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What changed in Zoom Communications, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Zoom Communications, Inc.'s 2023 and 2024 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 2024 report.

+491 added−460 removedSource: 10-K (2024-03-04) vs 10-K (2023-03-03)

Top changes in Zoom Communications, Inc.'s 2024 10-K

491 paragraphs added · 460 removed · 365 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

50 edited+30 added−23 removed38 unchanged
Biggest changeOther 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.
Biggest changeAvailable 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. The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information that we file with the SEC electronically.
Zoom Essential Apps, launched January 2023, provides access to a curated list of apps at no cost for 1 year after app activation for Zoom One Pro, Business and Business Plus users to enhance their Zoom experience such as through visual agendas, automated tools to keep meetings on track and interactive activities to add energy and fun to meetings .
Zoom Essential Apps, launched January 2023, provides access to a curated list of apps at no cost for one year after app activation for Zoom One Pro, Business and Business Plus users to enhance their Zoom experience such as through visual agendas, automated tools to keep meetings on track and interactive activities to add energy and fun to meetings.
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.
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, 2024.
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.
The App Marketplace features third-party integrations connecting Zoom with 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.
Through 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”).
Through the Zoom Developer ecosystem, we enable customers and their developers to build their own solutions with our underlying platform technology, seamlessly embed our 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”).
We use these channels, as well as social media, including our blog (blog.zoom.us), our Twitter account (@zoom_us), our LinkedIn page (linkedin.com/company/zoom-video-communications), our Instagram page (instagram.com/zoom), our TikTok page (tiktok.com/@zoom), and our Facebook page (facebook.com/zoomvideocommunications), to communicate with investors and the public about our Company, our products and services, and other matters.
We use these channels, as well as social media, including our blog (blog.zoom.us), our X (formerly Twitter) account (@zoom_us), our LinkedIn page (linkedin.com/company/zoom-video-communications), our Instagram page (instagram.com/zoom), our TikTok page (tiktok.com/@zoom), and our Facebook page (facebook.com/zoomvideocommunications), to communicate with investors and the public about Zoom, our products and services, and other matters.
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.
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, as well as with software providers, including Palo Alto Networks, Zendesk, and Box.
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.
By attracting free users to our platform, we promote usage that allows them 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.
We provide happiness to our customers by giving them an experience that delights them. We respond to customer needs with action to drive positive user experiences.
We deliver happiness to our customers by giving them an experience that delights them. We respond to customer needs with action to drive positive user experiences.
We announce material information to the public through a variety of means, including filings with the SEC, press releases, public conference calls, our website (www.zoom.com) and the investor relations section of our website (investors.zoom.us).
We announce material information to the public through a variety of means, including filings with the SEC, press releases, public conference calls, our website (www.zoom.com) and the investor relations section of our website 13 Table of Contents (investors.zoom.us).
As of January 31, 2023, there are more than 90 countries and territories included in the Provider Exchange program.
As of January 31, 2024, there are more than 90 countries and territories included in the Provider Exchange program.
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. Other trade names, trademarks, and service marks used in this Annual Report on Form 10-K are the property of their respective owners.
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.
Developer Ecosystem 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, and chat, or integrate 10 Table of Contents Zoom’s core technology into their products and services, with opportunities for co-marketing, discovery and distribution.
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 “Risks Related to Our Intellectual Property” under “Item 1A - Risk Factors.” Government Regulation Our business activities are subject to various federal, state, local, and foreign laws, rules, and regulations.
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.
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.
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.
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. Zoom Meetings currently offers translated captions in 34 languages.
Therefore, we encourage investors, the media, and others interested in our Company to review the information we make public in these locations, as such information could be deemed to be material information.
Therefore, we encourage investors, the media, and others interested in Zoom to review the information we make public in these locations, as such information could be deemed to be material information.
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.
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.
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.
Zoom Webinars Zoom Webinars support interactive video presentations to large audiences from almost anywhere in the world and from many devices. Zoom Webinars can scale up to 100,000 attendees and 1,000 interactive video panelists. With webinars, customers have control over the video viewing experience and attendees join to listen, learn and interact using chat, Q&A, live polling and more.
Zoom Sessions Zoom Sessions became available in January 2023, allowing customers to use the signature features of Zoom Events for a single-session event, including branded registration and event pages, live polling, surveys and chat, advanced reporting and the ability to organize upcoming and past events in one place.
Zoom Sessions Zoom Sessions allows customers to use the signature features of Zoom Events for a single-session event, including branded registration and event pages, live polling, surveys and chat, advanced reporting and the ability to organize upcoming and past events in one place.
Available stand-alone, or as an optional add-on to Zoom Meetings, Zoom Phone is a core component of our modern UCaaS strategy that enables customers to replace their existing PBX solution and consolidate all of their business communications and collaboration requirements onto Zoom.
Available stand-alone, or as an optional add-on to Zoom Meetings, Zoom Phone is a core component of our modern UCaaS strategy that enables customers to replace their existing PBX solution and consolidate all of their business communications and collaboration requirements onto Zoom. As of January 31, 2024, Zoom Phone provided native PSTN connectivity in more than 45 countries and territories.
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.
We believe maintaining a flexible working environment for our employees is a key priority. 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.
Our channel team coordinates the activities of resellers and strategic partners to build a strong ecosystem that broadens our reach.
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.
DEI also represents our intentional effort to create an inclusive environment of the brightest minds from a broad set of backgrounds in order to create the most innovative solutions for our customers.
Diversity, Equity, and Inclusion Diversity, equity, and inclusion (“DEI”) at Zoom is an embodiment of our core value of Care. DEI also represents our intentional effort to create an inclusive environment of the brightest minds from a broad set of backgrounds in order to create the most innovative solutions for our customers.
Hybrid connectivity is also supported, allowing customers to mix native Zoom Phone calling plans and third-party voice circuits. This unique capability allows customers to enjoy all of the benefits and features of Zoom Phone while keeping their existing service provider contracts, phone numbers, and calling rates with their preferred carrier of record.
This unique capability allows customers to enjoy all of the benefits and features of Zoom Phone while keeping their existing service provider contracts, phone numbers, and calling rates with their preferred carrier of record.
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.
Zoom Phone Zoom Phone is a cloud phone system for businesses that provides 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 provides inbound and outbound calling via its support for native connectivity to the public switched telephone network (“PSTN”).
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.
Employee Experience 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 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.
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.
It became available in January, 2023. 9 Table of Contents Zoom AI Zoom IQ for Sales Zoom IQ for Sales is conversation intelligence software for Zoom Meetings and Zoom Phone, which provides sales teams with meaningful and actionable insights from their customer interactions to improve seller performance and enhance customer experiences by merging call analytics with CRM data.
Zoom Revenue Accelerator Zoom Revenue Accelerator is conversation intelligence software for Zoom Meetings and Zoom Phone, which provides sales teams with meaningful and actionable insights from their customer interactions to improve seller performance and enhance customer experiences by reconciling call analytics with CRM data.
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.
For more information on the potential impacts of government regulations affecting our business, see “Risks Related to Laws and Regulations” under “Item 1A - Risk Factors.” Human Capital As of January 31, 2024, we had 7,420 full-time employees. Of these employees, 3,797 are in the United States and 3,623 are in our international locations.
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.
We care for our customers, company, communities, teammates, selves 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. Additionally, it was named to the Variety500, an award that recognizes the most influential business leaders shaping the industry.
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.
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.
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.
None of our U.S. employees are represented by a labor union. Employees in two of our non-U.S. subsidiaries have the benefit of a collective bargaining agreement and are represented by a workers’ council.
Users can reserve a work location time and duration in advance or on-demand by selecting a location on a floor plan. Administrators can learn more about the utilization of their workspaces to support planning and optimization of their locations. Zoom Events Zoom Event s Zoom Events provide businesses with a virtual event management solution powered by the Zoom platform.
Users can reserve a work location time and duration in advance or on-demand by selecting a location on a floor plan. Administrators can learn more about the utilization of their workspaces to support planning and optimization of their locations. Zoom Docs Zoom Docs is a dedicated, modular, AI-powered workspace for efficient, dynamic hybrid collaboration.
