10q10k10q10k.net

What changed in Zoom Communications, Inc.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Zoom Communications, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+480 added−455 removedSource: 10-K (2023-03-03) vs 10-K (2022-03-07)

Top changes in Zoom Communications, Inc.'s 2023 10-K

480 paragraphs added · 455 removed · 323 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

55 edited+21 added−15 removed35 unchanged
Biggest changeWe enable developers to embed our platform into their own offerings through open application program interfaces (“APIs”) and our cross-platform software development kits (“SDKs”). We have already partnered with several hardware video conferencing and peripheral providers and with software providers, including Atlassian and Dropbox.
Biggest changeThrough the Zoom Developer Platform, we enable customers and their developers to build their own solutions with our underlying platform technology, seamlessly embed our UC platform into their own offerings, and integrate their applications across Zoom products using our extensive library of application program interfaces (“APIs”) and selection of software development kits (“SDKs”).
Our customers also have access to tools and resources to develop private applications that integrate Zoom and Zoom technology into their workflows and systems. Our App Marketplace brings together integrations built by Zoom and third-party developers, making it easy for developers to publish their apps and for customers to enhance their Zoom experience with new functionalities.
Our customers also have access to tools and resources to develop private applications that integrate Zoom and Zoom technology into their workflows and systems. Zoom App Marketplace Our App Marketplace brings together integrations built by Zoom and third-party developers, making it easy for developers to publish their apps and for customers to enhance their Zoom experience with new functionalities.
Zoom Apps combine users' favorite apps with the power of video communications by allowing users to access them directly in Zoom Meetings. Users can enrich their Zoom experience with a variety of apps that cover many use cases — including whiteboarding, project management, note-taking, gaming, and more.
Zoom Apps Zoom Apps combine users' favorite apps with the power of video communications by allowing users to access them directly in Zoom Meetings. Users can enrich their Zoom experience with a variety of apps that cover many use cases — including whiteboarding, project management, note-taking, gaming, and more.
We have research and development presence in the United States, India, Singapore, and China, which we believe is a strategic advantage for us, allowing us to invest more in increasing our product capabilities in an efficient manner with a “follow the sun” strategy. Our Competition The markets in which we operate are highly competitive.
We have research and development presence in China, India, Singapore and the United States, which we believe is a strategic advantage for us, allowing us to invest more in increasing our product capabilities in an efficient manner with a “follow the sun” strategy. Our Competition The markets in which we operate are highly competitive.
Our developer platform also allows Zoom customers to administer their accounts including managing app requests and provisioning, as well as optimizing account usage with access to dashboards and comprehensive usage metrics. With our SDKs, APIs, webhooks and extensive developer resources, Zoom, third-party developers, and partners build applications that integrate our platform with other globally in-demand applications, platforms, websites, and services.
Our developer platform also allows Zoom customers to administer their accounts including managing app requests and provisioning, as well as optimizing account usage with access to dashboards and usage metrics. With our SDKs, APIs, webhooks and extensive developer resources, Zoom, third-party developers, and partners build applications that integrate our platform with other globally in-demand applications, platforms, websites, and services.
The App Marketplace features third-party integrations of Zoom into best of breed apps, Zoom Apps (third-party apps integrated into the Zoom experience) and SDK apps (apps built by ISV program partners using our Meeting SDK). Key integrations include Google Workspace, Calendly, Slack, Microsoft Teams, Salesforce, Otter.ai, Hubspot, Asana, Kahoot! and Miro.
The App Marketplace features third-party integrations of Zoom into best of breed apps, Zoom Apps (third-party apps integrated into the Zoom experience) and SDK apps, including apps built by ISV program partners using our Meeting SDK. Key integrations include Google Workspace, Calendly, Slack, Microsoft Teams, Salesforce, Otter.ai, Hubspot, Asana, Kahoot! and Miro.
Our Developer Platform enables customers, developers, and service providers to easily build apps and integrations on top of Zoom’s industry-leading video communications platform, with opportunities for global discovery and distribution. Our virtual and hybrid event solutions allow users to seamlessly create and manage engaging events.
Our Developer Platform enables customers, developers, and service providers to easily build apps and integrations on top of Zoom’s industry-leading video communications and collaboration platform, with opportunities for global discovery and distribution. Our virtual and hybrid event solutions allow users to seamlessly create and manage engaging events.
With Zoom Chat, users can easily invite people outside their organization to a chat conversation, and users can quickly switch from a chat to a phone call or video meeting during a conversation. Zoom Chat also features content storage for users who want discoverability and the ability to review their conversations or shared files.
With Zoom Team Chat, users can easily invite people outside their organization to a chat conversation, and quickly switch from a chat to a phone call or video meeting during a conversation. Zoom Team Chat also features content storage for users who want discoverability and the ability to review their conversations or shared files.
Zoom Meetings feature 49-person video gallery view, virtual backgrounds, MP4/M4A cloud/local recording with transcripts, video breakout rooms, screen sharing with annotation, and integrations with other powerful business applications to help teams get more done together. Zoom Meetings integrate with tools created by companies such as Atlassian, Dropbox, Google, LinkedIn, Microsoft, Salesforce, and Slack.
Zoom Meetings feature 49-person video gallery view, virtual backgrounds, MP4/M4A cloud/local recording with transcripts, video breakout rooms, screen sharing with annotation, and integrations with other powerful business applications to help teams get more done together. Zoom Meetings integrate with tools created by companies such as Atlassian, Box, Dropbox, Google, LinkedIn, Microsoft, Salesforce, ServiceNow, and Slack.
Zoom Developer Platform and Zoom App Marketplace The Zoom Developer Platform enables developers, platform integrators, service providers, and customers to easily build apps and integrations that use Zoom’s video-based communications solutions across video, phone, chat, or integrate Zoom’s core technology into their products and services, with opportunities for co-marketing, discovery and distribution.
Zoom Developers Zoom Developer Platform The Zoom Developer Platform enables developers, platform integrators, service providers, and customers to easily build apps and integrations that use Zoom’s video-based communications solutions across video, phone, chat, or integrate Zoom’s core technology into their products and services, with opportunities for co-marketing, discovery and distribution.
Our engineers aim to stay on the cutting edge of communication and collaboration technologies. We strive to deliver the best experience to our users by dedicating a portion of engineering capacity to developing on-demand, customer-requested features that would be valuable across our customer base. • Accelerate international expansion.
Our engineers aim to stay on the cutting edge of communication and collaboration technologies. We strive to deliver the best experience to our users by dedicating a portion of engineering capacity to developing on-demand, customer-requested features that would be valuable across our customer base. • Drive international expansion.
Item 1. BUSINESS Overview Our mission is to make video communications frictionless and secure. Zoom enables users to connect to others, share ideas, make plans, and build toward a future limited only by their imagination. Our frictionless communications platform started with video as its foundation, and we have set the standard for innovation ever since.
Item 1. BUSINESS Overview Our mission is to make communications frictionless and secure. Zoom enables people to connect to others, share ideas, make plans, and build toward a future limited only by their imagination. Our frictionless communications and collaboration platform started with video as its foundation, and we have set the standard for innovation ever since.
Other trade names, trademarks, and service marks used in this Annual Report on Form 10-K are the property of their respective owners. Available Information We file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Exchange Act.
Other trade names, trademarks, and service marks used in this Annual Report on Form 10-K are the property of their respective owners. 12 Table of Contents Available Information We file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Exchange Act.
Our sales efforts funnel this viral demand into routes-to-market that are optimized for each customer opportunity, which can include our direct sales force, online channel, resellers, and strategic partners. Our Growth Strategy We focus on the following elements of our strategy to drive our growth: • Keep our existing customers happy.
Our sales efforts funnel this viral demand into routes-to-market that are optimized for each customer opportunity, which can include our direct sales force, online channel, resellers, and strategic partners. 6 Table of Contents Our Growth Strategy We focus on the following elements of our strategy to drive our growth: • Keep our existing customers happy.
Sales Our sales model combines our viral demand generation and our free Zoom Meetings plan with a sales approach optimized for the size of each customer opportunity. Our direct sales force includes our field sales representatives as well as our inside sales team, and it is organized by customer employee count, region, and vertical.
Sales Our sales model combines our viral demand generation and our free Zoom Meetings plan with a sales approach optimized for the size of each customer opportunity. Our direct sales force includes our field sales representatives as well as our inside sales team, and it is organized by customer subscription size, region, and vertical.
By attracting free hosts to use our platform, we promote usage that allows hosts and their meeting attendees to experience the 6 Table of Contents Zoom difference. We complement this lead-generation model with our multipronged go-to-market strategy that integrates the viral enthusiasm for our platform with optimal routes-to-market, including direct sales representatives, online channel, resellers, and strategic partners.
By attracting free hosts to use our platform, we promote usage that allows hosts and their meeting attendees to experience the Zoom difference. We complement this lead-generation model with our multipronged go-to-market strategy that integrates the viral enthusiasm for our platform with optimal routes-to-market, including direct sales representatives, online channel, resellers, and strategic partners.
Our current customer base spans numerous industry categories, including education, entertainment/media, enterprise infrastructure, finance, government, health 9 Table of Contents care, manufacturing, nonprofit/not for profit and social impact, retail/consumer products, and software/internet. No individual customer represented more than 10% of our total revenue in the fiscal year ended January 31, 2022.
Our current customer base spans numerous industry categories, including education, entertainment/media, enterprise infrastructure, finance, government, health care, manufacturing, nonprofit/not for profit and social impact, retail/consumer products, and software/internet. No individual customer represented more than 10% of our total revenue in the fiscal year ended January 31, 2023.
Zoom’s E2EE uses the same 256-bit AES GCM encryption that secures Zoom meetings by default, but with Zoom’s E2EE, the meeting host generates encryption keys and uses public key cryptography to distribute these keys to the other meeting participants.
Zoom’s E2EE uses the same 256-bit AES GCM encryption that secures Zoom meetings by default, 7 Table of Contents but with Zoom’s E2EE, the meeting host generates encryption keys and uses public key cryptography to distribute these keys to the other meeting participants.
We strive to change the way business is done through our communications technology and our company culture. We take happiness so seriously that we have an employee-led happiness committee and crew to facilitate and amplify our efforts to deliver happiness to our employees and customers.
Our Culture of Happiness We are focused on delivering happiness to our employees and customers. We strive to change the way business is done through our communications technology and our company culture. We take happiness so seriously that we have an employee-led happiness committee and crew to facilitate and amplify our efforts to deliver happiness to our employees and customers.
Zoom Phone Zoom Phone is an enterprise cloud phone system that provides powerful private branch exchange (“PBX”) features, such as secure call routing, call queuing, call detail reports, call recording, call quality monitoring, voicemail, switch to video, and much more.
Zoom Phone Zoom Phone is a cloud phone system for businesses that provides powerful private branch exchange (“PBX”) features, such as secure call routing, call queuing, call detail reports, call recording, call quality monitoring, voicemail, switch to video, and much more.
In the fiscal year ended January 31, 2022, Zoom Phone provided native PSTN connectivity in more than 45 countries and territories. 7 Table of Contents Zoom Phone also supports Premise Peering and Cloud Peering, which provide customers with the flexibility to keep their current PSTN service providers by redirecting existing third-party voice circuits to the Zoom Phone cloud.
As of the fiscal year ended January 31, 2023, Zoom Phone provided native PSTN connectivity in more than 45 countries and territories. Zoom Phone also supports Premises Peering and Cloud Peering, which provide customers with the flexibility to keep their current PSTN service providers by redirecting existing third-party voice circuits to the Zoom Phone cloud.
Employees in one of our non-U.S. subsidiaries have the benefit of a collective bargaining agreement and are represented by a workers’ council. We have not experienced interruptions of operations or any work stoppages due to labor disagreements. Our Culture of Happiness We are focused on delivering happiness to our employees and customers.
None of our U.S. employees are represented by a labor union. Employees in one of our non-U.S. subsidiaries have the benefit of a collective bargaining agreement and are represented by a workers’ council. We have not experienced interruptions of operations or any work stoppages due to labor disagreements.
For example, our platform works without intensive translation requirements with only a few language adjustments to our user interface and support systems. • Grow our partnership ecosystem and continue to expand our platform. Our platform integrates easily with other systems and tools.
For example, our platform works without intensive translation requirements with only a few language adjustments to our user interface and support systems. • Grow our developer ecosystem and continue to expand our platform.
Zoom Chat Zoom Chat, which is included in the Zoom client for meeting and phone customers, enables organizations and teams to communicate and collaborate in groups, channels, or 1-1s and to stay connected by instantly sharing messages, images, audio files, and other content across desktop, laptop, tablet, and mobile devices.
Zoom Team Chat Zoom Team Chat, which is included in Zoom One and Zoom Phone plans, enables organizations and teams to communicate and collaborate in groups, channels, or 1-1s and to stay connected by instantly sharing messages, images, files, and other content across desktop, laptop, tablet, and mobile devices.
Marketing Our marketing team’s primary objective is to create preference for our brand by leveraging our viral growth, enhancing brand perception, and engaging our users with virtual events, content, social media, and customer advisory councils. We complement our viral growth with targeted online and out-of-home advertising.
Our online channel supports high-volume, high-velocity, self-service sales. 10 Table of Contents Marketing Our marketing team’s primary objective is to create preference for our brand by leveraging our viral growth, enhancing brand perception, and engaging our users with virtual events, content, social media, and customer advisory councils. We complement our viral growth with targeted online and out-of-home advertising.
Our platform may begin in a line of business and then organically expand across departments. This “land and expand” model has led to some of our largest deployments. Customers are also purchasing services for webinars, room solutions, and phone for the full Zoom Unified Communications as a Service (“UCaaS”) experience. • Innovate our platform continuously.
Our platform may begin in a line of business and then organically expand across departments. This “land and expand” model has led to some of our largest deployments. Customers are also purchasing services for webinars, room solutions, phone, and contact center for a complete and integrated set of communications services. • Innovate our platform continuously.
Designed to increase workforce collaboration across in-room and virtual participants, Zoom Rooms bring one-click to join meetings, wireless multi-sharing, interactive whiteboarding, and intuitive room controls for a frictionless and secure Zoom Meeting experience.
Designed to increase workforce collaboration across in-room and virtual participants, Zoom Rooms brings one-click to join meetings, wireless multi-sharing, interactive whiteboarding, intuitive room controls and other features to the Zoom Meeting experience.
Zoom has consistently high scores across customer review sites, including Gartner Peer Insights, TrustRadius, and G2 Crowd, including being recognized as a 2021 Gartner Peer Insights Customers’ Choice for Meeting Solutions and a TrustRadius Top Rated Web Conferencing Software.
Zoom has consistently high scores across customer review sites, including Gartner Peer Insights, TrustRadius, and G2 Crowd, including being recognized as a 2022 Gartner Peer Insights Customers’ Choice for Meeting Solutions as well as for Zoom Rooms and Zoom Video Webinars and a TrustRadius Top Rated Web Conferencing Software award along with nine other recognitions.
There are dozens of Zoom Chat compatible applications available in the Zoom App Marketplace that provide notifications and improved workflow for other enterprise systems.
There are dozens of Zoom Team Chat compatible applications available in the Zoom App Marketplace that provide notifications and improved workflow for other enterprise systems. Zoom Mail and Calendar Zoom Mail and Calendar includes both client experiences (Zoom Mail Client, Zoom Calendar Client) and service components (Zoom Mail Service, Zoom Calendar Service).
Zoom Webinars scale up to 50,000 people, including up to 100 interactive video panelists. With webinars, hosts have control over the video viewing experience and attendees join to listen, learn and interact using chat, Q&A, live polling and more.
Zoom Webinars Zoom Webinars support interactive video presentations to large audiences from almost anywhere in the world and from many devices. Zoom Webinars scale up to 50,000 people, including up to 1,000 interactive video panelists. With webinars, hosts have control over the video viewing experience and attendees join to listen, learn and interact using chat, Q&A, live polling and more.
We shifted our events strategy from in-person to online during the pandemic, including hosting Zoomtopia, our annual user conference, virtually to tens of thousands of attendees. Research and Development We drive our business with constant innovation.
We shifted our events strategy from in-person to online and then to hybrid as the world came out the pandemic, including hosting Zoomtopia, our annual user conference, as hybrid experience featuring both in person and virtual events to tens of thousands of attendees. Research and Development We drive our business with constant innovation.
Zoom Rooms Zoom Rooms is our software-based conference room system that transforms every room – from executive offices, huddle rooms, training rooms, to broadcast studios – into a collaboration space that is easy to use, simple to deploy, and low-effort to manage.
