enterprise revenue: $787.5 million, up 7.8% - its fastest growth in three years- and accounting for 62% of total revenue.

• Online revenue: $489.7 million, up just 0.6%, indicating that growth has effectively stalled.

• GAAP operating income: $314.3 million, down 2.3%, meaning revenue growth did not translate into higher operating profit.

• Remaining performance obligations (RPO): $4.54 billion, up 14%, providing an encouraging indicator of contracted future revenue.

You can see from these numbers where the contradictory nature of Zoom’s current business sits. Enterprise revenue is up a decent amount, growing faster than previous years, whilst online revenue is effectively flat. However, looking at the details of the enterprise numbers, Zoom also outlined: 

• Licensed monthly active users of AI features in Zoom Workplace increased 125% year-on-year.

• Zoom CX ARR continued growing at a high-double-digit rate.

• Zoom recorded its highest-ever number of seven-figure Zoom CX deals.

• Paid AI appeared in nine of Zoom’s ten largest CX deals.

• Zoom Virtual Agent customer numbers increased 256%.

• Zoom Revenue Accelerator paid customers increased 41%.

I’d argue that these numbers suggest a stronger enterprise business - that has potential for more sustainable growth - than the market is giving Zoom credit for. 

Eric Yuan, CEO of Zoom, said: 

The Enterprise acceleration was driven by our focused execution against our three priorities of elevating Workplace with AI, scaling AI-first customer experience, and driving growth in new AI products.

CFO Michell Chang added: 

It’s really what we have been telling investors we would work on: product diversification, AI monetization, moving upmarket, expanding in new routes of market with channel while working our churn.

As we move into these different businesses, and we move into that deeper relationship… with our customers, it will come with longer, larger AI-related deals.

And pointing to the success of the enterprise future, Change said: 

The strong growth in RPO reflects our continued success landing larger, longer-term, multi-product platform deals, demonstrating growing demand for our AI-first platform.

Zoom’s self-service/online section is a curious story too. The vendor raised the pricing on its online segment this year, which could have made an impact, but CFO Chang said that retention wasn’t really the problem: 

We did one [price increase] to the monthly and then one annual, so you can kind of think about it as one all up of roughly 6% in our online business. And… we did not really see a massive - or really any - change in our churn.

What is proving to be a sticking point, is that users are increasingly turning to AI search to discover collaboration tools and aren’t necessarily landing on Zoom, in the same way that they were Google Search. Chang said: 

And we're adjusting..due to dynamics that we saw in Q2 at the top of funnel across the industry where people are just discovering products in different ways. And we're aggressively working to address that, meaning they're going from search to more AI. We're active in addressing that. 

Chang didn’t lay out exactly how they’re addressing that, but it’s ironic to see AI working for and against Zoom in some ways….

It’s still too soon to say whether Zoom will be a breakout enterprise collaboration vendor - it’s got stiff competition from the likes of Microsoft and Salesforce. Those embedded vendors with an expanded footprint already have buy-in, in many ways. But I think the signs are positive here and I think Zoom’s focus on experience - both customer and employee - coupled with AI-enabled collaboration is smart for companies that are seeking new ways of working. The market will hate the flat online figures, but enterprise is where the real, sustained value is - and progress is being made there.