With users, offices, and data centers strategically located around the world, we are poised to reach new customers globally. Our platform is intuitively designed such that localization requirements are minimal.
With users, offices, and data centers strategically located around the world, we are poised to reach new customers globally. Our platform is intuitively designed such that localization requirements are minimal. For example, our platform works without intensive translation requirements with only a few language adjustments to our user interface and support systems. • Expand within existing customers.
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.
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. Our core areas of focus will be bolstering innovation on products in the following categories: employee experience, customer experience, core communications and generative AI. • Drive international expansion.
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.
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. Hybrid connectivity is also supported, allowing customers to mix native Zoom Phone calling plans and third-party voice circuits.
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.
Marketing Our marketing team’s primary objective is to create preference for our brand by leveraging our brand recognition, enhancing brand perception, and engaging our users with virtual events, content, social media, and customer advisory councils. We implement targeted online and out-of-home advertising. Our events strategy is based on a combination of online, in-person and hybrid approaches.
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.
Zoom was also named to Fortune’s 2023 Most Admired Companies list for the third year in a row, and Fast Company’s 2022 Next Big Things in Tech list highlighted Zoom Events. Our Growth Strategy We focus on the following elements of our strategy to drive our growth: • Keep our existing customers happy.
Zoom Whiteboard is a persistent collaboration tool that works across Zoom Meetings, Zoom Team Chat, Zoom Rooms for Touch, Zoom desktop and mobile apps, and web browsers.
Zoom Whiteboard is a persistent collaboration tool that works across Zoom Meetings, Zoom Team Chat, Zoom Rooms for Touch, Zoom desktop and mobile apps, and web browsers. Whiteboards can be shared with internal and external participants. Zoom Notes Zoom Notes is a new workspace to create and collaborate before, during, and after meetings.
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.
Built on Zoom’s reliable and secure platform, Zoom Contact Center enriches customer engagement by delivering highly personalized and seamless customer journeys across all channels. 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.
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.
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 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.
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.
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.
Zoomtopia, our annual user conference, provides a hybrid experience for tens of thousands of in-person and virtual attendees. Research and Development 11 Table of Contents We drive our business with constant innovation.
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.
Customers are also purchasing services for webinars, room solutions, phone, and contact center for a complete and integrated set of communications services. • Grow our developer ecosystem and continue to expand our platform.
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.
We have not experienced interruptions of operations or any work stoppages due to labor disagreements. 12 Table of Contents 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.
This approach allows us to cost-effectively drive upgrades to our paid offering and expansion within organizations of all sizes and verticals. • Expand within existing customers. As organizations experience our platform and become familiar with its benefits, more teams and departments within these organizations adopt Zoom.
This approach allows us to cost-effectively drive upgrades to our paid offering and expansion within organizations of all sizes and verticals. • Innovate our platform continuously. Our engineers aim to stay on the cutting edge of communication and collaboration technologies.
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.
Zoom has consistently earned high scores across customer review sites, Gartner Peer Insights, TrustRadius, and G2, including being recognized as a 2023 Top Rated Vendor in Unified Communications as a Service (“UCaaS”) by TrustRadius, and Leader badge for Zoom Contact Center by G2.
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.
Industry analysts also recognize our market leadership across our platform and products: Gartner has named Zoom a leader in the Magic Quadrant for UCaaS for the fourth year in a row, and Workvivo was named a leader in the Magic Quadrant for Intranet 6 Table of Contents Packaged Solutions.
Our culture of delivering happiness drives our mission, vision, and values and is fundamental to everything we do at Zoom: • Mission. Our mission is to make video communications frictionless and secure. • Vision. Our vision is to empower people to accomplish more through video communications. • Values.
Item 1. BUSINESS Overview Our mission is to provide one platform that delivers limitless human connection. Our culture of delivering happiness drives our mission and values and is fundamental to everything we do at Zoom. Zoom is an intelligent, secure collaboration platform that makes connecting easier, more immersive, and more dynamic for businesses and individuals.
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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.
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We’re committed to evolving our platform in ways that empower limitless human connection and solve real business problems. All of our product innovation has a unified goal: to help streamline the workday through effective communication and collaboration tools. The Zoom platform makes teamwork more meaningful, drives impact with intelligence, strengthens customer relationships, and enables seamless workflows.
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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.
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Additionally, trust is a cornerstone of the Zoom platform. We equip users with a comprehensive set of tools to make their interactions safe, secure, and private. We believe that strong security should never compromise a great user experience.
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Our cloud-native platform delivers reliable, high-quality video and voice solutions that are easy to use, manage, and deploy; provides an attractive return on investment; and is scalable and easily integrates with physical spaces and applications.
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Businesses of all sizes and individuals alike choose Zoom over other industry players for several reasons: • We care for customers at Zoom speed: Zoom puts customers first. We are committed to providing a platform and products that people love.
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As businesses around the world navigate a period of significant work transformation, Zoom’s ability to enable meaningful connections whether teams are in the office, at home, on-the-go, or in other locations such as a retail or manufacturing setting, is a critical differentiator. We believe that rich and reliable communications lead to interactions that build greater empathy and trust.
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We put innovation in customers' hands quickly to serve their needs. • Designed for hybrid work: Zoom is the only platform designed for hybrid communication and today’s unique hybrid work needs. • Zoom just works: Ease of use is a core design principle, along with quality and reliability. • Enterprise readiness: Zoom is built to meet the needs of enterprises, with robust reliability, security, compliance, and privacy capabilities and policies. • Cost-effective and value-focused: The total cost of ownership of the Zoom platform, across the employee experience and customer experience, is less than that of our competitors. • Open platform: The Zoom developer ecosystem enables customers to choose the apps and integrations they prefer.
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We strive to live up to the trust our customers place in us by delivering a communications solution that is secure, reliable, and “just works.” A cornerstone of our platform is Zoom Meetings, around which we provide a full suite of products and features designed to give users an easy, reliable, and innovative unified communications experience.
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We offer more than 2,500 integrations, including with major software vendors. We’re on a mission to reimagine the way we communicate and collaborate in a hybrid working world. Zoom brings employee and customer experience together into one platform that people love to use.
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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.
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Flagship products like Zoom Meetings, Zoom Phone, and Zoom Team Chat are among the core products on the platform that are critical to business communication and collaboration needs. We strive to continue building a platform that helps people work smarter, be more engaged with work, and better connect with each other.
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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.
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Artificial Intelligence (“AI”) has been core to Zoom’s product DNA over many years, grounded in our conviction that AI can make work more human by strengthening collaboration, productivity, and inclusivity.
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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.
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In fiscal year 2024, Zoom continued to invest in AI and focused on three key areas regarding AI innovation: supporting individual productivity, powering better collaboration, and helping customer-facing teams delight their customers. We recently launched Zoom AI Companion, our smart assistant that is designed to empower workers to increase productivity, improve team effectiveness, and enhance skills.
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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.
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Additionally, we introduced our federated approach to AI, which enables us to make Zoom’s AI capabilities accessible and affordable so that more people can incorporate them in their day-to-day workflows.
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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.
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In line with our commitment to responsible AI, Zoom does not use customer audio, video, chat, screen sharing, attachments, or other communications (such as poll results, whiteboard, and reactions) to train Zoom’s or third-party AI models. Zoom continues to be at the center of hybrid work.
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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.
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Our continued product innovation is laser-focused on supporting a hybrid work environment, with new innovations in areas such as document collaboration, hybrid workspaces, and employee communication. Our acquisition of Workvivo, an employee experience platform, deepened our commitment to creating a platform that is focused on connecting and engaging employees.
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This enthusiasm continues as meeting participants become paid hosts and as businesses of all sizes become our customers.
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Unlike most Contact Center as a Service (“CCaaS”) solutions that are only optimized for voice, Zoom Contact Center is an omnichannel cloud contact center platform that is optimized for video and intentionally supports a robust suite of channels, such as voice and video, SMS, and webchat.
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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.