Whiteboards can be shared with internal and external participants. 8 Table of Contents Zoom Spaces Zoom Rooms Zoom Rooms is our software-based conference room system that transforms every room – from executive offices, huddle rooms, training rooms, to broadcast studios – into a collaboration space that is easy to use, simple to deploy, and low-effort to manage.
Our channel team coordinates the activities of resellers and strategic partners to build a strong ecosystem that broadens our reach. Our online channel supports high-volume, high-velocity, self-service sales.
Our channel team coordinates the activities of resellers and strategic partners to build a strong ecosystem that broadens our reach.
Information contained on, or that can be accessed through, our website is not incorporated by reference into this Annual Report on Form 10-K. The Zoom design logo, “Zoom,” “Zoom Video Communications,” and our other registered or common law trademarks, service marks or trade names appearing in this Annual Report on Form 10-K are the property of Zoom Video Communications, Inc.
The Zoom design logo, “Zoom,” “Zoom Video Communications,” and our other registered or common law trademarks, service marks or trade names appearing in this Annual Report on Form 10-K are the property of Zoom Video Communications, Inc.
It also enables event hosts to provide ticketing and registration for attendees, and the ability to track these activities. 8 Table of Contents OnZoom is a prosumer-focused virtual event platform and marketplace for Zoom users to create, host, and monetize online events.
It also enables event hosts to provide ticketing and registration for attendees, and the ability to track these activities. OnZoom is a prosumer-focused virtual event platform and marketplace for Zoom users to create, host, and monetize online events. OnZoom is an extension of Zoom’s unified communications and collaboration platform with robust monetization (ticketing and fundraising) and simpler event management capabilities.
Our powerful third-party integrations help users maximize usage of their webinars and expand capabilities with paid registration, marketing automation, lead nurturing, and learning management.
Our powerful third-party integrations help users maximize usage of their webinars and expand capabilities with paid registration, marketing automation, lead nurturing, and learning management. Zoom Contact Center Zoom Contact Center Zoom Contact Center helps businesses deliver prompt, accurate and highly personalized customer experience.
In certain circumstances, we license intellectual property from third parties for use in our products. This may include open source software. We take steps to ensure compliance with the terms of the licenses governing such licensed technology.
In certain circumstances, we license intellectual property from third parties for use in our products. This may include open source software. We take steps to ensure compliance with the terms of the licenses governing such licensed technology. We believe our business is not materially dependent on any individual patent, trademark, copyright, trade secret, license, or other intellectual property right.
For more information on the potential impacts of government regulations affecting our business, see “Item 1A - Risk Factors.” Human Capital As of January 31, 2022, we had 6,787 full-time employees. Of these employees, 4,009 are in the United States and 2,778 are in our international locations. None of our U.S. employees are represented by a labor union.
For more information on the potential impacts of government regulations affecting our business, see “Item 1A - Risk Factors.” 11 Table of Contents Human Capital As of January 31, 2023, we had 8,484 full-time employees. Of these employees, 4,588 are in the United States and 3,896 are in our international locations.
We believe our business is not materially dependent on any individual patent, trademark, copyright, trade secret, license, or 10 Table of Contents other intellectual property right. For information on the risks associated with our intellectual property, see “Item 1A - Risk Factors.” Government Regulation Our business activities are subject to various federal, state, local, and foreign laws, rules, and regulations.
For information on the risks associated with our intellectual property, see “Item 1A - Risk Factors.” Government Regulation Our business activities are subject to various federal, state, local, and foreign laws, rules, and regulations.
Users comprise both hosts, who organize video meetings, and individual attendees, who participate in those video meetings. In 2019, we launched Zoom Phone, a cloud-based PBX system, creating a unique unified communications platform. Many customers also choose to implement Zoom Rooms, our software-based conference room system, which enables users to easily experience Zoom Meetings in their physical meeting spaces.
Users comprise both hosts, who organize video meetings, and individual attendees, who participate in those video meetings. In 2019, we launched Zoom Phone, a cloud-based PBX system, creating a unique unified communications and collaboration platform.
Our Products We provide a unified communications platform that delivers happiness and fundamentally changes how people interact, connecting them through frictionless and secure video, phone, chat, and content sharing.
Our Platform We provide a unified communications and collaboration platform that delivers happiness and fundamentally changes how people interact, connecting them through frictionless and secure meetings, phone, chat, content sharing and more. Our core products are grouped under the following categories: Zoom One, Zoom Spaces, Zoom Events, Zoom Contact Center, Zoom AI, and Zoom Developers.
Industry analysts also recognize our market leadership: Gartner has named Zoom a leader in its Magic Quadrant for Meeting Solutions for the sixth consecutive year, and a leader in the Magic Quadrant for UCaaS for a second year. Frost & Sullivan recognized Zoom with its 2021 Global Webinars and Virtual Events Market Leadership Award.
Industry analysts also recognize our market leadership: Gartner has named Zoom a leader in the Magic Quadrant for UCaaS for the third year in a row. Frost & Sullivan recognized Zoom with its 2022 North American Virtual Care Customer Value Leadership Award as well as its 2022 Global SMB Customer Experience Customer Value Leadership Award.
We have created three "workstyles" for our employees (in-person, remote and hybrid) and will be allowing most employees to choose their own workstyle. Corporate Information We were incorporated under the laws of the state of Delaware in April 2011 under the name Saasbee, Inc., and in February 2012, we changed our name to Zoom Communications, Inc.
Corporate Information We were incorporated under the laws of the state of Delaware in April 2011 under the name Saasbee, Inc., and in February 2012, we changed our name to Zoom Communications, Inc. In May 2012, we changed our name to Zoom Video Communications, Inc.
Zoom Events Zoom Events provides businesses with a virtual event management solution powered by the Zoom platform. Zoom Events enables users to manage and host all types of internal and external virtual events, from small interactive sessions to multi-day and multi-track events like conferences or consumer events.
Zoom Events enable users to manage and host all types of internal and external virtual events, from small interactive sessions to multi-day and multi-track events like conferences or consumer events. This includes the ability to create a “hub” where all of a business’ events can be listed with corresponding information about each event.
Viral enthusiasm begins with our users as they experience the simplicity and reliability of our platform – it “gets out of the way” so they can focus on what they need to get done together. This enthusiasm continues as meeting participants become paid hosts and as businesses of all sizes become our customers.
We have a unique model that combines viral enthusiasm for our platform with a multipronged go-to-market strategy for optimal efficiency. Viral enthusiasm begins with our users as they experience the simplicity and reliability of our platform – it “gets out of the way” so they can focus on what they need to get done together.
We care for our community, our customers, our company, our teammates, and ourselves. This culture supports our hiring and serves as a competitive advantage in attracting and retaining top talent. Comparably recognized Zoom for numerous culture awards in 2021 including Best Company Happiness and Best CEO.
We care for our community, our customers, our company, our teammates, and ourselves. This culture supports our hiring and serves as a competitive advantage in attracting and retaining top talent. Zoom was prominently featured in the computer software category on Fortune’s ‘Most Admired Companies’ list.
Our architecture can support up to 1,000 video participants in a single meeting. Conversations can be one to one, one to many, or many to many.
Zoom One Zoom Meetings Zoom Meetings provides HD video, voice, chat, and content sharing across mobile devices, desktops, laptops, telephones, and conference room systems. Our architecture can support up to 1,000 video participants in a single meeting. Conversations can be one to one, one to many, or many to many.
We also provide flexible work hours in certain cases. We have also provided a work-from-home reimbursement policy to assist employees in that transition. 11 Table of Contents Over the past year, we conducted a comprehensive employee survey with regular follow-ups and engaged in peer research to make thoughtful decisions on how to move forward in an evolving world of work.
Over the past several years, we conducted a comprehensive employee survey with regular follow-ups and engaged in peer research to make thoughtful decisions on how to move forward in an evolving world of work. Two priorities were immediately clear: keeping our employees safe and supporting them through a meaningful employee experience.
In May 2012, we changed our name to Zoom Video Communications, Inc. Our principal executive offices are located at 55 Almaden Boulevard, 6th Floor, San Jose, California 95113. Our telephone number is (888) 799-9666. Our website address is https://zoom.com.
Our principal executive offices are located at 55 Almaden Boulevard, 6th Floor, San Jose, California 95113. Our telephone number is (888) 799-9666. Our website address is https://zoom.com. Information contained on, or that can be accessed through, our website is not incorporated by reference into this Annual Report on Form 10-K.
That is why Zoom is an intuitive, scalable, and secure choice for large enterprises, small businesses, and individuals alike. We connect people through our core unified communications offering, which frictionlessly brings together video, phone, chat, and webinars, and enables meaningful experiences across disparate devices and locations.
That is why Zoom is an intuitive, scalable, and secure choice for large enterprises, small businesses, and individuals alike. We provide a unified communications and collaboration platform that delivers happiness and fundamentally changes how people interact, connecting them through frictionless and secure meetings, phone, chat, content sharing and more.
OnZoom is an extension of Zoom’s unified communications platform with robust monetization (ticketing and fundraising) and simpler event management capabilities. OnZoom is currently offered as a public beta for United States (“U.S.”) users to host and attend online events. Zoom Webinars Zoom Webinars support interactive video presentations to large audiences from almost anywhere in the world and from many devices.
OnZoom is currently offered as a public beta for United States (“U.S.”) users to host and attend online events.
In 2021, we were also recognized as a leader in IDC’s MarketScapes for UCaaS Service Providers (Small- and Medium-sized Businesses and Worldwide Enterprise) and for Worldwide Unified Communications and Collaboration, by Omdia Universe for Collaborative Meeting Services, and by Aragon Research Globes for Unified Communications and Collaboration and Video Conferencing.
In 2022, we were also recognized as a leader in two IDC MarketScapes for Collaboration Tools in Education (North America and Worldwide). In addition, IDC recognized Zoom as a leader in the 2022 APAC Team Collaboration and Videoconferencing MarketScape. Zoom also received Leader recognition in two Aragon Research Globes: Unified Communications and Collaboration as well as Video Conferencing.
In February 2022, we announced Zoom Contact Center, an omnichannel contact center solution that is optimized for video and integrated right into the same Zoom experience. The happiness we bring is recognized by customers.
Zoom Contact Center is an omnichannel contact center solution that is optimized for video and is integrated right into the Zoom client. Zoom Virtual Agent Zoom Virtual Agent is an intelligent conversational AI and chatbot solution that uses natural language processing and machine learning to accurately understand and instantly resolve issues for customers.
Our employees also named Zoom among the winners of Glassdoor’s Employees’ Choice Awards honoring the Best Places to Work in 2021. Diversity, Equity, and Inclusion Diversity, equity, and inclusion (“DEI”) at Zoom is an embodiment of our core value of Care.
Additionally, it was named to the Variety500, an award that recognizes the most influential business leaders shaping the industry. Zoom was also named to Newsweek’s “America's Greatest Workplaces 2023 for Diversity” list. Diversity, Equity, and Inclusion Diversity, equity, and inclusion (“DEI”) at Zoom is an embodiment of our core value of Care.
Third-party developers are able to engage with the Zoom App Marketplace and Zoom Developer Platform to extend the value and adoption of Zoom with our customers through the development of public and private apps and integrations.
Our app marketplace further extends the value and adoption of Zoom with our customers through the development and distribution of apps and integrations. We continue to partner with video conferencing hardware and peripheral providers, and with software providers, including Palo Alto Networks, Zendesk, and Box.
Removed
We also received Aragon’s Innovation Award for Video Conferencing in both 2020 and 2021. Zoom was also named to Fortune’s 2021 Future 50 list, which recognized innovative companies with high-growth potential who are creating meaningful value for their customers. We have a unique model that combines viral enthusiasm for our platform with a multipronged go-to-market strategy for optimal efficiency.
Added
Many customers also choose to implement Zoom Rooms, our software-based conference room system, which enables users to easily experience Zoom Meetings in their physical meeting spaces. We continue to invest resources to enhance the capabilities of our platform.
Removed
Our core products include Zoom Meetings, Zoom Phone, Zoom Chat, Zoom Rooms, Zoom Hardware-as-a-Service, Zoom Conference Room Connector, Zoom Events, Zoom Webinar, Zoom Developer Platform, Zoom App Marketplace, and Zoom Contact Center. Zoom Meetings Zoom Meetings provide HD video, voice, chat, and content sharing across mobile devices, desktops, laptops, telephones, and conference room systems.
Added
For example, during fiscal year 2023 we announced Zoom Contact Center, an omnichannel contact center solution that is optimized for video and integrated right into the same Zoom experience as well as Zoom Whiteboard, a persistent whiteboard tool for team collaboration in and outside of meetings and Zoom IQ for Sales, a conversation intelligence software for Zoom Meetings, which provides sales teams with meaningful and actionable insights from their customer interactions to improve seller performance and enhance customer experiences.
Removed
Zoom Rooms can leverage purpose-built hardware, such as Zoom Rooms Appliances, for a turnkey deployment, or users can customize room builds with Zoom’s open hardware ecosystem and professional audio/visual equipment, enabling organizations to build video-enabled spaces for any use case.
Added
As of February 2023, Zoom Mail and Calendar are generally available, which include both client experiences (Zoom Mail Client, Zoom Calendar Client) and service components (Zoom Mail Service, Zoom Calendar Service). Lastly, we launched Zoom Virtual Agent, an AI-powered chatbot that understands customer questions and provides accurate answers quickly. The happiness we bring is recognized by customers.
Removed
Zoom Rooms Scheduling Display helps meet the needs of the agile office by delivering simple, on-the-fly room booking and room utilization management through a calendaring system. With a single Zoom Rooms license, customers get unlimited access to this service, requiring only an iOS or Android touch display outside their rooms.
Added
We also received Aragon’s Innovation Award for Video Conferencing for the third year in a row (2020, 2021 and 2022). Zoom was also named to Fortune’s 2023 Most Admired Companies list for the second year in a row, and Fast Company’s 2022 Next Big Things in Tech list highlighted Zoom Events.
Removed
Zoom Rooms Digital Signage leverages displays, in and out of conference rooms, to project image, video, and URL content playlists. Included as part of Zoom Rooms, role-based admins can easily manage unlimited Digital Signage content and displays through the Zoom Admin Portal and remotely control the content displayed across screens for corporate communications, internal marketing, branding, and more.
Added
This enthusiasm continues as meeting participants become paid hosts and as businesses of all sizes become our customers.
Removed
Zoom for Home is a personal home office solution designed to help remote workers connect and be more productive. The leading providers of Zoom for Home compatible devices include Amazon, DTEN, Facebook, Google, Neat, Poly, and others. Zoom Hardware-as-a-Service Our Zoom Hardware-as-a-Service offering allows customers to access the latest and greatest video communication technology from third party equipment providers.
Added
Additionally, a customer managed key (“CMK”) service allows organizations to provide and manage their own encryption keys for certain customer content stored at rest in the Zoom Cloud. The organization needs to manage the keys in the Amazon Web Services Key Management Service.
Removed
Customers can deploy a world-class communications experience with a variety of subscription options for phone and meeting room hardware. Customers can also scale video conference rooms and phones with hardware options and hardware refreshes at an affordable, fixed monthly price. Zoom Conference Room Connector The Zoom Conference Room Connector is a gateway for SIP/H.323 endpoints to join Zoom meetings.
Added
This allows for encryption of applicable content stored in the Zoom Cloud using the keys that the organization controls. Translated captions help to remove language barriers, connect people, and promote inclusivity in meetings and webinars.
Removed
For organizations that use SIP/H.323 conference room systems from providers, such as Poly and Cisco, Zoom’s Conference Room Connector can take these traditional hardware video conferencing systems to the cloud, allowing users to leverage their existing investments while taking advantage of the Zoom platform.
Added
Captions are currently available between English and the following eleven languages: Chinese Mandarin – Simplified (beta), Dutch, French, German, Italian, Japanese (beta), Korean (beta), Portuguese, Russian, Spanish, and Ukrainian.
Removed
As organizations transition from legacy hardware-based conference rooms to software-based Zoom Rooms, IT administrators save cost on layers of service, maintenance, and support contracts and bridge their endpoints with Zoom Conference Room Connector. With the cost-savings, organizations can reinvest in video-enabling more rooms and continue to leverage their existing SIP/H.323 endpoints with a consistent, cloud-based experience across all their rooms.
Added
Zoom Phone Provider Exchange makes it easier for customers to choose their preferred PSTN provider partners, providing an improved way to connect with cloud peering partners, promote the discovery of new providers, and enable self-service of phone numbers from your selected partner.
Removed
This includes the ability to create a “hub” where all of a business’ events can be listed with corresponding information about each experience.
Added
As of January 31, 2023, there are more than 90 countries and territories included in the Provider Exchange program.
