Zoom’s Q1 2026 earnings call revealed a company seeing the fruits of its feature development make meaningful returns as customers entrenched themselves within its offerings.
It delivered solid results with first-quarter total revenue of $1.17 billion, up 2.9% year over year as reported and 3.4% in constant currency.
What was stark, however, was that its number of customers contributing more than $100,000 in trailing 12 months’ revenue was up 8.0% year over year.
Despite Microsoft commanding a staggering 46% of the unified communications and collaboration market, Zoom proved it’s still all to play for when it comes to winning customers.
The earnings call, featuring CEO Eric Yuan, highlighted how Zoom is taking a huge focus on AI, even in the most minute details.
“Today, I’m using our new Custom Avatars for Zoom Clips with AI Companion to share my part of the earnings report. I’m proud to be among the first-ever CEOs to use an avatar in an earnings call,”
Yuan told investors.
Within the call, Yuan and other Zoom C-suite figures like Investor Relations Manager Charles Eveslage and CFO Michelle Chang discussed how their strategic platform enhancements and AI innovations are attracting new customers while strengthening relationships with existing ones.
“We delivered another solid quarter, showcasing the power of our platform and innovation engine in helping customers navigate short-term challenges with greater efficiency while positioning them for long-term success,” Yuan explained.
So what was it that really helped clinch new clients and existing ones to deliver Zoom such growth?
Although a number of its solutions were listed on the call, some key announcements included an expansion of AI offerings and its entry into key verticals.
Zoom Workplace for Frontline Workers Expands Market Reach
Zoom’s launch of Workplace for Frontline represents a significant expansion into an underserved but massive market segment.
This mobile-first solution targets the majority of global workers who are frontline employees across retail, manufacturing, healthcare, and emergency services.
Yet it is a market where only a fraction of current SaaS spending is allocated, despite representing the vast majority of the workforce.
Vertical Interest
Zoom claimed its Zoom Workplace for Frontline Workers has closed several deals, and are seeing particular interest in industries like health care, retail and manufacturing.
The platform’s real-time activity feeds, auto-generated shift chat groups, and push-to-talk functionality address specific pain points for frontline workers who need instant communication and streamlined work management.
“80% of the workers in the world are frontline workers, and yet only 1% of the SaaS spend is on them,” Chang noted during the earnings call.
This highlights the enormous opportunity this represents.
This strategic move positions Zoom to capture new customer segments previously underserved by traditional UC platforms.
Custom AI Companion and Enterprise Monetization
The general availability of Zoom’s Custom AI Companion represents a crucial step in monetizing AI capabilities beyond the free tier included with paid licenses.
Built on Zoom AI Studio’s low-code environment, this offering allows organizations to create tailored AI agents, integrate enterprise data sources, and connect third-party AI solutions.
“Though only weeks in market, we’re seeing strong enthusiasm from several Global 2000 trial customers, who are especially excited about features like Bring Your Own Dictionary and Index, meeting summary templates, and our Jira integration,”
Yuan said.
The ability to customize AI experiences addresses enterprise needs for specialized workflows while creating new revenue streams for Zoom.
This strategic approach differentiates Zoom from competitors who charge premium fees for basic AI features.
As Yuan noted, “While we continue providing tremendous AI value at no additional cost to users with a paid license, we’re now monetizing through Custom AI Companion.”
Enhanced Virtual Agent Capabilities Transform Customer Experience
Zoom’s next-generation Virtual Agent for chat and voice represents a significant advancement in customer experience automation.
These AI-powered solutions can handle complex queries, execute tasks on behalf of customers, and provide advanced intent routing—capabilities that directly address enterprise efficiency needs.
“When our team enabled Zoom Virtual Agent, we saw huge value because we use two metrics to measure how successful that is: one is the CCaaS, another one is the self-service rate.
“After deploying Zoom Virtual Agent, it helped us a lot because the CCaaS number is 70. And guess what, the self-service rate is 97 percent, meaning 97 percent of those tickets were resolved very well without any human agent involved.”
These capabilities are driving significant customer wins.
The Contact Center customer count grew 65% year over year in Q1, with the business now representing a “triple-digit million ARR business, growing in high double digits,” according to Chang.
Q1, Zoom reported, is the largest quarter in terms of ARR contribution.
“If you look at the number of upsells of Zoom Virtual Agent, it is the largest quarter ever. So, we do have a lot of upsell opportunity to sell Zoom Virtual Agent to our existing installed base,” Yuan said.
Strategic Positioning Against Market Leaders
Despite Microsoft’s dominant market position, Zoom’s Q1 results demonstrate successful differentiation through user experience and total cost of ownership advantages.
Yuan emphasized this during the earnings call: “If you look at the total cost of ownership, in particular, look at AI, our AI Companion is part of our offering compared with the other vendors who would like to charge customers a lot per user per month.”
He went on to highlight how a large fintech company in Q1 dropped the Teams suite for the Zoom platform because they preferred the interface.
Zoom has worked a lot to make its user interface even easier this quarter.
They launched Zoom Workflow Automation, which allows users to automate routine processes within Zoom Workplace, leverage AI Companion capabilities, and reduce the need for manual switching between apps.
Equally, it launched its AI-powered task and project management capability, Zoom Tasks, to add to this ease of use.
“I think as long as we keep improving the product experience, make sure Zoom is employee choice, I think we will see more and more opportunities,” Yuan said.
A Sign of Things to Come?
Zoom’s Q1 2026 performance demonstrates that strategic innovation in AI capabilities, targeted market expansion, and competitive pricing can drive customer acquisition even in a market dominated by larger competitors.
The company’s platform approach, combining communication, collaboration, and customer experience under one AI-first umbrella, positions it well for continued growth despite challenging macroeconomic conditions.
Although Microsoft’s market dominance is undeniable, if anecdotes like those from Yuan ring true, and the numbers keep going up, then soon we may see UC turn into at least a two-horse race.