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The result is a one-stop shop designed for customer experience leaders to deliver excellence to their customers and to strengthen workforce engagement. The happiness we deliver is recognized by our customers.
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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.
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Forrester published its Forrester Wave for Conversational Intelligence, where Zoom Revenue Accelerator debuted as a Strong player. IDC named Zoom Events as a leader in its IDC MarketScape for Worldwide Virtual Events Applications.
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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.
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As organizations experience our platform and become familiar with its benefits, more teams and departments within these organizations adopt Zoom. 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.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRenewals of subscriptions to our platform may decline or fluctuate because of several factors, such as dissatisfaction with our products and support, a customer or host no longer having a need for our products, including any new customers or hosts that have subscribed to our services during the COVID-19 pandemic that may subsequently reduce or discontinue their use after the impact of the pandemic have tapered, a reduction in customer information technology spending budgets, or a consolidation of spending budgets on our competitors' platforms, during periods of high inflation or recessionary or uncertain economic environments or the perception that competitive products provide better, more secure, or less expensive options.
Biggest changeRenewals of subscriptions to our platform may decline or fluctuate because of several factors, such as dissatisfaction with our products and support, a customer no longer having a need for our products, or a belief that a competitor’s product is better, more secure, or less expensive than our products and platform.
We also rely on third-party service providers to provide other products, services, parts, or otherwise to operate our business. Our ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place.
We also rely on third-party service providers to provide other products, services and parts, or otherwise to operate our business. Our ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place.
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.
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.
In the United States, federal, state, and local governments have enacted numerous privacy, data protection, and information security laws, including data breach notification laws, personal data privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), and other similar laws (e.g., wiretapping laws).
Laws in the United States In the United States, federal, state, and local governments have enacted numerous privacy, data protection, and information security laws, including data breach notification laws, personal data privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), and other similar laws (e.g., wiretapping laws).
We have in the past and may in the future receive inquiries or be subject to investigations by domestic and international government entities regarding, among other things, our privacy, data protection, and information security practices.
Government Inquiries and Investigations We have in the past and may in the future receive inquiries or be subject to investigations by domestic and international government entities regarding, among other things, our privacy, data protection, and information security practices.
Additionally, we rely on the administrators of our customers in the healthcare and education industries to obtain the necessary consents from users of our products and services and to ensure their account settings are configured correctly for their compliance under applicable laws and regulations, including HIPAA.
Consents Additionally, we rely on the administrators of our customers in the healthcare and education industries to obtain the necessary consents from users of our products and services and to ensure their account settings are configured correctly for their compliance under applicable laws and regulations, including HIPAA.
A number of states require us to contribute to state USF and pay E-911 and other assessments and surcharges, while others are actively considering extending their programs to include the products we offer and the California Public Utilities Commission is now taking the position that it can require VoIP providers like Zoom Phone to obtain authority to operate in that state.
A number of states require us to contribute to state USF and pay E-911 and other assessments and surcharges, while others are actively considering extending their programs to include the products we offer. The California Public Utilities Commission is now taking the position that it can require VoIP providers like Zoom Phone to obtain authority to operate in that state.
If we do not comply with any current or future state regulations that apply to our business, we could be subject to substantial fines and penalties, we may have to restructure our product offerings, exit certain markets, or raise the price of our products, any of which could harm our business.
If we do not comply with any current or future state regulations that apply to our business, we could be subject to substantial fines and penalties, and we may have to restructure our product offerings, exit certain markets, or raise the price of our products, any of which could harm our business.
In addition, cybersecurity events or security vulnerabilities could result in breaches of our agreements with customers, lawsuits against us (including class action litigation), regulatory investigations or actions, and significant increases in costs, including costs for remediating the effects of such an event or vulnerability, lost revenue due to network downtime, and a decrease in customer, host, and user trust, increases in insurance premiums due to cybersecurity incidents, increased costs to address cybersecurity issues, and attempts to prevent future incidents, fines, penalties, judgments and settlements, and attorney fees, and harm to our business and our reputation because of any such incident.
In addition, cybersecurity events or security vulnerabilities could result in breaches of our agreements with customers, lawsuits against us (including class action litigation), regulatory investigations or actions, and significant increases in costs, including costs for remediating the effects of such an event or vulnerability, lost revenue due to network downtime, and a decrease in customer and user trust, increases in insurance premiums due to cybersecurity incidents, increased costs to address cybersecurity issues, and attempts to prevent future incidents, fines, penalties, judgments and settlements, and attorney fees, and harm to our business and our reputation because of any such incident.
Any defects in, or unavailability of, our or third-party hardware, software, or services that cause interruptions to the availability of our services, loss of data, or performance issues could, among other things: • cause a reduction in revenue or delay in market acceptance of our platform; • require us to issue refunds to our customers or expose us to claims for damages; • cause us to lose existing hosts and make it more difficult to attract new customers and hosts; • divert our development resources or require us to make extensive changes to our platform, which would increase our expenses; • increase our technical support costs; and • harm our reputation and brand.
Any defects in, or unavailability of, our or third-party hardware, software, or services that cause interruptions to the availability of our services, loss of data, or performance issues could, among other things: • cause a reduction in revenue or delay in market acceptance of our platform; • require us to issue refunds to our customers or expose us to claims for damages; • cause us to lose existing customers and make it more difficult to attract new customers; • divert our development resources or require us to make extensive changes to our platform, which would increase our expenses; • increase our technical support costs; and • harm our reputation and brand.
In the ordinary course of business, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share confidential, proprietary, and sensitive information, including personal information, customer and user content, business data, trade secrets, intellectual property, third-party data, business plans, transactions, financial information Our data processing activities may subject us to numerous privacy, data protection, and information security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, and contractual requirements.
In the ordinary course of business, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share confidential, proprietary, and sensitive information, including personal data, customer and user content, business data, trade secrets, intellectual property, third-party data, business plans, transactions, financial information Our data processing activities subject us to numerous privacy, data protection, and information security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, and contractual requirements.
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.
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; • 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 43 Table of Contents • our dual-class common stock structure as described above.
European regulators have issued significant fines in certain circumstances where the regulators alleged that appropriate consent was not obtained in connection with targeted advertising activities. It is anticipated that the ePrivacy Regulation and national implementing laws will replace the current national laws implementing the ePrivacy Directive, which may require us to make significant operational changes.
European regulators have issued significant fines in certain circumstances where the regulators alleged that appropriate consent was not obtained in connection with targeted advertising activities. In the EU, it is anticipated that the ePrivacy Regulation and national implementing laws will replace the current national laws implementing the ePrivacy Directive, which may require us to make significant operational changes.
We currently collect and remit applicable indirect taxes in jurisdictions where we, through our employees, have a presence and where we have determined, based on legal precedents in the jurisdiction, that sales of our platform are classified as taxable. State and local taxing authorities have differing rules and regulations which are subject to varying interpretations.
We currently collect and remit applicable indirect taxes in jurisdictions where we, through our employees, have a presence and where we have determined, based on legal precedents in the jurisdiction, that sales of our platform are classified as taxable. State and local taxing authorities have differing rules and regulations that are subject to varying interpretations.
If new or enhanced products fail to engage, retain, and increase our base of customers and hosts, or do not perform as expected, we may fail to generate sufficient revenue, operating margin, or other value to justify our investments in such products, any of which may harm our business in the short term, long term, or both.
If new or enhanced products fail to engage, retain, and increase our base of customers, or do not perform as expected, we may fail to generate sufficient revenue, operating margin, or other value to justify our investments in such products, any of which may harm our business in the short term, long term, or both.
Furthermore, it is difficult to predict the size and growth rate of our market, customer demand for our platform, user adoption and renewal of our platform, the entry of competitive products and services, or the success of existing competitive products and services. As a result, we may not increase or maintain profitability in future periods.
Furthermore, it is difficult to predict the size and growth rate of our market, customer demand for our platform, customer adoption and renewal of our platform, the entry of competitive products and services, or the success of existing competitive products and services. As a result, we may not increase or maintain profitability in future periods.