Removed
Zoom Contact Center In February 2022, we introduced Zoom Contact Center which combines contact center functionality with our Zoom unified communications solutions. Zoom Contact Center is currently available in the U.S. and Canada with additional international availability planned for later this year. Our Technology and Infrastructure Our unique technology and infrastructure enable best-in-class reliability, scalability, and performance.
Added
Zoom Mail Client and Zoom Calendar Client can be used with third-party email and calendaring services from Microsoft or Google, or with Zoom Mail Service and Calendar Service. Zoom Mail Service and Zoom Calendar Service are Zoom-hosted offerings targeted at customers with up to 50 employees. Both the Client and Service offerings are generally available as of February 2023.
Removed
We designed our communications platform to be video-first and cloud-native. Most legacy approaches utilize single multipoint control units (“MCUs”) to bridge video and voice participants into an integrated stream that is broadcast back to the participants. These hardware devices are shipped with defined processing and memory capacity that are difficult to scale.
Added
Zoom Whiteboard Zoom Whiteboard is an interactive canvas, allowing teams to collaborate and brainstorm through the use of templates, drag and drop shapes and objects, text, diagramming tools, and integrations with third party services.
Removed
In addition, an MCU architecture is similar to other mainframe-like approaches where stream processing and mixing run on the same machine, which is resource-intensive and limits scalability. Our technology was specifically designed from the start to address the most difficult component of communications: video.

… 11 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

178 edited+100 added−69 removed321 unchanged
Biggest changeSuch tax authorities may disagree with tax positions we take, and if any such tax authority were to successfully challenge any such position, our business could be adversely impacted. 27 Table of Contents The Tax Cuts and Jobs Act of 2017 requires the capitalization and amortization of research and development expenses effective for years beginning after December 31, 2021.
Biggest changeThe Tax Cuts and Jobs Act of 2017 requires the capitalization and amortization of research and development expenses effective for years beginning after December 31, 2021. The mandatory capitalization requirement increased our cash tax liabilities but also decreased our effective tax rate due to increasing the foreign-derived intangible income deduction.
We recognize revenue from subscriptions to our platform over the terms of these subscriptions. Consequently, increases or decreases in new sales may not be immediately reflected in our results of operations and may be difficult to discern. We recognize revenue from subscriptions to our platform over the terms of these subscriptions.
Consequently, increases or decreases in new sales may not be immediately reflected in our results of operations and may be difficult to discern. We recognize revenue from subscriptions to our platform over the terms of these subscriptions.
There have been various Congressional and executive efforts to eliminate or modify Section 230 of the Communications Act of 1934, enacted as part of the Communications Decency Act of 1996. President Biden and many Members of Congress from both parties support reform or repeal of Section 230, so the possibility of Congressional action remains.
There have been various Congressional and executive efforts to eliminate or modify Section 230 of the Communications Act of 1934, enacted as part of the Communications Decency Act of 1996. President Biden and many Members of Congress from both parties support the reform or repeal of Section 230, so the possibility of Congressional action remains.
This activity may increase because of increased demand for our services and increased media scrutiny of our unified communications platform, and can lead to additional adverse publicity, reputational harm, extortion threats, business and operational interruptions, security incidents, additional expenses, litigation, regulatory investigations and actions, and substantial harm to our business, some of which we have experienced during the COVID-19 pandemic.
This activity may increase because of increased demand for our services and increased media scrutiny of our unified communications and collaboration platform, and can lead to additional adverse publicity, reputational harm, extortion threats, business and operational interruptions, security incidents, additional expenses, litigation, regulatory investigations and actions, and substantial harm to our business, some of which we have experienced during the COVID-19 pandemic.
Our charter documents also contain other provisions that could have an anti-takeover effect, such as: • establishing a classified board of directors so that not all members of our board of directors are elected at one time; 38 Table of Contents • permitting the board of directors to establish the number of directors and fill any vacancies and newly created directorships; • providing that directors may only be removed for cause; • prohibiting cumulative voting for directors; • requiring super-majority voting to amend some provisions in our certificate of incorporation and bylaws; • authorizing the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan; • eliminating the ability of stockholders to call special meetings of stockholders; • prohibiting stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; and • our dual-class common stock structure as described above.
Our charter documents also contain other provisions that could have an anti-takeover effect, such as: 41 Table of Contents • establishing a classified board of directors so that not all members of our board of directors are elected at one time; • permitting the board of directors to establish the number of directors and fill any vacancies and newly created directorships; • providing that directors may only be removed for cause; • prohibiting cumulative voting for directors; • requiring super-majority voting to amend some provisions in our certificate of incorporation and bylaws; • authorizing the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan; • eliminating the ability of stockholders to call special meetings of stockholders; • prohibiting stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; and • our dual-class common stock structure as described above.
We, on occasion, offer customers a free period of time at the beginning of the subscription term that can result in deferred billings or long-term accounts receivable and increase the risk of loss on uncollected accounts receivable. Our quarterly results have fluctuated and may in the future fluctuate significantly and may not fully reflect the underlying performance of our business.
We, on occasion, offer customers a free period of time at the beginning of the subscription term that can result in deferred billings or long-term accounts receivable and increase the risk of loss on uncollected accounts receivable. Our results have fluctuated and may in the future fluctuate significantly and may not fully reflect the underlying performance of our business.
A federal court judge denied a request for a preliminary injunction against California’s state-specific network neutrality law, and as a result, California began enforcing that law on March 25, 2021. On March 10, 2021, trade associations representing internet service providers appealed the district court’s ruling denying the preliminary injunction, and the appeal was denied on January 28, 2022.
A federal court judge denied a request for a preliminary injunction against California’s state-specific network neutrality law, and as a result, California began enforcing that law on March 25, 2021. Trade associations representing internet service providers appealed the district court’s ruling denying the preliminary injunction, and the appeal was denied on January 28, 2022.
If we were to receive a claim of non-compliance with the terms of any of these open source licenses, we may be required to publicly release certain portions of our proprietary source code. We could also be required to expend substantial time and resources to re-engineer some of our software. Any of the foregoing could disrupt and harm our business.
If we were to receive a claim of non-compliance with the terms of any of these open source licenses, we could be required to publicly release certain portions of our proprietary source code. We could also be required to expend substantial time and resources to re-engineer some of our software. Any of the foregoing could disrupt and harm our business.
Many governments have enacted laws requiring companies to provide notice of data security incidents involving certain types of personal data. Such laws are inconsistent, and compliance in the event of a widespread data breach is costly. In addition, some of our customers require us to notify them of data security breaches.
Many governments have enacted laws requiring companies to provide notice of data security incidents involving certain types of personal information. Such laws are inconsistent, and compliance in the event of a widespread data breach is costly. In addition, some of our customers require us to notify them of data security breaches.
We also face risks related to health epidemics, such as the COVID-19 pandemic, which has impacted virtually every country in the world. An outbreak of a contagious disease, and other adverse health developments could have an adverse effect on global economic conditions and on our business.
We also face risks related to health epidemics, such as the COVID-19 pandemic, which impacted virtually every country in the world. An outbreak of a contagious disease, and other adverse health developments could have an adverse effect on global economic conditions and on our business.
New products may initially suffer from performance and quality issues that may negatively impact our ability to market and sell such products to new and existing customers and hosts. The short- and long-term impact of any major change to our products, or the introduction of new products, is particularly difficult to predict.
New products may initially suffer from performance and quality issues that may negatively impact our ability to market and sell such products to new and existing customers and hosts. The short- and long-term impact of any major change to our platform, or the introduction of new products, is particularly difficult to predict.
However, a majority of these hosts, including those that subscribed to our free plan during the COVID-19 pandemic as a result of shelter-in-place and work-from-home mandates, may never upgrade to a paid Zoom Meeting plan.
However, a majority of these hosts, including those that initially subscribed to our free plan during the COVID-19 pandemic as a result of shelter-in-place and work-from-home mandates, may never upgrade to a paid Zoom Meeting plan.
Given current economic conditions, including inflation, we could experience a reduction in demand and loss of customers, especially if the effects of the current economic environment have a prolonged impact on various industries that our unified communications platform addresses.
Given current economic conditions, including inflation, we could experience a reduction in demand and loss of customers, especially if the effects of the current economic environment have a prolonged impact on various industries that our unified communications and collaboration platform addresses.
Not every organization covered by our market opportunity estimates will necessarily buy video communications platforms, and some or many of those organizations may choose to continue using legacy communication methods or point solutions offered by our competitors.
Not every organization covered by our market opportunity estimates will necessarily buy video communications and collaboration platforms, and some or many of those organizations may choose to continue using legacy communication methods or point solutions offered by our competitors.
Additionally, if a third-party software provider has incorporated open source software into software that we license from such provider, we could be required to disclose any of our source code that incorporates or is a modification of our licensed software.
Additionally, if a third-party software provider has incorporated open source software into software that we license from such provider, we could be required to disclose our source code that incorporates or is a modification of such licensed software.
We may introduce significant changes to our existing products or develop and introduce new and unproven products, including technologies with which we have little or no prior development or operating experience.
We may introduce significant changes to our existing platform or develop and introduce new and unproven products, including technologies with which we have little or no prior development or operating experience.
Our quarterly results of operations may fluctuate as a result of a variety of factors, many of which are outside of our control, and as a result, may not fully reflect the underlying performance of our business.
Our results of operations may fluctuate as a result of a variety of factors, many of which are outside of our control, and as a result, may not fully reflect the underlying performance of our business.
We provide video communications services to schools, school districts, and school systems to support traditional, virtual, and hybrid classrooms, distance learning, educational office hours, guest lectures, and other services.
We provide video communications and collaboration services to schools, school districts, and school systems to support traditional, virtual, and hybrid classrooms, distance learning, educational office hours, guest lectures, and other services.
A host is any user of our unified communications platform who initiates a Zoom Meeting and invites one or more participants to join that meeting.
A host is any user of our unified communications and collaboration platform who initiates a Zoom Meeting and invites one or more participants to join that meeting.
Foreign Corrupt Practices Act of 1977, as amended (the "FCPA"), and the U.K. Bribery Act 2010, as well as other similar anti-bribery and anti-kickback laws and regulations. These laws and regulations generally prohibit companies and their employees and intermediaries, from directly or indirectly authorizing, offering, or providing improper payments or benefits to government officials and other recipients for improper purposes.
Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), and the U.K. Bribery Act 2010, as well as other similar anti-bribery and anti-kickback laws and regulations. These laws and regulations generally prohibit companies and their employees and intermediaries, from directly or indirectly authorizing, offering, or providing improper payments or benefits to government officials and other recipients for improper purposes.
Any significant change to applicable laws, regulations, or industry practices regarding the collection, use, retention, security, or disclosure of our users’ content, or regarding the manner in which the express or implied consent of users for the collection, use, retention, or disclosure of such content is obtained, could increase our costs and require us to modify our services and features, possibly in a material manner, which we may be unable to complete and may limit our ability to store and process user data or provide or develop new services and features.
Any significant change to applicable laws, regulations, or industry practices regarding the collection, use, retention, security, or disclosure of our users’ content, or regarding the manner in which the express or implied consent of users for the collection, use, retention, or disclosure of such content is obtained, could increase our costs and require us to modify our 33 Table of Contents services and features, possibly in a material manner, which we may be unable to complete and may limit our ability to store and process user data or provide or develop new services and features.
If a court were to find either exclusive-forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving the dispute in other jurisdictions, all of which could harm our results of operations. We do not intend to pay dividends for the foreseeable future.
If a court were to find either exclusive-forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving the dispute in other jurisdictions, all of which could harm our results of operations. 42 Table of Contents We do not intend to pay dividends for the foreseeable future.
Risks Related to Our Business and Our Industry Our business depends on our ability to attract new customers and hosts, retain and upsell additional products to existing customers, and upgrade free hosts to our paid offerings. Any decline in new customers and hosts, renewals, or upgrades would harm our business.
Risks Related to Our Business and Our Industry Our business depends on our ability to attract new customers, retain and upsell additional products and new product categories to existing customers, and upgrade free hosts to our paid offerings. Any decline in new customers, renewals, or upgrades would harm our business.
Depending upon their duration and implementation, these tariffs, the executive order and its implementation, and other regulatory actions could materially affect our business, including in the form of increased cost of revenue, decreased margins, increased pricing for customers, and reduced sales. We may be subject to additional liabilities on past sales for taxes, surcharges, and fees.
Depending upon their duration and implementation, these tariffs, the executive order and its implementation, and other regulatory actions could materially affect our business, including in the form of increased cost of revenue, decreased margins, increased pricing for customers, and reduced sales. 34 Table of Contents We may be subject to additional liabilities on past sales for taxes, surcharges, and fees.
Our quarterly results of operations have fluctuated and may in the future fluctuate significantly, and period-to-period comparisons of our results of operations may not be meaningful. Accordingly, the results of any one quarter should not be relied upon as an indication of future performance.
Our results of operations have fluctuated and may in the future fluctuate significantly, and period-to-period comparisons of our results of operations may not be meaningful. Accordingly, the results of any one quarter or period should not be relied upon as an indication of future performance.
Further growth of our operations to support our user base, our expanding third-party relationships, our information technology systems, and our internal controls and procedures may not be adequate to support our operations. In addition, as we continue to grow, we face challenges integrating, developing, and motivating a rapidly growing employee base in various countries around the world.
Further growth of our operations to support our user base, our expanding third-party relationships, our information technology systems, and our internal controls and procedures may not be adequate to support our operations. In addition, as we continue to grow, we face challenges integrating, developing, and motivating our employee base in various countries around the world.
Yuan is no longer providing services to us or his employment is terminated for cause, (iii) the date specified by the holders of a majority of the then 37 Table of Contents outstanding shares of Class B common stock, voting as a separate class, and (iv) the 15-year anniversary of the closing of our IPO.
Yuan is no longer providing services to us or his employment is terminated for cause, (iii) the date specified by the holders of a majority of the then outstanding shares of Class B common stock, voting as a separate class, and (iv) the 15-year anniversary of the closing of our IPO.
Despite precautions taken at these facilities, the occurrence of a natural disaster, an act of terrorism, or other act of malfeasance, a decision to close the facilities without adequate notice or other unanticipated problems at the facilities would harm our business. We operate in competitive markets, and we must continue to compete effectively.
Despite precautions taken at these 14 Table of Contents facilities, the occurrence of a natural disaster, an act of terrorism, or other act of malfeasance, a decision to close the facilities without adequate notice or other unanticipated problems at the facilities would harm our business. We operate in competitive markets, and we must continue to compete effectively.
Further, the Organization for Economic Co-operation and Development (“OECD”) and the Inclusive Framework of G20 and other countries have issued proposals related to the taxation of the digital economy. In addition, several countries have proposed or enacted Digital Services Taxes (“DST”), many of which would apply to revenue derived from digital services.
Further, the Organization for Economic Co-operation and Development (“OECD”) and the Inclusive Framework of G20 and other countries have issued proposals related to the taxation of the digital economy. In addition, several countries have proposed or enacted Digital Services Taxes (“DST”), many of which would apply to revenue 29 Table of Contents derived from digital services.
Our business depends upon our ability to attract new customers and hosts, and maintain and expand our relationships with our customers and hosts, including upselling additional products to our existing customers and upgrading hosts to a paid Zoom Meeting plan.
Our business depends upon our ability to attract new customers, and maintain and expand our relationships with our existing customers, including upselling additional products and new product categories to our existing customers and upgrading hosts to a paid Zoom Meeting plan.
Any unfavorable publicity or perception of our platform, including any delays or interruptions in service due to capacity constraints stemming from increased usage due to the COVID-19 pandemic, or of our privacy or security features, or of the providers of communication and collaboration technologies generally, could adversely affect our reputation and our ability to attract and retain hosts.
Any unfavorable publicity or perception of our platform, including any delays or interruptions in service due to capacity constraints stemming from increased usage or of our privacy or security features, or of the providers of communication and collaboration technologies generally, could adversely affect our reputation and our ability to attract and retain hosts.
In addition, our ability to manage our business and conduct our operations internationally in the future may require considerable management attention and resources and is subject to the particular challenges of supporting a rapidly growing business in an environment of multiple languages, cultures, customs, legal and regulatory systems, alternative dispute systems, and commercial markets.
In addition, our ability to manage our business and conduct our operations internationally in the future requires considerable management attention and resources and is subject to the particular challenges of supporting a rapidly growing business in an environment of multiple languages, cultures, customs, legal and regulatory systems, alternative dispute systems, and commercial markets.
Ineffective disclosure 41 Table of Contents controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our Class A common stock.
Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our Class A common stock.
