Zoom Slows Revenue Growth Amid Shift to CX Focus

Zoom's revenue growth slowed in Q2, according to its guidance, after a strong Q1. The company reported $1.24 billion in revenue for the first quarter of fiscal 2027, with CEO Eric Yuan calling it 'among our best growth rates in recent years'. However, Zoom guided Q2 revenue to be between $1.265 billion and $1.270 billion, which represents a 4.1% year-over-year growth rate.

This slower growth rate is notable because Cisco's Collaboration segment just delivered its best quarter in seven years, with a 12% increase in revenue. RingCentral grew 5.9% in its most recent quarter, outpacing Zoom's 5.5% growth in Q1.

Zoom attributes some of its growth to AI Companion users, which surged 184% year-over-year in Q1. However, the company still faces a challenge in converting adoption into revenue. The gap between AI Companion usage and revenue growth is evident, with paid AI Companion users growing rapidly but not yet translating into significant revenue.

Zoom's new Head of APAC, Carlos Quaderi, was appointed just three weeks before this earnings report. His mandate focuses on enterprise and SMB growth, the CX business, and channel expansion, rather than meetings and core calling. This appointment suggests that Zoom is shifting its focus to areas where it has seen success in recent quarters.

The company's full-year guidance remains at $5.08 billion to $5.09 billion, but a soft Q2 topline alongside accelerating CX growth would be seen as a company mid-transition, with its revenue mix catching up to its product bets.