If we fail to maintain relationships with our resellers, fail to develop relationships with new resellers in new markets, or expand the number of resellers in existing markets or fail to manage, train, or provide appropriate incentives to our existing resellers, our ability to increase the number of new customers and hosts and increase sales to existing customers could be adversely impacted, which would harm our business.
If we fail to maintain relationships with our resellers, develop relationships with new resellers in new markets, expand the number of resellers in existing markets, or manage, train, or provide appropriate incentives to our existing resellers, our ability to increase the number of new customers and increase sales to existing customers could be adversely impacted, which would harm our business.
Some customers may view a subscription to our platform as a cost-saving purchase, decreasing the need for business travel, others may view a subscription to our platform as a discretionary purchase, and our customers may reduce their information technology spending on our platform during an economic downturn or during times of economic uncertainty.
While some customers may view a subscription to our platform as a cost-saving purchase, decreasing the need for business travel, others may view a subscription to our platform as a discretionary purchase, and our customers may reduce their information technology spending on our platform during an economic downturn or during times of economic uncertainty.
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.
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 to terminate their subscriptions and adversely affect our ability to attract new customers.
As we continue to grow, maintaining this culture of transparency will present its own challenges that we will need to address, including the type of information and level of detail that we share with our employees. 24 Table of Contents In addition, as our stock price has fluctuated since our initial public offering (“IPO”), employees joining us at different times could have significant disparities in proceeds from sales of our equity in the public markets, which could create disparities in wealth among our employees, which may harm our culture and relations among employees and our business.
As we continue to grow, maintaining this culture of transparency will present its own challenges that we will need to address, including the type of information and level of detail that we share with our employees. 25 Table of Contents In addition, as our stock price has fluctuated since our initial public offering (“IPO”), employees joining us at different times could have significant disparities in proceeds from sales of our equity in the public markets, which could create disparities in wealth among our employees, which may harm our culture and relations among employees and our business.
Some of these potential factors include: • general awareness of the communications and collaboration technologies category; • availability of products and services that compete with ours; • new modes of communications and collaboration that may be developed in the future; • a reduction in customer information technology spending budgets, or a consolidation of spending budgets on our competitors' platforms, during periods of high inflation or recessionary or uncertain economic environments; • ease of adoption and use; • features and platform experience; • reliability of our platform, including frequency of outages; • performance; • brand; • user support; and • pricing.
Some of these potential factors include: • general awareness of the communications and collaboration technologies category; • availability of products and services that compete with ours; • new modes of communications and collaboration that may be developed in the future; • a reduction in customer information technology spending budgets, or a consolidation of spending budgets on our competitors' platforms, especially during periods of inflation or recessionary or uncertain economic environments; • ease of adoption and use; • features and platform experience; • reliability of our platform, including frequency of outages; • performance; • brand; • user support; and • pricing.
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.
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 should not be relied upon as an indication of future performance.
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.
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 35 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.
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.
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 demand for our platform.
In addition, while more than half of our employees are based in the United States, like many similarly situated technology companies, we have a sizable number of research and development personnel in China, which has exposed and could continue to expose us to governmental and regulatory as well as market and media scrutiny regarding the actual or perceived integrity of our platform or data security and privacy features.
In addition, while more than half of our employees are based in the United States, like many similarly situated technology companies, we have a sizable number of research and development personnel outside of the United States, including in China, which has exposed and could continue to expose us to governmental and regulatory as well as market and media scrutiny regarding the actual or perceived integrity of our platform or data security and privacy features.
If we experience excessive fraudulent activity or cannot meet evolving credit card association merchant standards, we could incur substantial costs and lose the right to accept credit cards for payment, which could cause our customer and paid host base to decline significantly. A large portion of our customers authorize us to bill their credit card accounts directly for our products.
If we experience excessive fraudulent activity or cannot meet evolving credit card association merchant standards, we could incur substantial costs and lose the right to accept credit cards for payment, which could cause our customer and paid user base to decline significantly. A large portion of our customers authorize us to bill their credit card accounts directly for our products.
Under the FCC’s new rules, broadband internet access providers may be able to charge web-based services such as ours for priority access or favor services offered by our competitors or by the internet access providers themselves, which could result in increased costs and a loss of existing customers and hosts, impair our ability to attract new customers and hosts, and harm our business.
Under the FCC’s current rules, broadband internet access providers may be able to charge web-based services such as ours for priority access or favor services offered by our competitors or by the internet access providers themselves, which could result in increased costs and a loss of existing customers, impair our ability to attract new customers, and harm our business.
Furthermore, third parties could build products similar to ours that rely on open source software. Even if such products do not include all the features and functionality that our platform provides, we could face pricing pressure from these third parties to the extent that users find such alternative products to be sufficient to meet their video communications needs.
Furthermore, third parties could build products similar to ours that rely on open source software. Even if such products do not include all the features and functionality that our platform provides, we could face pricing pressure from these third parties to the extent that users find such alternative products to be sufficient to meet their needs.
Zoom does not currently have any equipment from the companies subject to the ban in its network, but if other companies are added to the Covered List and the FCC adopts rules that ban sales or use of equipment from companies on the Covered List, we could be required to find new sources for similar equipment or replace existing equipment entirely.
Zoom does not currently have any equipment from the companies subject to the ban in its network, but if other companies are added to the Covered List and the FCC adopts rules that ban sales or use of equipment from such companies, we could be required to find new sources for similar equipment or replace existing equipment entirely.
Some investors may use these non-financial performance factors to guide their investment strategies and, in some cases, may choose not to invest in us if they believe our policies and actions relating to ESG are inadequate. We may face reputational damage in the event that we do not meet the ESG standards set by various constituencies.
Some investors may use these ESG performance factors to guide their investment strategies and, in some cases, may choose not to invest in us if they believe our policies and actions relating to ESG are inadequate. We may face reputational damage in the event that we do not meet the ESG standards set by various constituencies.
As a service provider and as a matter of policy, we do not monitor user meetings. However, to ensure user safety and prevent conduct that is illegal, violent, or harmful to others, we enforce our terms of service through use of a mix of tools that suggest when such activity may be occurring on our platform.
As a service provider and as a matter of policy, we do not monitor user meetings. However, to protect user safety and prevent conduct that is illegal, violent, or harmful to others, we enforce our terms of service through use of a mix of tools that suggest when such activity may be occurring on our platform.
Our current platform, as well as products, features, and functionality that we may introduce in the future, may not be widely accepted by our customers and hosts or may receive negative attention or may require us to compensate or reimburse third parties, any of which may lower our margins and harm our business.
Our current platform, as well as products, features, and functionality that we may introduce in the future, may not be widely accepted by our customers and users or may receive negative attention or may require us to compensate or reimburse third parties, any of which may lower our margins and harm our business.
If we or the third parties on which we rely fail, or are perceived to have failed, to address or comply with applicable privacy, data protection, and information security obligations, we could face significant consequences, including but not limited to: government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar); litigation (including class-action claims); additional reporting requirements and/or oversight; bans on processing personal information; and orders to destroy or not use personal information.
If we or the third parties on which we rely fail, or are perceived to have failed, to address or comply with applicable privacy, data protection, and information security obligations, we could face significant consequences, including but not limited to: government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar); litigation (including class-action claims) and mass arbitration demands; additional reporting requirements and/or oversight; bans on processing personal information; and orders to destroy or not use personal information.
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.
We plan to continue our practice of opening new co-located 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.
In addition, we provide, develop, and create applications for our platform partners that integrate our platform with our partners’ various offerings. For example, our Zoom Meetings product integrates with tools offered by companies, such as Atlassian and Dropbox, to help teams get more done together.
In addition, we provide, develop, and create applications for our platform partners that integrate our platform with our partners’ various offerings. For example, our Zoom One product integrates with tools offered by companies, such as Atlassian and Dropbox, to help teams get more done together.
Moreover, the harm to our reputation and legal liability related to such defects or errors may be substantial and would harm our business. 23 Table of Contents We also utilize hardware purchased or leased and software and services licensed from third parties to offer our platform.