There can be no assurance that we will not be forced to engage in price-cutting initiatives or other discounts or to increase our marketing and other expenses to attract and retain customers in 14 Table of Contents response to competitive pressures, either of which would harm our business.
There can be no assurance that we will not be forced to engage in price-cutting initiatives or other discounts or to increase our marketing and other expenses to attract and retain customers in response to competitive pressures, either of which would harm our business.
Ransomware attacks, including those perpetrated by organized criminal threat actors, nation-states, and nation-state-supported actors, are becoming increasingly prevalent and severe and can lead to significant interruptions in our operations, loss of data and income, reputational harm, and diversion of funds.
Ransomware attacks, including those perpetrated by organized criminal threat actors, nation-states, and nation-state-supported actors, are becoming increasingly 20 Table of Contents prevalent and severe and can lead to significant interruptions in our operations, loss of data and income, reputational harm, and diversion of funds.
As part of these services, Zoom may be used by students, including students under the age of 13, and we collect 30 Table of Contents personal information from such students on behalf of our school subscribers. School subscribers must contractually consent to Zoom’s information practices on behalf of students, prior to students using the services.
As part of these services, Zoom may be used by students, including students under the age of 13, and we collect personal information from such students on behalf of our school subscribers. School subscribers must contractually consent to Zoom’s information practices on behalf of students, prior to students using the services.
Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our business or cause us to fail to meet our reporting obligations and may result in a restatement of our consolidated financial statements for prior periods.
Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our business or cause us to fail to meet our reporting obligations and may result in a restatement of 44 Table of Contents our consolidated financial statements for prior periods.
We plan to continue our practice of opening new data centers to meet increased demand, but we may be unable to bring additional data centers online in a timely manner, including as a result of current shortages for certain parts, such as servers.
We plan to continue our practice of opening new data centers throughout the world to meet increased demand, but we may be unable to bring additional data centers online in a timely manner, including as a result of current shortages for certain parts, such as servers.
Therefore, these holders have significant influence over our management and affairs and over all matters requiring stockholder approval, including election of directors and significant corporate transactions, such as a merger or other sale of Zoom or our assets, for the foreseeable future.
Therefore, these holders have significant influence over our management and affairs and over all matters requiring stockholder approval, including election of directors and significant corporate transactions, 40 Table of Contents such as a merger or other sale of Zoom or our assets, for the foreseeable future.
We have never declared nor paid cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable 39 Table of Contents future.
We have never declared nor paid cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future.
Our ability to mitigate this volatility in any given period may be impacted by our contractual obligations to hold securities for a set period of time. All of our investments are subject to a risk of 40 Table of Contents a partial or total loss of investment capital.
Our ability to mitigate this volatility in any given period may be impacted by our contractual obligations to hold securities for a set period of time. All of our investments are subject to a risk of a partial or total loss of investment capital.
As a result, we cannot provide assurance that customers will renew their subscriptions utilizing the same tier of their Zoom Meeting plan, upgrade to a higher-priced tier, or purchase additional products, if they 12 Table of Contents renew at all.
As a result, we cannot provide assurance that customers will renew their subscriptions utilizing the same tier of their Zoom Meeting plan, upgrade to a higher-priced tier, or purchase additional products, if they renew at all.
Other large established companies may also make investments in video communications tools. In addition, as we introduce new products and services, and with the introduction of new technologies and market entrants, we expect competition to intensify in the future.
Other large established companies may also make investments in video communications tools. In addition, as we introduce new products and services into our platform, and with the introduction of new technologies and market entrants, we expect competition to intensify in the future.
We cannot be certain that we will be able to address any vulnerabilities in our software products and services that we may become aware of in the future, or there may be delays in developing patches that can be effectively deployed to address vulnerabilities.
We cannot be certain that we will be able to address any vulnerabilities in our software products 21 Table of Contents and services that we may become aware of in the future, or there may be delays in developing patches that can be effectively deployed to address vulnerabilities.
Increased usage of our services, novel uses of our services, and additional awareness of Zoom and our brand could lead to greater public scrutiny of, press related to, or a 20 Table of Contents negative perception of our information security and potential vulnerabilities associated with, our platform.
Increased usage of our services, novel uses of our services, and additional awareness of Zoom and our brand could lead to greater public scrutiny of, press related to, or a negative perception of our information security and potential vulnerabilities associated with, our platform.
As a result, we may experience additional volatility to our statements of operations due to changes in market prices of our investments in publicly held securities and the valuation and timing of observable price changes or impairments of our investments in privately held securities.
As a result, we may experience additional volatility to our statements of operations due to 43 Table of Contents changes in market prices of our investments in publicly held securities and the valuation and timing of observable price changes or impairments of our investments in privately held securities.
Declines in our growth rate could adversely affect investors’ perceptions of our business and the trading price of our Class A common stock could be adversely affected.
Our growth rate could adversely affect investors’ perceptions of our business and the trading price of our Class A common stock could be adversely affected.
We invest significantly in research and development, and our goal is to focus our spending on measures that improve quality and ease of adoption, enhance privacy and security, and create organic 18 Table of Contents user demand for our platform.
We invest significantly in research and development, and our goal is to focus our spending on measures that improve quality and ease of adoption, enhance privacy and security, and create organic user demand for our platform.
If our security measures are compromised, our reputation could be damaged; our data, information or intellectual property, or that of our 19 Table of Contents customers, may be destroyed, stolen, or otherwise compromised; our business may be harmed; and we could incur significant liability.
If our security measures are compromised, our reputation could be damaged; our data, information or intellectual property, or that of our customers, may be destroyed, stolen, or otherwise compromised; our business may be harmed; and we could incur significant liability.
As we continue to expand our international operations, we will become more exposed to the effects of fluctuations in currency exchange rates.
As we continue to expand our international operations, we have become more exposed to the effects of fluctuations in currency exchange rates.
Our effective tax rate could fluctuate due to changes in the proportion of our earnings and losses in countries with differing statutory tax rates.
Our effective tax rate could fluctuate due to changes in the proportion of our earnings in countries with differing statutory tax rates.
Although the majority of our cash generated from revenue is denominated in U.S. dollars, a small amount is denominated in foreign currencies, and our expenses are generally denominated in the currencies of the jurisdictions in which we conduct our operations.
Although the majority of our cash generated from revenue is denominated in U.S. dollars, a portion of our revenue is denominated in foreign currencies, and our expenses are generally denominated in the currencies of the jurisdictions in which we conduct our operations.
If our research and development investments do not accurately anticipate user demand or if we fail to develop our platform in a manner that satisfies user preferences and requirements in a timely and cost-effective manner, we may fail to retain our existing users or increase demand for our platform.
If our research and development investments do not accurately anticipate user demand or if we fail to 18 Table of Contents develop our platform in a manner that satisfies user preferences and requirements in a timely and cost-effective manner, we may fail to retain our existing users or increase demand for our platform.
We do not control, or in some cases have limited control over, the operation of the co-located data center facilities we use, and they are vulnerable to damage or interruption from human error; intentional bad acts; earthquakes; floods; fires; hurricanes; war; terrorist attacks; power losses; hardware failures; systems failures; telecommunications failures; disease, such as the COVID-19 pandemic; and similar events, any of which could disrupt our service.
We do not control, or in some cases have limited control over, the operation of the co-located data center facilities we use, and they are vulnerable to damage or interruption from human error; intentional bad acts; earthquakes; floods; fires; hurricanes; war; terrorist attacks; power losses; hardware failures; systems failures; telecommunications failures; disease, such as the COVID-19 pandemic; and other public health related measures, any of which could disrupt our service.
Interruptions, delays, or outages in our services would reduce our revenue; may require us to issue credits or pay penalties; may subject us to claims and litigation; and may cause customers and hosts to terminate their 13 Table of Contents subscriptions and adversely affect our ability to attract new customers and hosts.
Interruptions, delays, or outages in our services would reduce our revenue; may require us to issue credits or pay penalties; may subject us to claims and litigation; and may cause customers and hosts to terminate their subscriptions and adversely affect our ability to attract new customers and hosts.
In addition, we have experienced, and may in the future experience, other interruptions and delays in our services caused by a variety of other factors, including, but not limited to, infrastructure changes, vendor issues, human or software errors, viruses, security attacks, ransomware or cyber extortion, fraud, general internet availability issues, spikes in usage, and denial of service issues.
In addition, we have experienced, and may in the future experience, other interruptions and delays in our services caused by a variety of other factors, including, but not limited to, infrastructure changes, vendor issues, human or software errors, viruses, security attacks, ransomware or cyber extortion, fraud, general internet availability issues, spikes in usage, local administrative actions, changes to legal or permitting requirements, and denial of service issues.
Factors that may cause fluctuations in our quarterly results of operations include, without limitation, those listed below: • our ability to retain and upgrade customers to higher-priced tiers of Zoom Meeting plans; • our ability to attract new hosts and upgrade hosts that subscribe to our free Zoom Meeting plan to one of our paid Zoom Meeting plans; • our ability to hire and retain employees, in particular those responsible for the selling or marketing of our platform; • our ability to hire, develop, and retain talented sales personnel who are able to achieve desired productivity levels in a reasonable period of time and provide sales leadership in areas in which we are expanding our sales and marketing efforts; • changes in the way we organize and compensate our sales teams; • the timing of expenses and recognition of revenue; • our ability to increase sales to large organizations; • the length of our sales cycles, especially with respect to sales to large enterprises and highly regulated industries, including financial services and U.S. federal and state and foreign governmental agencies; • the amount and timing of operating expenses related to the maintenance and expansion of our business, operations, and infrastructure, as well as international expansion and entry into operating leases; and the hiring and retention of personnel who can build, manage, and maintain our expanded business operations and infrastructure; • timing and effectiveness of new sales and marketing initiatives; • changes in our pricing policies or those of our competitors; • our ability to hire and retain experienced research and development personnel to design new products, features, and functionality that meet our privacy and security standards; • the timing and success of new products, features, and functionality by us or our competitors; • interruptions or delays in our service; network outages; or actual, alleged, or perceived privacy violations or issues or security vulnerabilities, incidents, or breaches; • lawsuits; regulatory actions or investigations; legislator scrutiny; or negative publicity arising from actual, alleged, or perceived privacy violations or issues or security vulnerabilities, incidents, or breaches; • changes in the competitive dynamics of our industry, including consolidation among competitors; • changes in laws and regulations that impact our business; • any large indemnification payments to our users or other third parties; • the timing of expenses related to any future acquisitions; and • general economic and market conditions. 15 Table of Contents Failures in internet infrastructure or interference with broadband access could cause current or potential users to believe that our systems are unreliable, possibly leading our customers and hosts to switch to our competitors, or to cancel their subscriptions to our platform.
Factors that may cause fluctuations in our results of operations include, without limitation, those listed below: • our ability to retain and upgrade customers to higher-priced tiers of Zoom Meeting plans; • our ability to attract new hosts and upgrade hosts that subscribe to our free Zoom Meeting plan to one of our paid Zoom Meeting plans; • our ability to hire and retain employees, in particular those responsible for the selling or marketing of our platform; • our ability to hire, develop, and retain talented sales personnel who are able to achieve desired productivity levels in a reasonable period of time and provide sales leadership in areas in which we are expanding our sales and marketing efforts; • changes in the way we organize and compensate our sales teams; • the timing of expenses and recognition of revenue; • our ability to increase sales to large organizations; • the length of our sales cycles and linearity of our bookings, especially with respect to sales to large enterprises and highly regulated industries, including financial services and U.S. federal and state and foreign governmental agencies; • the amount and timing of operating expenses related to the maintenance and expansion of our business, operations, and infrastructure, as well as international expansion and entry into operating leases; and the hiring and retention of personnel who can build, manage, and maintain our expanded business operations and infrastructure; • timing and effectiveness of new sales and marketing initiatives; • changes in our pricing policies or those of our competitors; • our ability to hire and retain experienced research and development personnel to design new products, features, and functionality that meet our privacy and security standards; • the timing and success of new products, features, and functionality by us or our competitors; • interruptions or delays in our service; network outages; or actual, alleged, or perceived privacy violations or issues or security vulnerabilities, incidents, or breaches; • lawsuits, regulatory actions or investigations; legislator scrutiny; or negative publicity arising from actual, alleged, or perceived privacy violations or issues or security vulnerabilities, incidents, or breaches; • changes in the competitive dynamics of our industry, including consolidation among competitors; • changes in laws and regulations that impact our business; • any large indemnification payments to our users or other third parties; • the timing of expenses related to any future acquisitions; and • general economic and market conditions.
In addition, our current products, as well as products, features, and functionality that we may introduce in the future, may require us to compensate or reimburse third parties. For example, our cloud phone system, Zoom Phone, is a PBX phone solution that requires us to compensate carriers that operate the PSTN.
In addition, our current platform as well as products, features, and functionality 28 Table of Contents that we may introduce in the future, may require us to compensate or reimburse third parties. For example, our cloud phone system, Zoom Phone, is a PBX phone solution that requires us to compensate carriers that operate the PSTN.
Operating internationally subjects us to new risks and may increase risks that we currently face, including risks associated with: • providing our platform and operating our business across a significant distance, in different languages and among different cultures, including the potential need to modify our platform and features to ensure that they are culturally appropriate and relevant in different countries; • compliance with applicable international laws and regulations, including laws and regulations with respect to privacy, information security, telecommunications requirements, data protection, consumer protection, and unsolicited email, 23 Table of Contents and the risk of penalties to us and individual members of management or employees if our practices are deemed to be out of compliance; • operating in foreign jurisdictions where the government may impede or interrupt our ability to provide our services; • management of an employee base in jurisdictions that may not give us the same employment and retention flexibility as does the United States; • operating in jurisdictions that do not protect intellectual property rights to the same extent as does the United States and the practical enforcement of such intellectual property rights outside of the United States; • foreign government interference with our non-core intellectual property that resides outside of the United States, such as the risk of changes in foreign laws that could restrict our ability to use our intellectual property outside of the foreign jurisdiction in which we developed it; • integration with partners outside of the United States; • compliance by us and our business partners with anti-corruption laws, import and export control laws, tariffs, trade barriers, economic sanctions, and other regulatory limitations on our ability to provide our platform in certain international markets; • foreign exchange controls that might require significant lead time in setting up operations in certain geographic territories and might prevent us from repatriating cash earned outside the United States; • political and economic instability, including as a result of the United Kingdom's (“U.K.”) withdrawal from the European Union (“EU”), and other political tensions between countries in which we do business; • changes in diplomatic and trade relationships, including the imposition of new trade restrictions, trade protection measures, import or export requirements, trade embargoes, and other trade barriers; • generally longer payment cycles and greater difficulty in collecting accounts receivable, a risk that may increase as a result of the impact of the COVID-19 pandemic on our customers' ability to pay for our service on a timely basis; • double taxation of our international earnings and potentially adverse tax consequences due to changes in the income and other tax laws of the United States or the international jurisdictions in which we operate, including the imposition of digital services taxes; and • higher costs of doing business internationally, including increased accounting, travel, infrastructure, and legal compliance costs.
Operating internationally subjects us to new risks and increases risks that we currently face, including risks associated with: • providing our platform and operating our business across a significant distance, in different languages and among different cultures, including the potential need to modify our platform and features to ensure that they are culturally appropriate and relevant in different countries; • compliance with applicable international laws and regulations, including laws and regulations with respect to privacy, information security, telecommunications requirements, data protection, consumer protection, and unsolicited email, and the risk of penalties to us and individual members of management or employees if our practices are deemed to be out of compliance; • operating in foreign jurisdictions where the government may impede or interrupt our ability to provide our services; • management of an employee base in jurisdictions that may not give us the same employment and retention flexibility as the United States; • operating in jurisdictions that do not protect intellectual property rights to the same extent as the United States and the practical enforcement of such intellectual property rights outside of the United States; • foreign government interference with our non-core intellectual property that resides outside of the United States, such as the risk of changes in foreign laws that could restrict our ability to use our intellectual property outside of the foreign jurisdiction in which we developed it; • integration with partners outside of the United States; • compliance by us and our business partners with anti-corruption laws, import and export control laws, tariffs, trade barriers, economic sanctions, and other regulatory limitations on our ability to provide our platform in certain international markets; • foreign exchange controls that might require significant lead time in setting up operations in certain geographic territories and might prevent us from repatriating cash earned outside the United States; 25 Table of Contents • political and economic instability, including as a result of the United Kingdom's (“U.K.”) withdrawal from the European Union (“EU”), and other political tensions between countries in which we do business; • changes in diplomatic and trade relationships, including the continuing deterioration in diplomatic relations between the United States and China and the continuing war between Russia and Ukraine, which can and has resulted in the imposition of new trade restrictions, trade protection measures, import or export requirements, trade embargoes, and other trade barriers; • generally longer payment cycles and greater difficulty in collecting accounts receivable, a risk that may increase as a result of recent macroeconomic conditions, such as high inflation, recessionary environments, and fluctuations in foreign currency exchange rates, weighing on our customers' ability to pay for our service on a timely basis; • double taxation of our international earnings and potentially adverse tax consequences due to changes in the income and other tax laws of the United States or the international jurisdictions in which we operate, including the imposition of digital services taxes; and • higher costs of doing business internationally, including increased accounting, travel, infrastructure, and legal compliance costs.
