Zoom Unveils $1 Billion Buyback, FX-Fueled Growth and Rising Churn
ZM•Zoom's Q1 FY2027 revenue benefited from favorable FX and mid-teens growth in Zoom Phone ARR, though average monthly churn rose to 3% from 2.8%. The company authorized an additional $1 billion share repurchase and warned of decelerating growth in the second half of FY27.
1. International Growth Fueled by FX
Q1 revenue growth was partly driven by favorable foreign exchange rates, boosting international revenue, but management noted this tailwind may not persist. Zoom Phone annual recurring revenue grew in the mid-teens, with key deals like Baptist Health highlighting adoption.
2. Online Churn and Competitive Pressures
Average monthly online churn increased to 3% from 2.8% year-over-year, reflecting slight customer attrition and heightened competitive pressures from established contact center providers.
3. AI Monetization Driving Enterprise Revenue
AI features within Zoom Contact Center are contributing to paid adoption, with enterprise revenue up 7.2% driven by product diversification and AI monetization, although some of the growth reflects easier comparables and FX.
4. Share Repurchase and Guidance Outlook
The board approved an additional $1 billion share repurchase, demonstrating confidence in the balance sheet, even as guidance for the second half of FY2027 indicates a slowdown in growth.