Moreover, the harm to our reputation and legal liability related to such defects or errors may be substantial and would harm our business. 24 Table of Contents We also utilize hardware purchased or leased and software and services licensed from third parties to offer 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.
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 plans; • our ability to attract new customers and upgrade free users to one of our paid offerings; • 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; 16 Table of Contents • 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.
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.
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. The short- and long-term impact of any major change to our products, or the introduction of new products, is particularly difficult to predict.
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.
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.
In addition, a significant portion of our costs is expensed as incurred, while revenue is recognized over the term of the subscription. As a result, growth in the number of new customers and hosts could continue to result in our recognition of higher costs and lower revenue in the earlier periods of our subscriptions.
In addition, a significant portion of our costs is expensed as incurred, while revenue is recognized over the term of the subscription. As a result, growth in the number of new customers and users could continue to result in our recognition of higher costs and lower revenue in the earlier periods of our subscriptions.
On August 18, the parties in the Florida case requested, and were granted, a stay of the appeals court mandate pending Supreme Court review, and on September 21, 2022, Florida requested that the Supreme Court review the case. On September 16, the U.S. Court of Appeals for the Fifth Circuit issued a decision upholding the Texas law.
On August 18, the parties in the Florida case requested, and were granted, a stay of the appeals court mandate pending Supreme Court review. On September 16, 2022, the U.S. Court of Appeals for the Fifth Circuit issued a decision upholding the Texas law.
We have not always been able in the past and may be unable in the future to anticipate or prevent threats or techniques used to detect or exploit vulnerabilities in our services or software or third-party software, or obtain unauthorized access to or compromise our systems.
We have not always been able in the past and may be unable in the future to anticipate or prevent threats or techniques used to detect or exploit vulnerabilities in our information systems or third-party software, or obtain unauthorized access to or compromise our systems.
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.
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 users to our paid offerings. Any decline in new customers, renewals, or upgrades would harm our business.
In addition, various countries regulate the import of certain encryption technology, including through import permitting and licensing requirements and have enacted or could enact laws that could limit our ability to distribute our platform or could limit our hosts’ ability to implement our platform in those countries.
In addition, various countries regulate the import of certain encryption technology, including through import permitting and licensing requirements and have enacted or could enact laws that could limit our ability to distribute our platform or could limit our customers’ ability to implement our platform in those countries.
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.
As a result, we cannot provide assurance that customers will renew their subscriptions utilizing the same tier of plan, upgrade to a higher-priced tier, or purchase additional products, if they renew at all.
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.
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.
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.
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 to switch to our competitors, or to cancel their subscriptions to our platform.
Cyber-attacks, malicious internet-based activity, online and offline fraud, and other similar activities threaten the confidentiality, integrity, and availability of our proprietary, confidential, and sensitive data and information technology systems, and those of the third parties upon which we rely. Cloud-based platform providers of products and services have been and are expected to continue to be targeted.
Cyberattacks, other malicious internet-based activity, online and offline fraud, and other similar activities threaten the confidentiality, integrity, and availability of our proprietary, confidential, and sensitive data and information technology systems, and those of the third parties upon which we rely. Cloud-based platform providers of products and services have been and are expected to continue to be targeted.
Likewise, the financial success of our investment in any publicly held company is typically dependent upon an exit in favorable market conditions, and to a lesser extent on liquidity events. The capital markets for public offerings and acquisitions are dynamic and the likelihood of successful liquidity events for the companies we have invested in could significantly worsen.
Likewise, the financial success of our investment in any publicly held company is typically dependent upon an exit in favorable market conditions, and to a lesser extent on liquidity events. The capital markets for public offerings and acquisitions are currently depressed and the likelihood of successful liquidity events for the companies we have invested in could significantly worsen.
Finally, our subscription-based revenue model also makes it difficult for us to rapidly increase our revenue through additional sales in any period, as revenue from new customers or from existing customers that increase their use of our platform or upgrade to a higher-priced tier of Zoom Meeting plan must be recognized over the applicable subscription term.
Finally, our subscription-based revenue model also makes it difficult for us to rapidly increase our revenue through additional sales in any period, as revenue from new customers or from existing customers that increase their use of our platform or upgrade to a higher-priced plan must be recognized over the applicable subscription term.
Loss of or reduction in sales through these third parties could reduce our revenue. Our competitors may in some cases be effective in causing our reseller or potential reseller to favor their products and services or prevent or reduce sales of our products and services.
Loss of or reduction in sales through these third parties could reduce our revenue. Our competitors may in some cases be effective in causing our resellers or potential resellers to favor their products and services or prevent or reduce sales of our products and services.
As a result, we anticipate increased sales to large organizations will lead to higher up-front sales costs and greater unpredictability in our business, results of operations, and financial condition. We generate revenue from sales of subscriptions to our platform, and any decline in demand for our platform or for communications and collaboration technologies in general would harm our business.
As a result, we anticipate increased sales to large organizations will lead to higher up-front sales costs and greater unpredictability in our business, results of operations, and financial condition. 17 Table of Contents We generate revenue from sales of subscriptions to our platform, and any decline in demand for our platform or for communications and collaboration technologies in general would harm our business.
Actual or perceived security compromises experienced in our industry or by our competitors, our customers, a third party upon whom we rely, or us could cause us to experience adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing sensitive data (including personal data); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; monetary fund diversions; interruptions in our operations (including availability of data); financial loss; and other similar harms.
Actual or perceived security gaps or security compromises experienced in our industry or by our competitors, our customers, a third party upon whom we rely, or us could cause us to experience adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing sensitive data (including personal information); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; monetary fund diversions; diversion of management attention; interruptions in our operations (including availability of data); financial loss; and other similar harms.
There is no assurance that new additions or other future enhancements to our platform or new product experiences, features, or capabilities will be compelling to our users or gain market acceptance, or that they will perform as expected.
There is no assurance that new additions or other future enhancements to our platform or new product experiences, features, or capabilities will be compelling to our customers or gain market acceptance, or that they will perform as expected.
In addition, our products and services may be perceived as not being secure. This perception may result in customers and hosts curtailing or ceasing their use of our products, our incurring significant liabilities, and our business being harmed.
In addition, our products and services may be perceived as not being secure. This perception may result in customers and users curtailing or ceasing their use of our products, our incurring significant liabilities, and our business being harmed.
Moreover, as a result of any such failures, we could be in breach of our K-12 school customer contracts, and our customers could lose trust in us, which could harm our reputation and business. Individuals are increasingly resistant to the collection, use, and sharing of personal information to deliver targeted advertising.
Moreover, as a result of any such failures, we could be in breach of our K-12 school customer contracts, and our customers could lose trust in us, which could harm our reputation and business. Consumer Preferences and Protection Individuals are increasingly resistant to the collection, use, and sharing of personal information to deliver targeted advertising.
Any failure to offer high-quality support for our customers and hosts may harm our relationships with our customers and hosts and, consequently, our business. Increased user demand for support, may result in increased costs that may harm our results of operations.
Any failure to offer high-quality support for our customers and users may harm our relationships with our customers and users and, consequently, our business. Increased user demand for support may result in increased costs that may harm our results of operations.
Additionally, companies that transfer personal information out of the EEA and UK to other jurisdictions, particularly to the United States, are subject to increased scrutiny from regulators, individual litigants, and activities groups.
Additionally, companies that transfer personal information out of the EEA and UK to other jurisdictions, particularly to the United States, are subject to increased scrutiny from regulators, individual litigants, and activist groups.
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.
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.
The variables that go into the calculation of our market opportunity are subject to change over time, and there is no guarantee that any particular number or percentage of the organizations covered by our market opportunity estimates will purchase our solutions at all or generate any particular level of revenue for us.
The variables that go into 44 Table of Contents the calculation of our market opportunity are subject to change over time, and there is no guarantee that any particular number or percentage of the organizations covered by our market opportunity estimates will purchase our solutions at all or generate any particular level of revenue for us.
Our ability to engage, retain, and increase our base of customers and hosts and to increase our revenue will depend on our ability to successfully create new products, features, and functionality, both independently and together with third parties.