The additional risks and challenges associated with doing business with governmental entities include, but are not limited to, the following: • selling to governmental entities can be more competitive, expensive, and time-consuming than selling to private entities, often requiring significant up-front time and expense and ongoing compliance costs without any assurance that these efforts will generate a sale; • government certification requirements may change, or we may be unable to achieve or sustain one or more government certifications, including FedRAMP, which may restrict our ability to sell into the government sector until we have attained such certificates; • contracts with governmental entities and other government contractors, including resellers in the government market, contain terms that differ less favorably from what we generally agree to in our standard agreements, including, terms and conditions required by regulation that are not negotiable with the customer; • non-compliance with terms and conditions of government contracts, or with representations or certifications made in connection with government contracts, can result in significantly more adverse consequences than we typically would expect in the commercial market, including, depending on the circumstances, criminal liability, liability under the civil False Claims Act, and/or suspension or debarment from doing business with governmental entities; • government demand and payment for our products may be influenced by public sector budgetary cycles and funding authorizations, with funding reductions or delays having an adverse impact on public sector demand for our products; and • government-imposed vaccine mandates could result in increased attrition and difficulties in recruiting, and non-compliance with any such mandates could restrict our ability to do business with governmental entities.
Federal Risk and Authorization Management Program (“FedRAMP”) authorized SaaS service, selling to government entities and other government contractors present a number of unique challenges and risk including the following: • selling to governmental entities can be more competitive, expensive, and time-consuming than selling to private entities, often requiring significant up-front time and expense and ongoing compliance costs without any assurance that these efforts will generate a sale; • government certification requirements may change, or we may be unable to achieve or sustain one or more government certifications, including FedRAMP, which may restrict our ability to sell into the government sector until we have attained such certificates; • contracts with governmental entities and other government contractors, including resellers in the government market, contain terms that differ less favorably from what we generally agree to in our standard agreements, including, terms and conditions required by regulation that are not negotiable with the customer; • non-compliance with terms and conditions of government contracts, or with representations or certifications made in connection with government contracts, can result in significantly more adverse consequences than we typically would expect in the commercial market, including, depending on the circumstances, criminal liability, liability under the civil False Claims Act, and/or suspension or debarment from doing business with governmental entities; • government demand and payment for our products may be influenced, among other things, by public sector budgetary cycles and funding authorizations, with funding reductions or delays having an adverse impact on public sector demand for our products; and • government-imposed vaccine mandates could result in increased attrition and difficulties in recruiting, and non-compliance with any such mandates could restrict our ability to do business with governmental entities.
For example, we recently introduced Zoom Contact Center, an omnichannel contact center solution that is optimized for video, which, as we build out our offering, may result in increased competition against companies that offer similar services, such as Five9, Inc., Genesys and NICE inContact, and new competitors that may enter that market in the future.
In February 2022, we launched Zoom Contact Center, an omnichannel contact center solution that is optimized for video, which, as we build out our offering, may result in increased competition against companies that offer similar services, such as Five9, Inc., Genesys and NICE inContact, and new competitors that may enter that market in the future.
Yuan, together with his affiliates, held approximately 7.6% of our outstanding capital stock but controlled approximately 29.8% of the voting power of our outstanding capital stock.
Yuan, together with his affiliates, held approximately 7.7% of our outstanding capital stock but controlled approximately 31.6% of the voting power of our outstanding capital stock.
We cannot make any assurances that we will experience an increase in paid hosts or that new or existing users will continue to utilize our services at the same levels after the COVID-19 pandemic has tapered.
We cannot make any assurances that we will experience an increase in paid hosts or that new or existing users will continue to utilize our services at the same levels during the COVID-19 pandemic recovery.
We also utilize Amazon Web Services and Oracle Cloud for the hosting of certain critical aspects of our business, as well as Microsoft Azure for limited customer-specified managed services. As part of our distributed meeting architecture, we establish private links between data centers that automatically transfer data between various data centers in order to optimize performance on our platform.
We also utilize Amazon Web Services and Oracle Cloud for the hosting of certain critical aspects of our business, as well as Microsoft Azure for limited customer-specified managed services. As part of our distributed meeting architecture, we establish private links between data centers that automatically transfer data between various data centers.
Attorney’s Office for the EDNY, which requested information regarding our interactions with foreign governments and foreign political parties, including the Chinese government, as well as information regarding storage of and access to user data, the development and implementation of Zoom’s privacy policies, and the actions we took relating to the Tiananmen commemorations on Zoom.
Attorney’s Office for the EDNY, which requested information regarding our interactions with foreign governments and foreign political parties, including the Chinese government, as well as information regarding storage of and access to user data, the development and implementation of Zoom’s privacy policies, and the actions we took relating to videoconference commemorations of the crackdown on the 1989 Tiananmen Square democracy protests.
Legislation has been adopted in Florida and Texas and has been introduced in at least fifteen additional states that is intended to reduce or eliminate the power of businesses operating on the Internet to moderate user-generated content, implicitly eliminating the federal protections granted under Section 230.
Legislation has been adopted in Florida and Texas that is intended to reduce or eliminate the power of businesses operating on the Internet to moderate user-generated content, implicitly eliminating the federal protections granted under Section 230.
Interruptions, delays, or outages in service from our co-located data centers and a variety of other factors, including increased usage stemming from the COVID-19 pandemic, would impair the delivery of our services, require us to issue credits or pay penalties, and harm our business. We currently serve our users from various co-located data centers located throughout the world.
Interruptions, delays, or outages in service from our co-located data centers and a variety of other factors, would impair the delivery of our services, require us to issue credits or pay penalties, and harm our business. We currently serve our users from various co-located data centers located throughout the world.
Many resellers may not be willing to invest the time and resources required to train their staff to 25 Table of Contents effectively sell our platform.
Many resellers may not be willing to invest the time and resources required to train their staff to effectively sell our platform.
The impact of these events would also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, on committees of our board of directors, or as members of senior management. Item 1B. UNRESOLVED STAFF COMMENTS None.
The impact of these events would also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, on committees of our board of directors, or as members of senior management.
Additionally, if our data centers are unable to keep up with our increasing needs for capacity, including increased usage stemming from the COVID-19 pandemic, customers may experience delays or interruptions in service as we seek to obtain additional capacity, which could result in the loss of customers who use our unified communications platform because of its reliability and performance.
Additionally, if our data centers are unable to keep up with our increasing needs for capacity, customers may experience delays or interruptions in service as we seek to obtain additional capacity, which could result in the loss of customers who use our unified communications and collaboration platform because of its reliability and performance.
For example, in September 2019, the Chinese government turned off our service in China without warning and requested that we take certain steps prior to restoring our service, including designating an in-house contact for law enforcement requests and transferring China-based user data housed in the United States to a data center in China.
For example, the Chinese government has at times turned off our service in China without warning and requested that we take certain steps prior to restoring our service, such as designating an in-house contact for law enforcement requests and transferring China-based user data housed in the United States to a data center in China.
In addition, there are pending cases before the judiciary that may result in changes to the protections afforded to internet platforms, including a lawsuit by former President Trump that, if successful, would greatly limit the scope of Section 230.
In addition, there are pending cases before the judiciary that may result in changes to the protections afforded to internet platforms, including a lawsuit by former President Trump that, if successful, would greatly limit the scope of Section 230. Further, on October 3, 2022, the U.S.
The provision for taxes on our consolidated financial statements could also be impacted by changes in accounting principles; changes in U.S. federal, state, or foreign tax laws applicable to corporate multinationals; other fundamental changes in tax law currently being considered by many countries; and changes in taxing jurisdictions’ administrative interpretations, decisions, policies, and positions.
The provision for taxes on our consolidated financial statements could also be impacted by changes in accounting principles; changes in U.S. federal, state, or foreign tax laws applicable to corporate multinationals (including provisions of the recently enacted federal tax legislation titled the Inflation Reduction Act); other fundamental changes in tax law currently being considered by many countries; and changes in taxing jurisdictions’ administrative interpretations, decisions, policies, and positions.
For the fiscal years ended January 31, 2022, 2021, and 2020, 22.6%, 20.2%, and 9.4% of our revenue, respectively, and 16.8%, 11.9%, and 17.5% of our expenses, respectively, were denominated in currencies other than U.S. dollars.
For the fiscal years ended January 31, 2023, 2022, and 2021, 20.0%, 22.6%, and 20.2% of our revenue, respectively, and 10.8%, 16.8%, and 11.9% of our expenses, respectively, were denominated in currencies other than U.S. dollars.
Our revenue growth rate has begun to decline and we expect our revenue growth rate to generally decline in future periods. We have experienced significant revenue growth in prior periods. You should not rely on the revenue growth of any prior quarterly or annual period as an indication of our future performance.
Our revenue growth rate has fluctuated in prior periods, and may decline in future periods. Our revenue growth has fluctuated in prior periods. We have previously experienced periods of significant revenue growth. You should not rely on the revenue growth of any prior quarterly or annual period as an indication of our future performance.
All of our executive officers are at-will employees, and we do not maintain any key person life insurance policies. Any changes in our senior management team in particular, even in the ordinary course of business, may be disruptive to our business.
All of our executive officers are at-will employees, and we do not maintain any key person life insurance policies. Any changes in our senior management team in particular, even in the ordinary course of business, may be disruptive to our business. Such changes may result in a loss of institutional knowledge and cause disruptions to our business.
If adequate capacity is not available to us as our user base grows, our network may be unable to achieve or maintain sufficiently high data transmission capacity, reliability, or performance.
If adequate capacity does not continue to be available to us as our user base grows in the future, our network may be unable to achieve or maintain sufficiently high data transmission capacity, reliability, or performance.
We cannot predict whether any such state legislation will be adopted, enforced, modified, overturned, or vacated. International Regulation As we expand internationally, we may be subject to telecommunications, consumer protection, privacy, data protection, and other laws and regulations in the foreign countries where we offer our products.
Constitution and on the ground that it is preempted by Section 230. We cannot predict whether any such state legislation will be adopted, enforced, modified, overturned, or vacated. International Regulation As we expand internationally, we may be subject to telecommunications, consumer protection, privacy, data protection, and other laws and regulations in the foreign countries where we offer our products.
As of January 31, 2022, the holders of our outstanding Class B common stock held 67.8% of the voting power of our outstanding capital stock, with our directors, executive officers and 5% stockholders and their respective affiliates holding 60.8% of such voting power in the aggregate. As of January 31, 2022, our founder, President and Chief Executive Officer, Eric S.
As of January 31, 2023, the holders of our outstanding Class B common stock held 65.4% of the voting power of our outstanding capital stock, with our directors, executive officers and 5% stockholders and their respective affiliates holding 57.9% of such voting power in the aggregate. As of January 31, 2023, our founder, President and Chief Executive Officer, Eric S.
To meet this increased demand, we have incurred and expect to continue to incur significant costs associated with upgrading our infrastructure and expanding our capacity, including higher variable costs to the extent we have had to rely on public cloud providers rather than our own data centers. Fluctuation in quarterly results may negatively impact the value of our securities.
To meet this increased demand, we have incurred and expect to continue to incur significant costs associated with upgrading our infrastructure and expanding our capacity, including higher variable costs to the extent we have had to rely on public cloud providers rather than our own data centers.

… 267 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

0 edited+0 added−1 removed1 unchanged
Removed
We believe that our facilities are suitable to meet our current needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 3. LEGAL PROCEEDINGS Information with respect to this item may be found in Note 8 - “Commitment and Contingencies” in the accompanying notes to the consolidated financial statements included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K, under “Legal Proceedings,” which is incorporated herein by reference.
Biggest changeItem 3. LEGAL PROCEEDINGS Information with respect to this item may be found in Note 9 - “Commitment and Contingencies” in the accompanying notes to the consolidated financial statements included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K, under “Legal Proceedings,” which is incorporated herein by reference. Item 4.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+2 added−0 removed4 unchanged
Biggest changeUnregistered Sales of Equity Securities None. 43 Table of Contents Use of Proceeds None. Issuer Purchases of Equity Securities None. Item 6. [RESERVED] Omitted at registrant's option.
Biggest changeUnregistered Sales of Equity Securities None. Use of Proceeds None.
The following graph compares (i) the cumulative total stockholder return on our Class A common stock from April 18, 2019 (the date our Class A common stock commenced trading on the Nasdaq Global Select Market) through January 31, 2022 with (ii) the cumulative total return of the Russell 2000 Index (“RUT”) and the Nasdaq Computer Index (“IXCO”) over the same period, assuming the investment of $100 in our Class A common stock and in both of the other indices on April 18, 2019 and the reinvestment of dividends.
The following graph compares (i) the cumulative total stockholder return on our Class A common stock from April 18, 2019 (the date our Class A common stock commenced trading on the Nasdaq Global Select Market) through January 31, 2023 with (ii) the cumulative total return of the Russell 2000 Index (“RUT”) and the Nasdaq Computer Index (“IXCO”) over the same period, assuming the investment of $100 in our Class A common stock and in both of the other indices on April 18, 2019 and the reinvestment of dividends.
Dividend Policy We have never declared or paid any cash dividends on our capital stock. We currently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future.
Dividend Policy 46 Table of Contents We have never declared or paid any cash dividends on our capital stock. We currently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our Class A common stock is listed on the Nasdaq Global Select Market under the symbol “ZM.” Holders of Record As of January 31, 2022, we had 57 holders of record of our Class A common stock and 17 holders of record of our Class B common stock.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our Class A common stock is listed on the Nasdaq Global Select Market under the symbol “ZM.” Holders of Record As of January 31, 2023, we had 56 holders of record of our Class A common stock and 16 holders of record of our Class B common stock.
Added
Issuer Purchases of Equity Securities The following table presents information with respect to our repurchases of Class A common stock during the three months ended January 31, 2023: 47 Table of Contents Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under Publicly Announced Program (in thousands) (1) November 1 - 30, 2022 — $ — — $ 9,222 December 1 – 31, 2022 126,407 $ 72.98 126,407 $ — January 1 – 31, 2023 — $ — — $ — Total 126,407 $ 72.98 126,407 — (1) In February 2022, our Board of Directors authorized a stock repurchase program of up to $1.0 billion of our Class A common stock, which was completed in December 2022.
Added
See Note 10 "Stockholders’ Equity and Equity Incentive Plans" of this Annual Report on Form 10-K for additional information related to share repurchases. Item 6. [RESERVED] Omitted at registrant's option.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

79 edited+33 added−47 removed43 unchanged
Biggest change(Benefit from) provision for Income Taxes (Benefit from) provision for income taxes consists primarily of income taxes related to federal, state, and foreign jurisdictions where we conduct business. 49 Table of Contents Results of Operations The following tables set forth selected consolidated statements of operations data and such data as a percentage of revenue for each of the fiscal years indicated: Year Ended January 31, 2022 2021 2020 (in thousands) Revenue $ 4,099,864 $ 2,651,368 $ 622,658 Cost of revenue (1) 1,054,554 821,989 115,396 Gross profit 3,045,310 1,829,379 507,262 Operating expenses: Research and development (1) 362,990 164,080 67,079 Sales and marketing (1) 1,135,959 684,904 340,646 General and administrative (1) 482,770 320,547 86,841 Total operating expenses 1,981,719 1,169,531 494,566 Income from operations 1,063,591 659,848 12,696 Gains on strategic investments, net 43,761 2,538 — Other (expense) income, net (5,720) 15,648 13,666 Income before (benefit from) provision for income taxes 1,101,632 678,034 26,362 (Benefit from) provision for income taxes (274,007) 5,718 1,057 Net income $ 1,375,639 $ 672,316 $ 25,305 (1) Includes stock-based compensation expense as follows: Cost of revenue $ 69,612 $ 34,960 $ 7,860 Research and development 113,000 50,161 11,645 Sales and marketing 229,297 146,377 41,465 General and administrative 65,378 44,320 12,139 Total stock-based compensation expense $ 477,287 $ 275,818 $ 73,109 Year Ended January 31, 2022 2021 2020 (as a percentage of revenue) Revenue 100 % 100 % 100 % Cost of revenue 26 31 19 Gross profit 74 69 81 Operating expenses: Research and development 8 6 11 Sales and marketing 27 26 55 General and administrative 12 12 13 Total operating expenses 47 44 79 Income from operations 27 25 2 Gains on strategic investments, net 1 — — Other (expense) income, net 0 1 2 Income before (benefit from) provision for income taxes 28 26 4 (Benefit from) provision for income taxes (6) 1 0 Net income 34 % 25 % 4 % 50 Table of Contents Comparison of Fiscal Years Ended January 31, 2022 and 2021 Revenue Year Ended January 31, 2022 2021 $ Change % Change (in thousands, except percentages) Revenue $ 4,099,864 $ 2,651,368 $ 1,448,496 55 % Revenue for the fiscal year ended January 31, 2022 increased by $1,448.5 million, or 55%, compared to the fiscal year ended January 31, 2021.
