Zoom's Voice Strategy Evolves: Is Phone Now a Core Growth Driver?

Cloud-based telephony adoption is accelerating as enterprises move toward unified platforms that streamline voice, video and collaboration. Zoom Communications ZM is emerging as a key beneficiary through Zoom Phone, which continues to gain traction across large enterprise accounts and international markets.

Zoom Phone is evolving beyond voice replacement into a core layer of enterprise infrastructure. Its integration with Zoom’s broader stack enables seamless AI-powered features, simplified administration and consistent user experiences across regions, positioning it as a scalable alternative to fragmented legacy systems. This structure is enabling Zoom to win high-value displacements, including a recent five-year, seven-figure annual recurring revenue deal that replaced Cisco across a global deployment.

In the second quarter of fiscal 2026, Zoom Phone posted mid-teens Annual Recurring Revenue growth. Revenues from the Americas rose 4.6% year over year, EMEA grew 5.7%, and Asia-Pacific climbed 4.2%. Enterprise customers contributing over $100,000 in trailing 12-month revenues increased 9%, now representing 32% of total revenue, highlighting global demand across complex multinational accounts.

AI integration is further strengthening platform stickiness. Monthly active users of Zoom Phone’s AI tools rose over 30% sequentially, reflecting growing enterprise reliance on transcription, smart call summaries and real-time insights. As these features become embedded in daily workflows, they are expected to deepen engagement and reinforce Zoom Phone’s role within larger communication deployments.

Enterprise revenue reached $730.7 million in the second quarter, up 7% year over year and accounting for 60% of total revenue. The Zacks Consensus Estimate for third-quarter enterprise revenues is pegged at $730.97 million, implying 4.6% growth. As organizations standardize on unified, AI-ready communication stacks, Zoom Phone is likely to remain a core driver of Zoom’s enterprise growth strategy.

Zoom Phone Faces Competitive Pressure

Zoom Communications is navigating rising competition from Microsoft MSFT and ALPHABET (GOOGL) in enterprise telephony. Microsoft is aggressively scaling Teams Phone within its Microsoft 365 ecosystem, directly targeting large accounts that Zoom Communications is also pursuing. Alphabet integrates Google Voice with Google Meet and Workspace, allowing Alphabet to offer a lightweight communication suite for global collaboration. While Zoom Communications emphasizes AI-driven features and platform bundling, Microsoft gains from deep productivity ties, and Alphabet from simplicity and scale. As cloud-based voice adoption rises, Zoom, Microsoft and Alphabet are locked in a race for global enterprise standardization.

Zoom’s Share Price Performance, Valuation and Estimates

Zoom shares have appreciated 3.8% year to date, while the Zacks Internet – Software industry and the Zacks Computer and Technology sector have increased 22% and 18.2%, respectively.

ZM’s YTD Price Performance

From a valuation standpoint, Zoom stock is currently trading at a forward 12-month Price/Sales ratio of 5.22X compared with the industry’s 5.77X. Zoom has a Value Score of D.

ZM Valuation

The Zacks Consensus Estimate for third-quarter fiscal 2026 earnings is pegged at $1.42 per share, which is up four cents over the past 30 days, indicating a year-over-year improvement of 2.9%.

Zoom Communications, Inc. Price and Consensus

Zoom Communications, Inc. price-consensus-chart | Zoom Communications, Inc. Quote

Zoom currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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