Our ability to engage, retain, and increase our base of customers and users and to increase our revenue will depend on our ability to successfully create new products, features, and functionality, both independently and together with third parties.
Further, any change in export or import regulations, economic sanctions or related laws, shift in the enforcement or scope of existing regulations or change in the countries, governments, persons, or technologies targeted by such regulations could result in decreased use of our platform or in our decreased ability to export or sell our platform to existing or potential customers with international operations.
Further, any change in export or import regulations, economic sanctions or related laws, shift in the 37 Table of Contents enforcement or scope of existing regulations or change in the countries, governments, persons, or technologies targeted by such regulations could result in decreased use of our platform or in our decreased ability to export or sell our platform to existing or potential customers with international operations.
The FCPA also requires public companies to make and keep books and records that accurately and fairly reflect the transactions of the corporation and to device and maintain an adequate system of internal accounting controls.
The FCPA also requires public companies to make and keep books and records that accurately and fairly reflect the transactions of the corporation and to devise and maintain an adequate system of internal accounting controls.
In addition, our recruiting personnel, methodology, and approach may need to be altered to address a changing candidate pool and profile. We may not be able to identify or implement such changes in a timely manner. In addition, we may experience employee turnover as a result of our recent restructuring actions.
In addition, our recruiting personnel, methodology, and approach may need to be altered to address a changing candidate pool and profile. We may not be able to identify or implement such changes in a timely manner. In addition, we have experienced and may continue to experience employee turnover as a result of our recent restructuring actions.
Any alterations to our business strategy or operations made in order to adapt to or comply with any such changes would be time-consuming and expensive, and certain of our competitors may be better suited to withstand or react to these changes. Further, in recent years, the U.S.
Any alterations to our business strategy or operations made in order to adapt to or comply with any such changes would be time-consuming and expensive, and certain of our competitors may be better suited to withstand or react to these changes. 36 Table of Contents Further, in recent years, the U.S.
This usage dramatically changed the scale of our business, and we have a limited operating history at the current scale of our business. As a result, our ability to forecast our future results of operations is limited and subject to a number of uncertainties, including our ability to plan for and model future growth and expenses.
This usage dramatically changed the scale of our business, and we have a 31 Table of Contents limited operating history at the current scale of our business. As a result, our ability to forecast our future results of operations is limited and subject to a number of uncertainties, including our ability to plan for and model future growth and expenses.
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.
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.
To the extent we are successful in increasing our user base, we may also incur increased losses because, other than sales commissions, the costs associated with acquiring customers and hosts are generally incurred up front, while the subscription revenue is generally recognized ratably over the subscription term, which can be monthly, annual, or on a multiyear basis.
To the extent we are successful in increasing our customer base, we may also incur increased losses because, other than sales commissions, the costs associated with acquiring customers are generally incurred up front, while the subscription revenue is generally recognized ratably over the subscription term, which can be monthly, annual, or on a multiyear basis.
During times of war and other major conflicts, we and the third parties upon which we rely may be vulnerable to a heightened risk of these attacks, including cyberattacks, that could materially disrupt our systems and operations, supply chain, and ability to provide our services.
During times of war and other major conflicts, we and the third parties upon which we rely may be vulnerable to a heightened risk of these attacks, which could materially disrupt our systems and operations, supply chain, and ability to provide our services.
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.
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.
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.
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; and other public health related measures, any of which could disrupt our service.
It is impossible to build every product feature that every customer or host wants, and our competitors may develop and offer features that our platform does not provide.
It is impossible to build every product feature that every customer or user wants, and our competitors may develop and offer features that our platform does not provide.
In addition, the holders of Class B common stock collectively will continue to be able to control all matters submitted to our stockholders for approval even if their stock holdings represent less than a majority of the outstanding shares of our common stock.
In addition, the holders of Class B common stock collectively will continue to be able to control all matters submitted to our stockholders for approval even if their stock holdings represent less than a majority of the outstanding shares of our 42 Table of Contents common stock.
We generally pass USF, E-911 fees, and other surcharges through to our customers where we are permitted to do so, which may result in our products becoming more expensive. We expect that state public utility commissions will continue their attempts to apply state telecommunications regulations to services like Zoom Phone.
We generally pass USF, E-911 fees, and other surcharges through to our customers where we are permitted to do so, which may result in our products becoming more expensive. We expect that state 39 Table of Contents public utility commissions will continue their attempts to apply state telecommunications regulations to services like Zoom Phone.
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.
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.
We also cannot be sure that our existing general liability insurance coverage and coverage for cyber liability or errors or omissions will continue to be available on acceptable terms or will be available in sufficient amounts to cover one or more large claims or that the insurer will not deny coverage as to any future claim.
We also cannot be sure that our existing general liability insurance coverage and coverage for cyber liability or errors or omissions will continue to be available on acceptable terms or will be available in sufficient amounts 23 Table of Contents to cover one or more large claims or that the insurer will not deny coverage as to any future claim.
We cannot assure you that additional financing will be available to us on favorable terms when required, or at all, particularly during times of market volatility and general economic instability.
We cannot assure you that additional financing will be available to us on favorable terms when required, or at all, particularly 45 Table of Contents during times of market volatility and general economic instability.
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.
In addition, our current platform, 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.
For example, the European Union’s General Data Protection Regulation (“EU GDPR”), the United Kingdom’s GDPR (“UK GDPR”), Brazil’s General Data Protection Law (Lei Geral de Proteção de Dados Pessoais, or “LGPD”) (Law No. 13,709/2018), and China’s Personal Information Protection Law (“PIPL”) impose strict requirements for processing personal information.
For example, the European Union’s General Data Protection Regulation (“EU 32 Table of Contents GDPR”), the United Kingdom’s GDPR (“UK GDPR”), Brazil’s General Data Protection Law (Lei Geral de Proteção de Dados Pessoais, or “LGPD”) (Law No. 13,709/2018), and China’s Personal Information Protection Law (“PIPL”) impose strict requirements for processing personal information.
As we continue to expand our international operations, we have become more exposed to the effects of fluctuations in currency exchange rates.
As we continue to expand our international operations, we will become more exposed to the effects of fluctuations in currency exchange rates.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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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.
Biggest changeLEGAL 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. 48 Table of Contents Item 4.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph uses the closing market price on April 18, 2019 of $62.00 per share as the initial value of our Class A common stock. As discussed above, we have never declared or paid a cash dividend on our Class A common stock and do not anticipate declaring or paying a cash dividend in the foreseeable future.
Biggest changeThe graph uses the closing market price on April 18, 2019 of $62.00 per share as the initial value of our Class A common stock.
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.
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, 2024 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 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.
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.
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.
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, 2024, we had 59 holders of record of our Class A common stock and 14 holders of record of our Class B common stock.
Removed
Unregistered Sales of Equity Securities None. Use of Proceeds None.
Added
As discussed above, we have never declared or paid a cash dividend on our Class A common stock and do not anticipate declaring or paying a cash dividend in the foreseeable future. 49 Table of Contents Unregistered Sales of Equity Securities None. Use of Proceeds None. Issuer Purchases of Equity Securities None. Item 6. [RESERVED] Not applicable
Removed
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.
Removed
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

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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.