Biggest changeProvision for (Benefit from) Income Taxes Provision for (benefit from) income taxes consists primarily of income taxes related to federal, state, and foreign jurisdictions where we conduct business. 53 Table of Contents Results of Operations The following tables set forth selected consolidated statements of operations data and such data as a percentage of revenue for each of the fiscal years indicated: Year Ended January 31, 2023 2022 2021 (in thousands) Revenue $ 4,392,960 $ 4,099,864 $ 2,651,368 Cost of revenue (1) 1,100,451 1,054,554 821,989 Gross profit 3,292,509 3,045,310 1,829,379 Operating expenses: Research and development (1) 774,059 362,990 164,080 Sales and marketing (1) 1,696,590 1,135,959 684,904 General and administrative (1) 576,431 482,770 320,547 Total operating expenses 3,047,080 1,981,719 1,169,531 Income from operations 245,429 1,063,591 659,848 (Losses) gains on strategic investments, net (37,571) 43,761 2,538 Other income (expense), net 41,418 (5,720) 15,648 Income before provision (benefits) for income taxes 249,276 1,101,632 678,034 Provision (benefits) for income taxes 145,565 (274,007) 5,718 Net income $ 103,711 $ 1,375,639 $ 672,316 (1) Includes stock-based compensation expense as follows: Cost of revenue $ 174,546 $ 69,612 $ 34,960 Research and development 361,720 113,000 50,161 Sales and marketing 532,371 229,297 146,377 General and administrative 217,115 65,378 44,320 Total stock-based compensation expense $ 1,285,752 $ 477,287 $ 275,818 Year Ended January 31, 2023 2022 2021 (as a percentage of revenue) Revenue 100.0 % 100.0 % 100.0 % Cost of revenue 25.1 % 25.7 % 31.0 % Gross profit 74.9 % 74.3 % 69.0 % Operating expenses: Research and development 17.6 % 8.9 % 6.2 % Sales and marketing 38.6 % 27.7 % 25.8 % General and administrative 13.1 % 11.8 % 12.1 % Total operating expenses 69.3 % 48.4 % 44.1 % Income from operations 5.6 % 25.9 % 24.9 % (Losses) gains on strategic investments, net (0.9) % 1.1 % 0.1 % Other income (expense), net 1.0 % (0.1) % 0.6 % Income before provision (benefits) for income taxes 5.7 % 26.9 % 25.6 % Provision (benefits) for income taxes 3.3 % (6.7) % 0.2 % Net income 2.4 % 33.6 % 25.4 % 54 Table of Contents Comparison of Fiscal Years Ended January 31, 2023 and 2022 Revenue Year Ended January 31, 2023 2022 $ Change % Change (in thousands, except percentages) Revenue $ 4,392,960 $ 4,099,864 $ 293,096 7.1 % Revenue for the fiscal year ended January 31, 2023 increased by $293.1 million, or 7.1%, compared to the fiscal year ended January 31, 2022.
In order for us to address this opportunity to expand the use of our products with our existing customers, we will need to maintain the reliability of our platform and produce new features and functionality that are responsive to our customers’ requirements for enterprise-grade solutions. We quantify our expansion across existing customers through our net dollar expansion rate.
In order for us to address this opportunity to expand the use of our products with our existing customers, we will need to maintain the reliability of our platform and produce new features and functionality that are responsive to our customers’ requirements for enterprise-grade solutions. We quantify our expansion across existing Enterprise customers through our net dollar expansion rate.
Investing Activities Net cash used in investing activities of $2,859.1 million for the fiscal year ended January 31, 2022 was primarily due to net purchases of marketable securities of $2,404.8 million, purchases of strategic investments of $305.1 million, purchases of property and equipment of $132.6 million, purchases of intangible assets of $13.0 million, and cash paid for acquisition, net of cash acquired, of $3.5 million.
Net cash used in investing activities of $2,859.1 million for the fiscal year ended January 31, 2022 was primarily due to net purchases of marketable securities of $2,404.8 million, purchases of strategic investments of $305.1 million, purchases of property and equipment of $132.6 million, purchases of intangible assets of $13.0 million, and cash paid for acquisition, net of cash acquired, of $3.5 million.
We calculate ARR by taking the monthly recurring revenue (“MRR”) and multiplying it by 12. MRR is defined as the recurring revenue run-rate of subscription agreements from all customers for the last month of the period, including revenue from monthly subscribers who have not provided any indication that they intend to cancel their subscriptions.
We calculate ARR by taking the monthly recurring revenue (“MRR”) and multiplying it by 12. MRR is defined as the recurring revenue run-rate of subscription agreements from all Enterprise customers for the last month of the period, including revenue from monthly subscribers who have not provided any indication that they intend to cancel their subscriptions.
Our net dollar expansion rate includes the increase in user adoption within our customers, as our subscription revenue is primarily driven by the number of paid hosts within a customer and the purchase of additional products, and compares our subscription revenue from the same set of customers across comparable periods.
Our net dollar expansion rate includes the increase in user adoption within our Enterprise customers, as our subscription revenue is primarily driven by the number of paid hosts within a customer and the purchase of additional products, and compares our subscription revenue from the same set of Enterprise customers across comparable periods.
For the trailing 12-months calculation, we take an average of the net dollar expansion rate over the trailing 12 months. Our net dollar expansion rate may fluctuate as a result of a number of factors, including the level of penetration within our customer base, expansion of products and features, and our ability to retain our customers.
For the trailing 12-months calculation, we take an average of the net dollar expansion rate over the trailing 12 months. Our net dollar expansion rate may fluctuate as a result of a number of factors, including the level of penetration within our customer base, expansion of products and features, and our ability to retain our Enterprise customers.
We determine the period of benefit for commissions paid for the acquisition of the initial customer contract by taking into consideration the initial estimated customer life and the technological life of our unified communications platform and related significant features. We do not pay sales commissions upon contract renewal.
We determine the period of benefit for commissions paid for the acquisition of the initial customer contract by taking into consideration the initial estimated customer life and the technological life of our unified communications and collaboration platform and related significant features. We do not pay sales commissions upon contract renewal.
Our customers generally do not have the ability to take possession of our software. We also provide services, which include professional services, consulting services, and online event hosting, which are generally considered distinct from the access to our unified communications platform.
Our customers generally do not have the ability to take possession of our software. We also provide services, which include professional services, consulting services, and online event hosting, which are generally considered distinct from the access to our unified communications and collaboration platform.
We then calculate the ARR from these customers as of the current period end (“Current Period ARR”), which includes any upsells, contraction, and attrition. We divide the Current Period ARR by the Prior Period ARR to arrive at the net dollar expansion rate.
We then calculate the ARR from these Enterprise customers as of the current period end (“Current Period ARR”), which includes any upsells, contraction, and attrition. We divide the Current Period ARR by the Prior Period ARR to arrive at the net dollar expansion rate.
Expansion of Zoom Across Existing Customers We believe that there is a large opportunity for growth with many of our existing customers. Many customers have increased the size of their subscriptions as they have expanded their use of our platform across their operations.
Expansion of Zoom Across Existing Enterprise Customers We believe that there is a large opportunity for growth with many of our existing customers. Many customers have increased the size of their subscriptions as they have expanded their use of our platform across their operations.
Goodwill amounts are not amortized, but rather tested for impairment at least annually, in the fourth quarter of each fiscal year, or more often if circumstances indicate that the carrying value may not be recoverable. As of January 31, 2022, no impairment of goodwill has been identified.
Goodwill amounts are not amortized, but rather tested for impairment at least annually, in the fourth quarter of each fiscal year, or more often if circumstances indicate that the carrying value may not be recoverable. As of January 31, 2023, no impairment of goodwill has been identified.
An immediate decrease of ten percent in enterprise value of our largest privately held equity securities held as of January 31, 2022 would not have had a material impact on the value of our investment portfolio. Income Taxes We use the asset and liability method of accounting for income taxes.
An immediate decrease of ten percent in enterprise value of our largest privately held equity securities held as of January 31, 2023 would not have had a material impact on the value of our investment portfolio. Income Taxes We use the asset and liability method of accounting for income taxes.
It is important to note that other companies, including companies in our industry, may not use these metrics, may calculate these metrics differently, or may use other financial measures to evaluate their liquidity, all of which could reduce the usefulness of these non-GAAP metrics as a comparative measure.
It is important to note that other companies, including companies in our industry, may not use this metrics, may calculate t metrics differently, or may use other financial measures to evaluate their liquidity, all of which could reduce the usefulness of these non-GAAP metrics as a comparative measure.
For a discussion of the fiscal year ended January 31, 2021 compared to the fiscal year ended January 31, 2020, please refer to Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended January 31, 2021.
For a discussion of the fiscal year ended January 31, 2022 compared to the fiscal year ended January 31, 2021, please refer to Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended January 31, 2022.
For a discussion of the fiscal year ended January 31, 2020 , please refer to Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended January 31, 2021.
For a discussion of the fiscal year ended January 31, 2021 , please refer to Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended January 31, 2022.
Overview Our mission is to make video communications frictionless and secure. Zoom enables users to connect to others, share ideas, make plans, and build toward a future limited only by their imagination. Our frictionless communications platform started with video as its foundation, and we have set the standard for innovation ever since.
Overview Our mission is to make communications frictionless and secure. Zoom enables people to connect to others, share ideas, make plans, and build toward a future limited only by their imagination. Our frictionless communications and collaboration platform started with video as its foundation, and we have set the standard for innovation ever since.
Liquidity and Capital Resources As of January 31, 2022, our principal sources of liquidity were cash, cash equivalents, and marketable securities of $5.4 billion, which were held for working capital purposes and for investment in growth opportunities.
Liquidity and Capital Resources As of January 31, 2023, our principal sources of liquidity were cash, cash equivalents, and marketable securities of $5.4 billion, which were held for working capital purposes and for investment in growth opportunities.
We routinely evaluate the estimated remaining useful lives of our finite-lived intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. Indefinite-lived intangible assets are recorded at fair value and are not amortized.
We routinely evaluate the estimated remaining useful 59 Table of Contents lives of our finite-lived intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. Indefinite-lived intangible assets are recorded at fair value and are not amortized.
Financing Activities Net cash provided by financing activities of $34.1 million for the fiscal year ended January 31, 2022 was due to proceeds from issuance of common stock pursuant to our employee stock purchase plan (“ESPP”) of $59.3 million and proceeds from the exercise of stock options of $14.4 million, offset by proceeds from international employee stock sales remitted to employees and tax authorities of $40.0 million.
Net cash provided by financing activities of $34.1 million for the fiscal year ended January 31, 2022 was primarily due to proceeds from issuance of common stock pursuant to our ESPP of $59.3 million, proceeds from the exercise of stock options of $14.4 million, offset by proceeds from international employee stock sales remitted to employees and tax authorities of $40.0 million.
We calculate net dollar expansion rate as of a period end by starting with the annual recurring revenue (“ARR”) from all customers with more than 10 employees as of 12 months prior (“Prior Period ARR”). We define ARR as the annualized revenue run rate of subscription agreements from all customers at a point in time.
We calculate net dollar expansion rate as of a period end by starting with the annual recurring revenue (“ARR”) from all Enterprise customers as of 12 months prior (“Prior Period ARR”). We define ARR as the annualized revenue run rate of subscription agreements from all customers at a point in time.
FCF and Adjusted FCF are presented for supplemental informational purposes only, have limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of other GAAP financial measures, such as net cash provided by operating activities.
FCF is presented for supplemental informational purposes only and has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of other GAAP financial measures, such as net cash provided by operating activities.
Revenue from these customers represented 22%, 20%, and 33% of total revenue for the fiscal years ended January 31, 2022, 2021, and 2020, respectively. As of January 31, 2022, 2021, and 2020, we had 2,725, 1,644, and 641 customers, respectively, that contributed more than $100,000 of trailing 12 months revenue, demonstrating our rapid penetration of larger organizations, including enterprises.
Revenue from these customers represented 27%, 22%, and 20% of total revenue for the fiscal years ended January 31, 2023, 2022, and 2021, respectively. As of January 31, 2023, 2022, and 2021, we had 3,471, 2,725, and 1,644 customers, respectively, that contributed more than $100,000 of trailing 12 months revenue, demonstrating our rapid penetration of larger organizations, including enterprises.
We believe that FCF and Adjusted FCF are useful indicators of liquidity that provides information to management and investors about the amount of cash generated from our operations that, after investments in property and equipment, can be used for future growth.
We believe that FCF is a useful indicator of liquidity that provides information to management and investors about the amount of cash generated from our operations that, after investments in property and equipment, can be used for future growth.
Our revenue was $4,099.9 million, $2,651.4 million, and $622.7 million for the fiscal years ended January 31, 2022, 2021, and 2020, respectively, representing period-over-period growth rate of 55% and 326% for fiscal year 2022 and fiscal year 2021, respectively.
Our revenue was $4,393.0 million, $4,099.9 million, and $2,651.4 million for the fiscal years ended January 31, 2023, 2022, and 2021, respectively, representing period-over-period growth rate of 7% and 55% for fiscal year 2023 and fiscal year 2022, respectively.
See the “Future minimum lease payments” table in Note 7 and “Non-cancelable Purchase Obligations” in Note 8 to our consolidated financial statements included in Part II, Item 8 of this Form 10-K for more details. 53 Table of Contents Cash Flows The following table summarizes our cash flows for the periods presented: Year Ended January 31, 2022 2021 2020 (in thousands) Net cash provided by operating activities $ 1,605,266 $ 1,471,177 $ 151,892 Net cash used in investing activities $ (2,859,097) $ (1,562,420) $ (499,468) Net cash provided by financing activities $ 34,068 $ 2,050,277 $ 615,690 Operating Activities Our largest source of operating cash is cash collections from our customers for subscriptions to our platform.
See the “Future minimum lease payments” table in Note 7 and “Non-cancelable Purchase Obligations” in Note 9 to our consolidated financial statements included in Part II, Item 8 of this Form 10-K for more details. 57 Table of Contents Cash Flows The following table summarizes our cash flows for the periods presented: Year Ended January 31, 2023 2022 2021 (in thousands) Net cash provided by operating activities $ 1,290,262 $ 1,605,266 $ 1,471,177 Net cash used in investing activities $ (318,322) $ (2,859,097) $ (1,562,420) Net cash (used in) provided by financing activities $ (936,942) $ 34,068 $ 2,050,277 Operating Activities Our largest source of operating cash is cash collections from our customers for subscriptions to our platform.
This expansion in the use of our platform also provides us with opportunities to market and sell additional products to our customers, such as Zoom Phone, Zoom HaaS, Zoom for Home, Zoom Rooms at each office location, Developer Platform solutions, Zoom Events, and Zoom Video Webinars.
This expansion in the use of our platform also provides us with opportunities to market and sell additional products to our customers, such as Zoom for Home, Rooms at each office location, Developer Platform solutions, Spaces, Events, Contact Center and IQ for Sales.
Cash from operations could also be affected by various risks and uncertainties, including, but not limited to, the effects of the COVID-19 pandemic, including timing of cash collections from our customers and other risks detailed in the section titled “Risk Factors.” However, based on our current business plan and revenue prospects, we believe our existing cash, cash equivalents, and marketable securities, together with net cash provided by operations, will be sufficient to meet our needs for at least the next 12 months and allow us to capitalize on growth opportunities.
Cash from operations could also be affected by various risks and uncertainties, including, but not limited to, the recent changes in macroeconomic conditions such as high inflation, recessionary environments, and the fluctuations in foreign currency exchange rates, could impact the timing of cash collections from our customers and other risks detailed in the section titled “Risk Factors.” However, based on our current business plan and revenue prospects, we believe our existing cash, cash equivalents, and marketable securities, together with net cash provided by operations, will be sufficient to meet our needs for at least the next 12 months and allow us to capitalize on growth opportunities.
