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Zoom Raises Annual Forecasts as AI Integration Drives Growth

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Zoom Communications has raised its full-year revenue and profit outlook, citing strong demand for its hybrid work solutions and the integration of AI-powered tools across its platform.

The company now expects fiscal 2026 revenue to reach between $4.80 billion and $4.81 billion, slightly above its earlier forecast and consensus estimates of $4.79 billion. Adjusted profit per share is projected between $5.56 and $5.59, a significant increase from the previous range of $5.34 to $5.37 and well ahead of analyst expectations of $5.41.

The upgrades come as Zoom expands its AI capabilities, particularly through its AI Companion, which saw major updates in March. The platform now supports functions like meeting summaries, shift overviews, and automated clip generation, enhancing productivity and collaboration for users in hybrid and remote settings.

“Across online and enterprise, the majority of the business in the first quarter saw no change in buying behavior, still strong demand,” said CFO Michelle Chang.

Chang also noted that despite increased scrutiny on deal terms among some large U.S. clients, Zoom did not suffer any significant losses during the quarter.

Q1 Performance and Strategic Momentum

For the first fiscal quarter ended April 30:

  • Revenue stood at $1.17 billion, in line with Wall Street expectations.

  • Adjusted earnings were $1.43 per share, exceeding forecasts of $1.31.

The results indicate that Zoom’s pivot from a pandemic-era video calling staple to a more diversified enterprise communications platform is gaining traction.

Industry analysts responded positively to the company’s evolution.

“With a beefed-up buyback program and AI Companion upgrades now spanning everything from shift summaries to clip generation, Zoom finally has the makings of a new story to tell,” said Jeremy Goldman, senior director at Emarketer.

Zoom’s increased focus on enterprise customers, AI-driven enhancements, and broader collaboration tools is helping it stay relevant amid fierce competition from platforms like Microsoft Teams and Google Meet.

Tech M&A Advisory Firm AXOM Hires Morgan Stanley’s Buzz Black for Software Dealmaking

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AXOM Partners, a boutique advisory firm specializing in technology, has hired experienced investment banker Buzz Black from Morgan Stanley to strengthen its coverage of the enterprise software industry. Black, known for his work on significant software deals, will join AXOM in May following a period of gardening leave and will be based in San Francisco.

During his time at Morgan Stanley, Black advised on several high-profile software transactions, including Blackstone and Vista Equity Partners’ $8.4 billion acquisition of Smartsheet and KKR’s $4.8 billion deal for Instructure. He also played a role in cybersecurity transactions, such as the $560 million sale of Demisto to Palo Alto Networks and the 2017 sale of eSentire to Warburg Pincus.

In an interview, Black discussed the growing trend among large strategic buyers who often prefer acquiring companies with strong teams and cutting-edge technology, enabling faster market entry. His addition to AXOM is expected to enhance its ability to cover large enterprise software deals, complementing the firm’s existing focus on early-stage, venture-backed startups.

AXOM, founded in 2023 by Brandon Hightower, Alan Bressers, and Ross Weiner (former Qatalyst Partners bankers), has quickly established itself in the AI sector, advising on several high-profile deals such as Rockset’s sale to OpenAI, Nvidia’s acquisition of OctoAI, and MongoDB’s acquisition of Voyage AI. According to Hightower, Black’s experience will add valuable coverage and insight into both the buyer and strategic target sides of AI-focused transactions.

Microsoft Expands AI Model Options for 365 Copilot, Aims to Reduce Costs

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Microsoft is reportedly working to incorporate both internal and third-party artificial intelligence (AI) models into its flagship product, Microsoft 365 Copilot, in a strategic move to diversify beyond its current dependency on OpenAI technology. Sources familiar with the project revealed that this effort is aimed at improving cost efficiency, speed, and overall performance for enterprise users.

Since the launch of 365 Copilot in March 2023, Microsoft has relied heavily on OpenAI’s GPT-4 model, touting its advanced capabilities as a key feature. However, concerns over cost and scalability have driven the tech giant to explore alternatives. These include developing its own smaller AI models, such as Phi-4, and customizing open-weight models to enhance the efficiency and affordability of 365 Copilot.

A Microsoft spokesperson emphasized the company’s continued collaboration with OpenAI for frontier models, but noted that the company integrates “various models from OpenAI and Microsoft depending on the product and experience.” OpenAI declined to comment on these developments.

One of the primary goals of this diversification is to lower operational costs, which could translate into savings for end users, according to insiders. The efforts are being closely monitored by Microsoft leadership, including CEO Satya Nadella, highlighting the strategic importance of this initiative.

Microsoft’s approach mirrors recent trends in its other business units. GitHub, acquired by Microsoft in 2018, introduced models from Anthropic and Google in October 2023 as alternatives to OpenAI’s GPT-4 for its coding assistant. Similarly, Microsoft’s consumer chatbot Copilot now integrates both in-house models and OpenAI technology.

Despite Microsoft’s push for 365 Copilot, adoption has faced challenges. Gartner reported in August that most companies had not moved beyond the pilot phase of their 365 Copilot implementations. Pricing and utility remain key concerns for enterprises. However, there are positive signals, with BNP Paribas Exane analysts forecasting that Microsoft could reach over 10 million paid users of 365 Copilot this year. Furthermore, Microsoft noted in November that 70% of Fortune 500 companies are already using the product.

As Microsoft continues to refine 365 Copilot’s capabilities and explore more cost-effective AI solutions, its efforts reflect a broader industry trend of reducing reliance on any single AI provider while maximizing efficiency and scalability.