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. 55 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, 2024 2023 2022 (in thousands) Revenue $ 4,527,224 $ 4,392,960 $ 4,099,864 Cost of revenue (1) 1,077,801 1,100,451 1,054,554 Gross profit 3,449,423 3,292,509 3,045,310 Operating expenses: Research and development (1) 803,187 774,059 362,990 Sales and marketing (1) 1,541,307 1,696,590 1,135,959 General and administrative (1) 579,650 576,431 482,770 Total operating expenses 2,924,144 3,047,080 1,981,719 Income from operations 525,279 245,429 1,063,591 Gains (losses) on strategic investments, net 109,770 (37,571) 43,761 Other income (expense), net 197,263 41,418 (5,720) Income before provision for (benefit from) income taxes 832,312 249,276 1,101,632 Provision for (benefit from) income taxes 194,850 145,565 (274,007) Net income $ 637,462 $ 103,711 $ 1,375,639 (1) Includes stock-based compensation expense as follows: Cost of revenue $ 143,798 $ 174,546 $ 69,612 Research and development 336,309 361,720 113,000 Sales and marketing 381,298 532,371 229,297 General and administrative 195,756 217,115 65,378 Total stock-based compensation expense $ 1,057,161 $ 1,285,752 $ 477,287 Year Ended January 31, 2024 2023 2022 (as a percentage of revenue) Revenue 100.0 % 100.0 % 100.0 % Cost of revenue 23.8 % 25.1 % 25.7 % Gross profit 76.2 % 74.9 % 74.3 % Operating expenses: Research and development 17.7 % 17.6 % 8.9 % Sales and marketing 34.0 % 38.6 % 27.7 % General and administrative 12.9 % 13.1 % 11.8 % Total operating expenses 64.6 % 69.3 % 48.4 % Income from operations 11.6 % 5.6 % 25.9 % Gains (losses) on strategic investments, net 2.4 % (0.9) % 1.1 % Other income (expense), net 4.4 % 1.0 % (0.1) % Income before provision for (benefit from) income taxes 18.4 % 5.7 % 26.9 % Provision for (benefit from) income taxes 4.3 % 3.3 % (6.7) % Net income 14.1 % 2.4 % 33.6 % 56 Table of Contents Comparison of Fiscal Years Ended January 31, 2024 and 2023 Revenue Year Ended January 31, 2024 2023 $ Change % Change (in thousands, except percentages) Revenue $ 4,527,224 $ 4,392,960 $ 134,264 3.1 % Revenue for the fiscal year ended January 31, 2024 increased by $134.3 million, or 3.1%, compared to the fiscal year ended January 31, 2023.
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.
In order for us to address this opportunity and 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.
(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.
Gains (Losses) on Strategic Investments, Net Gains (losses) 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.
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.
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.
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.
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.
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 strive to live up to the trust our customers place in us by delivering a communications solution while prioritizing their privacy and security. Our 29 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.
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.
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, 2024, 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, 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.
An immediate decrease of ten percent in enterprise value of our largest privately held equity securities held as of January 31, 2024 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.
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.
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 licenses 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 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.
For a discussion of the fiscal year ended January 31, 2022, 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, 2023.
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.
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. 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 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.
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.
On February 7, 2023, as a result of the economic environment, we announced a restructuring plan intended to reduce operating costs and continue advancing our ongoing commitment to profitable growth. The restructuring plan includes a reduction of our current workforce by approximately 15%.
On February 7, 2023, as a result of the economic environment, we announced a restructuring plan intended to reduce operating costs and continue advancing our ongoing commitment to profitable growth. The restructuring plan included a reduction of our then-current workforce by approximately 15%.
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.
Our Zoom One Basic offering is free and gives users 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, Enterprise Plus, and Enterprise Premier.
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 decrease in revenue from the rest of the world in the fiscal years ended January 31, 2024 and 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.
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.
It is important to note that other companies, including companies in our industry, may not use this metric, may calculate this metric differently, or may use other financial measures to evaluate their liquidity, all of which could reduce the usefulness of this non-GAAP metric as a comparative measure.
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.
We have not recorded any impairment charges during the fiscal years presented. Strategic Investments 61 Table of Contents 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.
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.
Cash from operations could also be affected by various risks and uncertainties, including, but not limited to, the recent macroeconomic shifts, such as high inflation, changes in interest rates and the responses by central banking authorities, potential recessionary environments, and the fluctuations in foreign currency exchange rates, which 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.
We then divided that amount by three to calculate the online average monthly churn. 50 Table of Contents Innovation and Expansion of Our Platform We continue to invest resources to enhance the capabilities of our platform.
We then divided that amount by three to calculate the online average monthly churn. Innovation and Expansion of Our Platform We continue to invest resources to enhance the capabilities of our platform.
The online monthly average churn for our Online customers was 3.4%, 3.9%, and 4.9% per month for the fiscal years ended January 31, 2023, 2022 and 2021, respectively.
The online monthly average churn for our Online customers was 3.1%, 3.4%, and 3.9% per month for the fiscal years ended January 31, 2024, 2023 and 2022, respectively.
Revenue from Online customers represented 45.2%, 52.4%, and 54.4% of total revenue for the fiscal years ended January 31, 2023, 2022 and 2021, respectively. The ability to retain these Online customers will have an impact on our future revenue.
Revenue from Online customers represented 42.1%, 45.2%, and 52.4% of total revenue for the fiscal years ended January 31, 2024, 2023 and 2022, respectively. The ability to retain these Online customers will have an impact on our future revenue.
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.
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. Sales commission is generally not paid upon contract renewal.
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.
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 28.7%, 30.5%, and 33.3% of our total revenue for the fiscal years ended January 31, 2024, 2023, and 2022, respectively.
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”).
Our trailing 12-month net dollar expansion rate for Enterprise customers was 101%, 115%, and 130% as of January 31, 2024, 2023 and 2022, respectively. 52 Table of Contents 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”).
As of January 31, 2023, 2022 and 2021 the percentage of total Online MRR from Online customers with a continual term of service of at least 16 months was 72.0%, 59.0% and 10.0% respectively. We calculate our online average monthly churn by starting with the Online customer MRR as of the beginning of the applicable quarter (“Entry MRR”).
As of January 31, 2024, 2023 and 2022 the percentage of total Online MRR from Online customers with a continual term of service of at least 16 months was 74.2%, 72.0% and 58.8% respectively. We calculate our online average monthly churn by starting with the Online customer MRR as of the beginning of the applicable quarter (“Entry MRR”).
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.
Revenue from these customers represented 29.2%, 27.1%, and 21.9% of total revenue for the fiscal years ended January 31, 2024, 2023, and 2022, respectively. As of January 31, 2024, 2023, and 2022, we had 3,810, 3,471, and 2,725 customers, respectively, that contributed more than $100,000 of trailing 12 months revenue, demonstrating our rapid penetration of larger organizations, including enterprises.
We generate revenue from the sale of subscriptions to our unified communications and collaboration platform. Subscription revenue is driven primarily by the number of paid hosts as well as purchases of additional products, including Zoom Phone, Zoom Spaces, Zoom Events, Zoom Contact Center and Zoom IQ for Sales.
We generate revenue from the sale of subscriptions to our unified communications and collaboration platform. Subscription revenue is driven primarily by the number of customers as well as purchases of additional products, including Zoom Phone, Zoom Spaces, Zoom Events, Zoom Contact Center and Zoom Revenue Accelerator.
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 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, 2024 2023 2022 (in thousands) Net cash provided by operating activities $ 1,598,836 $ 1,290,262 $ 1,605,266 Less: purchases of property and equipment (126,953) (103,826) (132,590) Free cash flow (non-GAAP) $ 1,471,883 $ 1,186,436 $ 1,472,676 Net cash used in investing activities $ (1,183,689) $ (318,322) $ (2,859,097) Net cash provided by (used in) financing activities $ 60,186 $ (936,942) $ 34,068 Components of Results of Operations Revenue We derive our revenue from subscription agreements with customers for access to our unified communications and collaboration platform.
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.
Liquidity and Capital Resources As of January 31, 2024, our principal sources of liquidity were cash, cash equivalents, and marketable securities of $7.0 billion, which were held for working capital purposes and for investment in growth opportunities.
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 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 57.9%, 54.8% and 47.6% of total revenue for the fiscal years ended January 31, 2024, 2023 and 2022, respectively.
For example, for the year ended January 31, 2023, we experienced unfavorable foreign currency impact as a result of the continued strengthening of the U.S. dollar compared to certain foreign jurisdictions where we do a significant amount of business, which resulted in a $69.1 million negative impact on revenue for the year ended January 31, 2023.
In addition, for the fiscal year ended January 31, 2024, we experienced unfavorable foreign currency impact as a result of the continued strengthening of the U.S. dollar compared to certain foreign jurisdictions where we do a significant amount of business, which resulted in a $34.1 million 51 Table of Contents negative impact on revenue for the fiscal year ended January 31, 2024.