While we believe global demand for our platform will continue to increase as international market awareness of Zoom grows, our ability to conduct our operations internationally will require considerable management attention and resources, and is subject to the particular challenges of supporting a rapidly growing business in an environment of multiple languages, cultures, customs, legal and regulatory systems, alternative dispute systems, and commercial markets. 46 Table of Contents Key Business Metrics We have historically reviewed the following key business metrics to measure our performance, identify trends, formulate financial projections, and make strategic decisions.
While we believe global demand for our platform will continue to increase as international market awareness of Zoom grows, our ability to conduct our operations internationally will require considerable management attention and resources, and is subject to the particular challenges of supporting a rapidly growing business in an environment of multiple languages, cultures, customs, legal and regulatory systems, alternative dispute systems, and commercial markets.
Cost of Revenue Cost of revenue primarily consists of costs related to hosting our unified communications platform and providing general operating support services to our customers. These costs are related to our co-located data centers, third-party cloud hosting, integrated third-party PSTN services, personnel-related expenses, amortization of capitalized software development and acquired intangible assets, royalty payments, and allocated overhead.
These costs are related to our co-located data centers, third-party cloud hosting, integrated third-party PSTN services, personnel-related expenses, amortization of capitalized software development and acquired intangible assets, royalty payments, and allocated overhead.
Other (Expense) Income, Net Other (expense) income, net consists primarily of interest income and net accretion on our marketable securities and effect of changes in foreign currency exchange rates.
(Losses) gains on Strategic Investments, Net (Losses) gains on strategic investments, net consist primarily of remeasurement gains or losses on our equity investments. Other Income (Expense), Net Other income (expense) income, net consists primarily of interest income and net accretion on our marketable securities and effect of changes in foreign currency exchange rates.
The following table presents a summary of our cash flows for the fiscal years presented and a reconciliation of FCF and Adjusted FCF to net cash provided by operating activities, the most directly comparable financial measure calculated in accordance with GAAP: 47 Table of Contents Year Ended January 31, 2022 2021 2020 (in thousands) Net cash provided by operating activities $ 1,605,266 $ 1,471,177 $ 151,892 Less: purchases of property and equipment (132,590) (79,972) (38,084) Free cash flow (non-GAAP) $ 1,472,676 $ 1,391,205 $ 113,808 Add: Litigation settlement payments, net 85,000 — — Adjusted free cash flow (non-GAAP) $ 1,557,676 $ 1,391,205 $ 113,808 Net cash used in investing activities $ (2,859,097) $ (1,562,420) $ (499,468) Net cash provided by financing activities $ 34,068 $ 2,050,277 $ 615,690 Components of Results of Operations Revenue We derive our revenue from subscription agreements with customers for access to our unified communications platform.
The following table presents a summary of our cash flows for the fiscal years presented and a reconciliation of FCF to net cash provided by operating activities, the most directly comparable financial measure calculated in accordance with GAAP: Year Ended January 31, 2023 2022 2021 (in thousands) Net cash provided by operating activities $ 1,290,262 $ 1,605,266 $ 1,471,177 Less: purchases of property and equipment (103,826) (132,590) (79,972) Free cash flow (non-GAAP) $ 1,186,436 $ 1,472,676 $ 1,391,205 Net cash used in investing activities $ (318,322) $ (2,859,097) $ (1,562,420) Net cash (used in) provided by financing activities $ (936,942) $ 34,068 $ 2,050,277 Components of Results of Operations Revenue We derive our revenue from subscription agreements with customers for access to our unified communications and collaboration platform.
The increase in general and administrative expense was primarily due to an increase of $72.2 million in personnel-related expenses mainly driven by additional headcount, which includes a $21.1 million increase in stock-based compensation expense; an increase of $66.9 million in litigation settlement expense, net of amounts estimated to be covered by insurance; an increase of $44.1 million related to professional services composed primarily of legal and other consulting fees; and an increase of $28.8 million related to subscription to software-based services.
The increase in general and administrative expense was primarily due to an increase of $193.2 million in personnel-related expenses, which includes a $151.7 million increase in stock-based compensation expense, mainly driven by additional headcount and expanded equity programs, and an increase of $11.4 million related to subscription to software-based services offset by a decrease of $71.1 million in litigation settlement expense, net of amounts estimated to be covered by insurance and a decrease of $24.1 million related to professional services composed primarily of legal and other consulting fees.
Free Cash Flow and Adjusted Free Cash Flow We define FCF as GAAP net cash provided by operating activities less purchases of property and equipment. We define Adjusted FCF as FCF plus litigation settlement payments, net.
Free Cash Flow 51 Table of Contents We define FCF as GAAP net cash provided by operating activities less purchases of property and equipment.
We believe that of our significant accounting policies, which are described in Note 1 “Summary of Business and Significant Accounting Policies” to our consolidated financial statements, the following critical estimates involve a greater degree of judgment and complexity. Revenue Recognition We derive our revenue primarily from subscription agreements with customers for access to our unified communications platform and services.
We believe that of our significant accounting policies, which are described in Note 1 “Summary of Business and Significant Accounting Policies” to our consolidated financial statements, the following critical estimates involve a greater degree of judgment and complexity.
Net cash used in investing activities of $1,562.4 million for the fiscal year ended January 31, 2021 was primarily due to net purchases of marketable securities of $1,438.8 million, purchases of property and equipment of $80.0 million, cash paid for acquisition, net of cash acquired, of $26.5 million, purchases of strategic investments of $13.0 million, and purchases of intangible assets of $5.8 million.
Investing Activities Net cash used in investing activities of $318.3 million for the fiscal year ended January 31, 2023 was primarily due to cash paid for acquisition, net of cash acquired, of $120.6 million, purchases of property and equipment of $103.8 million, purchases of strategic investments of $69.1 million, net purchases of marketable securities of $13.9 million, and purchases of intangible assets of $11.3 million.
Gains on Strategic Investments, Net Year Ended January 31, 2022 2021 $ Change % Change (in thousands, except percentages) Gains on strategic investments, net $ 43,761 $ 2,538 $ 41,223 1,624 % Gains on strategic investments, net recognized during the fiscal year ended January 31, 2022 was driven by $49.9 million unrealized gains recognized on our privately held equity securities, partially offset by $6.2 million unrealized losses recognized on our publicly traded equity securities.
Gains on Strategic Investments, Net Year Ended January 31, 2023 2022 $ Change % Change (in thousands, except percentages) (Losses) Gains on strategic investments, net $ (37,571) $ 43,761 $ 81,332 (185.9) % Losses on strategic investments, net recognized during the fiscal year ended January 31, 2023 were primarily driven by $36.8 million of unrealized losses recognized on our publicly traded equity securities, while gains on strategic investments, net recognized during the fiscal year ended January 31, 2022 were driven by $49.9 million of unrealized gains recognized on our privately held equity securities, partially offset by $6.2 million unrealized losses recognized on our publicly traded equity securities.
We believe that as more developers and other third parties use our platform to integrate major third-party applications, we will become the ubiquitous platform for communications. We will need to expend additional resources to continue introducing new products, features, and functionality, and supporting the efforts of third parties to enhance the value of our platform with their own applications.
We will need to expend additional resources to continue introducing new products, features, and functionality, and supporting the efforts of third parties to enhance the value of our platform with their own applications.
Our operating results and growth prospects will depend, in part, on our ability to attract new customers. While we believe there is a significant market opportunity that our platform addresses, it is difficult to predict customer adoption rates or the future growth rate and size of the market for our platform.
While we believe there is a significant market 49 Table of Contents opportunity that our platform addresses, it is difficult to predict customer adoption rates or the future growth rate and size of the market for our platform.
The increase in sales and marketing expense was primarily due to higher personnel-related expenses of $308.2 million, mainly driven by additional headcount in our sales force to support the increased demand , which includes an increase of $82.9 million in stock-based compensation expense; and an increase of $73.0 million in amortization of deferred contract acquisition costs driven by our increase in revenue.
The increase in sales and marketing expense was primarily due to higher personnel-related expenses of $471.4 million, which includes an increase of $303.1 million in stock based compensation, mainly driven by additional headcount and expanded equity programs, and an increase of $82.1 million in amortization of deferred contract acquisition costs.
Operating Expenses Research and Development Year Ended January 31, 2022 2021 $ Change % Change (in thousands, except percentages) Research and development $ 362,990 $ 164,080 $ 198,910 121 % Research and development expense for the fiscal year ended January 31, 2022 increased by $198.9 million, or 121%, compared to the fiscal year ended January 31, 2021.
Operating Expenses Research and Development Year Ended January 31, 2023 2022 $ Change % Change (in thousands, except percentages) Research and development $ 774,059 $ 362,990 $ 411,069 113.2 % Research and development expense for the fiscal year ended January 31, 2023 increased by $411.1 million, or 113.2%, compared to the fiscal year ended January 31, 2022.
General and Administrative General and administrative expenses primarily consist of personnel-related expenses associated with our finance and legal organizations; professional fees for external legal, accounting, and other consulting services; expected credit losses; insurance; indirect taxes; litigation settlements, and allocated overhead.
Sales and marketing expenses also include credit card processing fees related to sales and amortization of deferred contract acquisition costs. 52 Table of Contents General and Administrative General and administrative expenses primarily consist of personnel-related expenses associated with our finance and legal organizations; professional fees for external legal, accounting, and other consulting services; expected credit losses; insurance; certain indirect taxes; litigation settlements; corporate security and regulatory expenses; and allocated overhead.
The remainder of the increase was primarily attributable to an increase of $11.6 million in allocated overhead expenses, and an increase of $6.8 million related to subscription to software-based services. 51 Table of Contents Sales and Marketing Year Ended January 31, 2022 2021 $ Change % Change (in thousands, except percentages) Sales and marketing $ 1,135,959 $ 684,904 $ 451,055 66 % Sales and marketing expense for the fiscal year ended January 31, 2022 increased by $451.1 million, or 66%, compared to the fiscal year ended January 31, 2021.
The remainder of the increase was primarily attributable to an increase of $21.6 million in allocated overhead expenses. 55 Table of Contents Sales and Marketing Year Ended January 31, 2023 2022 $ Change % Change (in thousands, except percentages) Sales and marketing $ 1,696,590 $ 1,135,959 $ 560,631 49.4 % Sales and marketing expense for the fiscal year ended January 31, 2023 increased by $560.6 million, or 49.4%, compared to the fiscal year ended January 31, 2022.
General and Administrative Year Ended January 31, 2022 2021 $ Change % Change (in thousands, except percentages) General and administrative $ 482,770 $ 320,547 $ 162,223 51 % General and administrative expense for the fiscal year ended January 31, 2022 increased by $162.2 million, or 51%, compared to the fiscal year ended January 31, 2021.
General and Administrative Year Ended January 31, 2023 2022 $ Change % Change (in thousands, except percentages) General and administrative $ 576,431 $ 482,770 $ 93,661 19.4 % General and administrative expense for the fiscal year ended January 31, 2023 increased by $93.7 million, or 19.4%, compared to the fiscal year ended January 31, 2022.
Other sales and marketing expenses include advertising and promotional events to promote our brand, such as awareness programs, digital programs, public relations, tradeshows, and our user conference, Zoomtopia, and allocated overhead. Sales and marketing expenses also include credit card processing fees related to sales and amortization of deferred contract acquisition costs.
Sales and Marketing Sales and marketing expenses primarily consist of personnel-related expenses directly associated with our sales and marketing organization. Other sales and marketing expenses include advertising and promotional events to promote our brand, such as awareness programs, digital programs, public relations, tradeshows, and our user conference, Zoomtopia, and allocated overhead.
Other (Expense) Income, Net Year Ended January 31, 2022 2021 $ Change % Change (in thousands, except percentages) Other (expense) income, net $ (5,720) $ 15,648 $ (21,368) (137) % Other (expense) income, net for the fiscal year ended January 31, 2022 decreased by $21.4 million, or 137%, compared to the fiscal year ended January 31, 2021.
Other (Expense) Income, Net Year Ended January 31, 2023 2022 $ Change % Change (in thousands, except percentages) Other income (expense), net $ 41,418 $ (5,720) $ 47,138 (824.1) % Other income (expense), net for the fiscal year ended January 31, 2023 increased by $47.1 million, or 824.1%, compared to the fiscal year ended January 31, 2022.
We had net income of $1,375.6 million, $672.3 million, and $25.3 million for the fiscal years ended January 31, 2022, 2021, and 2020, respectively.
We had net income of $103.7 million, $1,375.6 million, and $672.3 million for the fiscal years ended January 31, 2023, 2022, and 2021, respectively. Net cash provided by operating activities was $1,290.3 million, $1,605.3 million, and $1,471.2 million for the fiscal years ended January 31, 2023, 2022, and 2021, respectively.
Therefore, the recent increase in usage of our platform has adversely affected, and may continue to adversely affect, our gross margin. In addition, there is no assurance that we will experience an increase in paid hosts or that new or existing users will continue to utilize our service after the COVID-19 pandemic has tapered globally.
There is no assurance that we will experience an increase in paid hosts or that new or existing users will continue to utilize our service after the COVID-19 pandemic has tapered globally. As reported in prior periods we experienced significant revenue growth.
Governments have instituted lockdown or other similar measures to slow infection rates. Many organizations have resorted to mandating employees to work from home, which has resulted in these organizations seeking out video communication solutions like ours to keep employees as productive as possible, even while working from home.
During the onset of the COVID-19 pandemic, many organizations resorted to mandating employees to work from home, which resulted in these organizations seeking out video communication solutions like ours to keep employees as productive as possible, even while working from home.
Amortization is recognized on a straight-line basis commensurate with the pattern of revenue recognition. Allowance for Credit Losses The allowance for credit losses is based on management’s estimate for expected credit losses for outstanding accounts receivable.
Amortization is recognized on a straight-line basis commensurate with the pattern of revenue recognition.
We also provide other services, which include professional services, consulting services, and online event hosting, which were immaterial to our consolidated financial statements. Revenue is recognized when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration that we expect to receive in exchange for these services.
Revenue Recognition We derive our revenue primarily from subscription agreements with customers for access to our unified communications and collaboration platform and services. We also provide other services, which include professional services, consulting services, and online event hosting, which were immaterial to our consolidated financial statements. Revenue is recognized when a customer obtains control of promised services.
Cost of Revenue Year Ended January 31, 2022 2021 $ Change % Change (in thousands, except percentages) Cost of revenue $ 1,054,554 $ 821,989 $ 232,565 28 % Gross profit 3,045,310 1,829,379 1,215,931 66 % Gross margin 74 % 69 % Cost of revenue for the fiscal year ended January 31, 2022 increased by $232.6 million, or 28%, compared to the fiscal year ended January 31, 2021.
Cost of Revenue Year Ended January 31, 2023 2022 $ Change % Change (in thousands, except percentages) Cost of revenue $ 1,100,451 $ 1,054,554 $ 45,897 4.4 % Gross profit 3,292,509 3,045,310 247,199 8.1 % Gross margin 74.9 % 74.3 % Cost of revenue for the fiscal year ended January 31, 2023 increased by $45.9 million, or 4.4%, compared to the fiscal year ended January 31, 2022.
As a result, an expected dividend yield of zero percent was used. 56 Table of Contents Strategic Investments Accounting for strategic investments in privately held debt and equity securities in which we do not have a controlling interest or significant influence requires us to make significant estimates and assumptions.
We have not recorded any impairment charges during the fiscal years presented. Strategic Investments Accounting for strategic investments in privately held debt and equity securities in which we do not have a controlling interest or significant influence requires us to make significant estimates and assumptions.
An end-to-end encryption (“E2EE”) option is available to free and paid Zoom customers globally who host meetings with up to 200 participants. Zoom’s E2EE uses the same AES-256-GCM encryption that secures Zoom meetings by default, but with Zoom’s E2EE, the meeting host generates encryption keys and uses public key cryptography to distribute these keys to the other meeting participants.
Zoom’s E2EE uses the same AES-256-GCM encryption that secures Zoom meetings by default, but with Zoom’s E2EE, the meeting host, or originating caller in the case of Zoom Phone, as opposed to Zoom's servers, generates encryption keys and uses public key cryptography to distribute these keys to the other meeting participants or call recipient.
The increase was primarily due to higher personnel-related expenses of $182.1 million mainly driven by additional headcount, which includes a $62.8 million increase in stock-based compensation expense.
The increase was primarily due to higher personnel-related expenses of $388.4 million, which includes a $248.7 million increase in stock-based compensation expense, mainly driven by the increased headcount and expanded equity programs, and an increase of $139.7 million in non-stock based related personal costs due to a 67% increase in headcount.
Our Basic offering is free and gives hosts access to Zoom Meetings with core features but with the limitation that meetings with more than two endpoints time-out at 40 minutes. Our paid offerings include our Pro, Business, Enterprise, Education, and Healthcare plans, which provide incremental features and functionality, such as different participant limits, administrative controls, and reporting.
Our Zoom One Basic offering is free and gives hosts access to Zoom Meetings with core features but with the limitation that meetings time-out at 40 minutes. Our core paid offerings are available with our Zoom One bundles: Zoom One Pro, Business, Business Plus, Enterprise, and Enterprise Plus.
As of January 31, 2022, 2021, and 2020, we had approximately 191,000, 141,100, and 54,600 Enterprise customers. Non-GAAP Financial Measures In addition to our results determined in accordance with GAAP, we believe that free cash flow (“FCF”) and adjusted free cash flow (“Adjusted FCF”), non-GAAP financial measures, are useful in evaluating our liquidity.
These customers are a subset of Enterprise customers. Non-GAAP Financial Measures In addition to our results determined in accordance with GAAP, we believe that free cash flow (“FCF”) is a non-GAAP financial measure that is useful in evaluating our liquidity.
Net cash provided by operating activities was $1,605.3 million for the fiscal year ended January 31, 2022, compared to $1,471.2 million for the fiscal year ended January 31, 2021.
Net cash provided by operating activities was $1,290.3 million for the fiscal year ended January 31, 2023, compared to $1,605.3 million for the fiscal year ended January 31, 2022. The decrease in operating cash flow was mainly driven by higher income tax payments and lower increases in deferred revenue.
The remaining increase was primarily due to an increase of $99.0 million in personnel-related expenses mainly driven by additional headcount, which includes a $34.7 million increase in stock-based compensation expense; an increase of $26.6 million related to subscription to software-based services; an increase of $9.3 million in allocated overhead expenses; and an increase of $8.6 million in professional services mainly for customer support.
The increase was primarily due to an increase of $147.9 million in personnel-related expenses, which includes an increase of $104.9 million in stock-based compensation expense, mainly driven by additional headcount and expanded equity programs, an increase of $29.8 million related to subscription to software-based services, and an increase in allocated overhead of $8.7 million , partially offset by a decrease of $144.6 million in costs mainly driven by the net impact of the transition from third-party cloud hosting to internal data centers and cloud optimization.
For example, we have recently introduced a number of product enhancements, including new features for Zoom Phone, Zoom Meetings, and Zoom Webinars. We addressed new work-from-home realities with the introduction of Zoom for Home, a solution designed for the home office that combines Zoom software enhancements with compatible hardware.
We addressed new work-from-home realities with the introduction of Zoom for Home, a solution designed for the home office that combines Zoom software enhancements with compatible hardware. We also deliver Zoom Phone calling plans in more than 45 countries and territories as of January 31, 2023.
These customers are a subset of the customers with more than 10 employees. Number of Enterprise Customers We believe that our ability to increase the number of Enterprise customers is an indicator of our potential future business opportunities, the growth of our business, and an indicator of our market penetration.
Key Business Metrics We review the following key business metrics to measure our performance, identify trends, formulate financial projections, and make strategic decisions. Number of Enterprise Customers We believe that our ability to increase the number of Enterprise customers is an indicator of our potential future business opportunities, the growth of our business, and an indicator of our market penetration.
Our 24 co-located data centers worldwide and the public cloud enable us to provide both high-quality and high-definition, real-time video to our customers even in low-bandwidth environments. We generate revenue from the sale of subscriptions to our unified communications platform.
We strive to live up to the trust our customers place in us by delivering a communications solution while prioritizing their privacy and security. Our 28 co-located data centers worldwide and the public cloud in conjunction with our proprietary adaptive rate codec enable us to provide both high-quality and high-definition, real-time video to our customers even in low-bandwidth environments.
We also expanded our geographic footprint with Zoom Phone availability to more than 45 countries and territories during fiscal year 2022. Third-party developers are also a key component of our strategy for platform innovation to make it easier for customers and developers to extend our product portfolio with new functionalities.
Third-party developers are also a key component of our strategy for platform innovation to make it easier for customers and developers to extend our product portfolio with new functionalities. We believe that as more developers and other third parties use our platform to integrate major third-party applications, we will become the ubiquitous platform for communications and collaboration.
Critical Accounting Estimates Critical accounting estimates are those accounting estimates that require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. These estimates are developed based on historical experience and various other assumptions that we believe to be reasonable under the circumstances.
These estimates are developed based on historical experience and various other assumptions that we believe to be reasonable under the circumstances.
For Zoom Phone, plans include Zoom Phone Pro, which provides extension-to-extension calling or can be used with the Bring Your Own Carrier model wherein the customer connects Zoom Phone to an existing carrier. We also offer Regional Unlimited and Regional Metered calling plans in three specific markets (United States/Canada, United Kingdom/Ireland, and Australia/New Zealand).
We also offer vertical-specific plans for Education, Healthcare and Government which provide incremental features and functionality, such as different participant limits, administrative controls, and reporting. 48 Table of Contents For Zoom Phone, plans include Zoom Phone Pro, which provides extension-to-extension calling or can be used with the Bring Your Own Carrier model wherein the customer connects Zoom Phone to an existing carrier.
Subscription revenue is driven primarily by the number of paid hosts as well as purchases of additional products, including Zoom Rooms, Zoom Webinars, Zoom Phone, Zoom Events, and Hardware-as-a-Service (“HaaS”) for rooms and phones. A host is any user of our unified communications platform who initiates a Zoom Meeting and invites one or more participants to join that meeting.
A host is any user of our unified communications and collaboration platform who initiates a Zoom Meeting and invites one or more participants to join that meeting.
Expected timing of those payments are as follows: Payments Due by Period Total Less Than 1 Year 1 – 3 Years 3 – 5 Years More Than 5 Years (in thousands) Operating lease obligations $ 117,763 $ 24,490 $ 47,787 $ 30,171 $ 15,315 Non-cancelable purchase obligations 386,594 227,182 159,412 — — Total contractual obligations $ 504,357 $ 251,672 $ 207,199 $ 30,171 $ 15,315 The contractual commitment amounts in the table above are associated with agreements that are enforceable and legally binding.
Expected timing of those payments are as follows: Payments Due by Period Total Less Than 1 Year 1 – 3 Years 3 – 5 Years More Than 5 Years (in thousands) Operating lease obligations $ 105,176 $ 25,886 $ 48,706 $ 22,580 $ 8,004 Non-cancelable purchase obligations 298,855 191,902 104,253 2,700 — Total contractual obligations $ 404,031 $ 217,788 $ 152,959 $ 25,280 $ 8,004 The contractual commitment amounts in the table above are associated with agreements that are enforceable and legally binding.
Our revenue from the rest of world (APAC and EMEA) represented 33%, 31%, and 19% of our total revenue for the fiscal years ended January 31, 2022, 2021, and 2020, respectively. We plan to add local sales support in further select international markets over time.
The decrease in revenue from the rest of the world in the fiscal year ended January 31, 2023 was due to the impact of the strengthening of the U.S dollar along with macroeconomic conditions in the EMEA region. We plan to add local sales support in further select international markets over time.
The remaining increase was primarily due to an increase of $104.4 million in marketing and sales event-related costs mainly due to an increase in digital advertising programs, an increase of $19.1 million in credit card processing fees as a result of increased online payments, an increase of $17.1 million in allocated overhead expenses, and an increase of $8.4 million related to subscription to software-based services.
The remaining increase was primarily due to an increase of $76.9 million in marketing and sales event-related costs mainly due to an increase in awareness, social media and digital programs, and an increase of $14.9 million in allocated overhead expenses.
In response to the COVID-19 pandemic, we have temporarily removed the 40-minute time limit for meetings with more than two endpoints from our free Basic accounts for more than 125,000 K-12 school domains worldwide . We also experienced a significant increase in usage from paid users as more companies utilized our platform to allow their employees to work remotely.
The increase in gross margin was mainly due to increased efficiencies as we expanded our internal data center capacity; in addition, during the current fiscal year, we reinstated the 40-minute time limit for meetings with more than two endpoints from our free Basic accounts for more than 125,000 K-12 school domains worldwide, which was temporarily lifted at the onset of the COVID-19 pandemic.
Stock Repurchase Program In February 2022, our board of directors authorized a stock repurchase program of up to $1.0 billion of our Class A common, which expires in February 2024.
Stock Repurchase Program In February 2022, our board of directors authorized a stock repurchase program of up to $1.0 billion of our Class A common, which was completed in December 2022. See Note 10 "Stockholders’ Equity and Equity Incentive Plans" of this Annual Report on Form 10-K for additional information related to share repurchases.
Expansion of Zoom Across Existing Enterprise Customers Our net dollar expansion rate for Enterprise customers is calculated the same way as discussed above by applying the ARR specifically from Enterprise customers. We define Enterprise customers as distinct business units who have been engaged by either our direct sales team, resellers, or strategic partners.
We define Enterprise customers as distinct business units who have been engaged by either our direct sales team, resellers, or strategic partners. Revenue from Enterprise customers represented 54.8%, 47.6% and 45.6% of total revenue for the year ending January 31, 2023, 2022 and 2021, respectively.
We connect people through our core unified communications offering, which frictionlessly brings together video, phone, chat, and webinars, and enables meaningful experiences across disparate devices and locations. Our Developer Platform enables customers, developers, and service providers to easily build apps and integrations on top of Zoom’s industry-leading video communications platform, with opportunities for global discovery and distribution.
Our Developer Platform enables customers, developers, and service providers to easily build apps and integrations on top of Zoom’s industry-leading video communications and collaboration platform, with opportunities for global discovery and distribution. Our virtual and hybrid event solutions allow users to seamlessly create and manage engaging events. We believe that face-to-face communications build greater empathy and trust.
The decrease was primarily attributable to a decrease of $19.2 million related to changes in foreign currency exchange rates. 52 Table of Contents (Benefit from) Provision for Income Taxes Year Ended January 31, 2022 2021 $ Change % Change (in thousands, except percentages) (Benefit from) provision for income taxes $ (274,007) $ 5,718 $ (279,725) (4,892) % Benefit from income taxes for the fiscal year ended January 31, 2022 was $274.0 million, compared to a provision for income taxes of $5.7 million the fiscal year ended January 31, 2021.
The increase was mainly driven by an increase of $45.6 million in investment yield. 56 Table of Contents Provision for (Benefit from) Income Taxes Year Ended January 31, 2023 2022 $ Change % Change (in thousands, except percentages) Provision for (benefit from) income taxes $ 145,565 $ (274,007) $ 419,572 (153.1) % Provision for income taxes for the fiscal year ended January 31, 2023 was $145.6 million, compared to a benefit from income taxes of $274.0 million the fiscal year ended January 31, 2022.
Our trailing 12-month net dollar expansion rate for Enterprise customers was 130% as of January 31, 2022, and greater than 130% as of January 31, 2021 and 2020, respectively. Innovation and Expansion of Our Platform We continue to invest resources to enhance the capabilities of our platform.
Our trailing 12-month net dollar expansion rate for Enterprise customers was 115%, 130%, and 152% as of January 31, 2023, 2022 and 2021, respectively. Retention of Online Customers In addition to Enterprise customers, we also have a significant number of customers that subscribe to our services directly through our website (“Online customers”).
Net cash provided by financing activities of $2,050.3 million for the fiscal year ended January 31, 2021 was due to proceeds from our follow-on offering, net of underwriting discounts and commissions and other offering costs, of $1,979.2 million , proceeds from issuance of common stock pursuant to our ESPP of $38.4 million, proceeds from the exercise of stock options of $28.6 million, and proceeds from international employee stock sales to be remitted to employees and tax authorities of $4.1 million.
Financing Activities Net cash used in financing activities of $936.9 million for the fiscal year ended January 31, 2023 was primarily due to cash paid for repurchases of common stock of $1.0 billion, offset by proceeds from issuance of common stock pursuant to our employee stock purchase plan (“ESPP”) of $53.7 million and proceeds from the exercise of stock options of $8.6 million.
As a result, the increase in revenue was primarily due to subscription services provided to existing customers, which accounted for approximately 70% of the increase, and to subscription services provided to new customers, which accounted for approximately 30% of the increase.
The increase in revenue was due to a 23.6% increase in revenue from subscription services provided to Enterprise customers, of which 87.6% and 12.4% were from existing and new customers, respectively. This increase was partially offset by a 7.7% decline in revenue from subscription services provided to Online customers.
T he program may be modified, suspended or discontinued at any time. As of March 6, 2022, $997.1 million of the repurchase authorization remained available. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated by the SEC under the Securities Act.
Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated by the SEC under the Securities Act. 58 Table of Contents Critical Accounting Estimates Critical accounting estimates are those accounting estimates that require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Moreover, the tapering of the COVID-19 pandemic, particularly as vaccines become widely available and distributed, may result in a decline in paid hosts and users once individuals are no longer working or attending school from home. Key Factors Affecting Our Performance Acquiring New Customers We are focused on continuing to grow the number of customers that use our platform.
Key Factors Affecting Our Performance Acquiring New Customers We are focused on continuing to grow the number of customers that use our platform. Our operating results and growth prospects will depend, in part, on our ability to attract new customers.
It also enables event hosts to provide ticketing and registration for attendees, and the ability to track these activities. International Expansion Our platform addresses the communications needs of users worldwide, and we see international expansion as a major opportunity.
International Opportunity Our platform addresses the communications and collaboration needs of users worldwide, and we see international expansion as a major opportunity. Our revenue from the rest of world (APAC and EMEA) represented 30%, 33%, and 31% of our total revenue for the fiscal years ended January 31, 2023, 2022, and 2021, respectively.
Removed
Our virtual and hybrid event solutions allow users to seamlessly create and manage engaging events. We believe that face-to-face communications build greater empathy and trust. We strive to live up to the trust our customers place in us by delivering a communications solution while prioritizing their privacy and security.

… 79 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+1 added−0 removed3 unchanged
Biggest changeOur expenses are generally denominated in the currencies of the jurisdictions in which we conduct our operations, which are primarily in the United States, China, Europe, and Australia. Our results of current and future operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates.
Biggest changeOur expenses are generally denominated in the currencies of the jurisdictions in which we conduct our operations, which are primarily in Australia, China, Europe and the United States. Our results of current and future operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates.
The effect of a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have had a material impact on our historical consolidated financial statements for the fiscal years ended January 31, 2022, 2021, and 2020.
The effect of a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have had a material impact on our historical consolidated financial statements for the fiscal years ended January 31, 2023, 2022, and 2021.
Our 57 Table of Contents marketable securities generally consist of high-grade commercial paper, agency bonds, corporate and other debt securities, U.S. government agency securities, and treasury bills. The cash and cash equivalents and marketable securities are held for working capital purposes. Such interest-earning instruments carry a degree of interest rate risk.
Our marketable securities generally consist of high-grade commercial paper, agency bonds, corporate and other debt securities, U.S. government agency securities, and treasury bills. The cash and cash equivalents and marketable securities are held for working capital purposes. Such interest-earning instruments carry a degree of interest rate risk.
Interest Rate Risk We had cash and cash equivalents of $1.1 billion and marketable securities of $4.4 billion as of January 31, 2022. Cash and cash equivalents consist of bank deposits, money market funds, high-grade commercial paper, and agency bonds.
Interest Rate Risk We had cash and cash equivalents of $1.1 billion and marketable securities of $4.3 billion as of January 31, 2023. Cash and cash equivalents consist of bank deposits, money market funds and high-grade commercial paper, and agency bonds.
A hypothetical 10% change in interest rates during any of the periods presented would not have had a material impact on our historical consolidated financial statements for the fiscal years ended January 31, 2022, 2021, and 2020. 58 Table of Contents
A hypothetical 10% change in interest rates during any of the periods presented would not have had a material impact on our historical consolidated financial statements for the fiscal years ended January 31, 2023, 2022, and 2021. 61 Table of Contents
Item 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK Foreign Currency and Exchange Risk The vast majority of our cash generated from revenue is denominated in U.S. dollars, with a small amount denominated in foreign currencies.
Item 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK Foreign Currency and Exchange Risk The majority of our cash generated from revenue is denominated in U.S. dollars, with a portion of our revenue from amounts denominated in foreign currencies.
Added
For the fiscal year ending January 31, 2023, 2022 and 2021, 20.0% , 22.6% and 20.2% of our revenue, respectively and 10.8%, 60 Table of Contents 16.8% and 11.9% of our expenses, respectively were denominated in currencies other than the U.S. dollar.

Other ZM 10-K year-over-year comparisons