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.
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. 53 Table of Contents Key Business Metrics We review the following key business metrics to measure our performance, identify trends, formulate financial projections, and make strategic decisions.
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.
The increase in revenue was due to an 8.7% increase in revenue from subscription services provided to Enterprise customers, of which 80.3% and 19.7% were from existing and new customers, respectively. This increase was partially offset by a 3.8% decline in revenue from subscription services provided to Online customers.
Our primary uses of cash from operating activities are for employee-related expenditures, costs related to hosting our platform, and marketing expenses. Net cash provided by operating activities is impacted by our net income adjusted for certain non-cash items, such as stock-based compensation expense, depreciation and amortization expenses, as well as the effect of changes in operating assets and liabilities.
Net cash provided by operating activities is impacted by our net income adjusted for certain non-cash items, such as stock-based compensation expense, depreciation and amortization expenses, as well as the effect of changes in operating assets and liabilities.
As of January 31, 2023, 2022, and 2021, we had approximately 213,000, 191,000, and 141,100 Enterprise customers, respectively.
As of January 31, 2024, 2023, and 2022, we had approximately 220,400, 213,000, and 191,000 Enterprise customers, respectively.
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.
See Note 11 of the Notes to Consolidated Financial Statements for further information. 58 Table of Contents For a discussion of the fiscal year ended January 31, 2023 compared to the fiscal year ended January 31, 2022, 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, 2023.
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.
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.
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.
Cost of Revenue Cost of revenue primarily consists of costs related to hosting our unified communications and collaboration 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.
Many factors may contribute to declines in our growth rate, among other things, higher market penetration, increased competition, slowing demand for our platform from the tapering of the COVID-19 pandemic, a slower than anticipated capitalization on growth opportunities, and the maturation of our business. We continue to monitor the impacts of the COVID-19 pandemic on our business.
Many factors may contribute to declines in our growth rate as compared to prior fiscal years, among other things, higher market penetration, increased competition, slowing demand for our platform, a slower than anticipated capitalization on growth opportunities, and the maturation of our business.
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.
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, Spaces, Contact Center, Revenue Accelerator, Events and Developer Platform Solutions.
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.
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. Free Cash Flow We define FCF as GAAP net cash provided by operating activities less purchases of property and equipment.
We refer to hosts who subscribe to a paid Zoom Meeting plan as “paid hosts.” We define a customer as a separate and distinct buying entity, which can be a single paid user or host or an organization of any size (including a distinct unit of an organization) that has multiple paid hosts.
We define a customer as a separate and distinct buying entity, which can be a single paid user or an organization of any size (including a distinct unit of an organization) that has multiple users.
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.
Operating Expenses Research and Development Year Ended January 31, 2024 2023 $ Change % Change (in thousands, except percentages) Research and development $ 803,187 $ 774,059 $ 29,128 3.8 % Research and development expense for the fiscal year ended January 31, 2024, increased by $29.1 million, or 3.8%, compared to the fiscal year ended January 31, 2023.
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.
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.
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.
Gains (Losses) on Strategic Investments, Net Year Ended January 31, 2024 2023 $ Change % Change (in thousands, except percentages) Gains (losses) on strategic investments, net $ 109,770 $ (37,571) $ 147,341 392.2 % Gains on strategic investments, net, of $109.8 million for the fiscal year ended January 31, 2024, was driven by realized and unrealized gains on our publicly and privately held securities, while losses on strategic investments, net, of $37.6 million for the fiscal year ended January 31, 2023, were primarily driven by unrealized losses recognized on our publicly traded equity securities.
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.
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.
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.
Financing Activities Net cash provided by financing activities of $60.2 million for the fiscal year ended January 31, 2024 was due to proceeds from issuance of common stock pursuant to our employee stock purchase plan (“ESPP”) of $54.1 million and proceeds from the exercise of stock options of $10.2 million, partially offset by proceeds from employee equity transactions remitted to employees and tax authorities, net, of $4.1 million.
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.
General and Administrative Year Ended January 31, 2024 2023 $ Change % Change (in thousands, except percentages) General and administrative $ 579,650 $ 576,431 $ 3,219 0.6 % General and administrative expense for the fiscal year ended January 31, 2024, increased by $3.2 million, or 0.6%, compared to the fiscal year ended January 31, 2023.
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.
Net cash provided by operating activities was $1,598.8 million, $1,290.3 million, and $1,605.3 million for the fiscal years ended January 31, 2024, 2023, and 2022, 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.
Our revenue was $4,527.2 million, $4,393.0 million, and $4,099.9 million for the fiscal years ended January 31, 2024, 2023, and 2022, respectively, representing year-over-year growth of 3.1% and 7.1%, respectively. We had net income of $637.5 million, $103.7 million, and $1,375.6 million for the fiscal years ended January 31, 2024, 2023, and 2022, respectively.
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.
Other Income, Net Year Ended January 31, 2024 2023 $ Change % Change (in thousands, except percentages) Other income, net $ 197,263 $ 41,418 $ 155,845 376.3 % Other income, net for the fiscal year ended January 31, 2024 increased by $155.8 million, or 376.3%, compared to the fiscal year ended January 31, 2023.
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.
Cost of Revenue Year Ended January 31, 2024 2023 $ Change % Change (in thousands, except percentages) Cost of revenue $ 1,077,801 $ 1,100,451 $ (22,650) (2.1) % Gross profit 3,449,423 3,292,509 156,914 4.8 % Gross margin 76.2 % 74.9 % Cost of revenue for the fiscal year ended January 31, 2024, decreased by $22.7 million, or 2.1%, compared to the fiscal year ended January 31, 2023.
The amount of revenue recognized reflects the consideration that we expect to receive in exchange for these services over the contract term which can include a free period discount. Cost of Revenue Cost of revenue primarily consists of costs related to hosting our unified communications and collaboration platform and providing general operating support services to our customers.
The amount of revenue recognized reflects 54 Table of Contents the consideration that we expect to receive in exchange for these services over the contract term which can include a free period discount.
Critical accounting estimates are accounting estimates where the nature of the estimates are material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and the impact of the estimates on financial condition or operating performance is material.
Critical accounting estimates are accounting estimates where the nature of the estimates are material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and the impact of the estimates on financial condition or operating performance is material. 60 Table of Contents 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.
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.
Cash Flows The following table summarizes our cash flows for the periods presented: Year Ended January 31, 2024 2023 2022 (in thousands) Net cash provided by operating activities $ 1,598,836 $ 1,290,262 $ 1,605,266 Net cash used in investing activities $ (1,183,689) $ (318,322) $ (2,859,097) Net cash provided by (used in) financing activities $ 60,186 $ (936,942) $ 34,068 Operating Activities Our largest source of operating cash is cash collections from our customers for subscriptions to our platform.
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.
Investing Activities Net cash used in investing activities of $1,183.7 million for the fiscal year ended January 31, 2024 was due to net purchases of marketable securities of $951.4 million, cash paid for acquisition, net of cash acquired, of $204.9 million, purchases of property and equipment of $127.0 million, purchases of strategic investments of $70.5 million, partially offset by proceeds from strategic investments of $170.1 million.
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.
Net cash provided by operating activities was $1,598.8 million for the fiscal year ended January 31, 2024, compared to $1,290.3 million for the fiscal year ended January 31, 2023.
The change in income taxes was primarily due to tax shortfalls on stock-based compensation, non-deductible stock-based compensation expense, changes in the valuation allowance on certain state deferred tax assets, and other compensation-related permanent differences as of January 31, 2023, compared to tax windfalls on stock-based compensation and the valuation allowance release on the U.S. federal and state deferred tax assets during the fiscal year ended January 31, 2022.
The change in income taxes was primarily due to changes in income before taxes, tax shortfalls on stock-based compensation, the foreign-derived intangible income deduction, and the valuation allowance recorded against certain federal, state, and foreign deferred tax assets as of January 31, 2024.
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.
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.
Gross margin increased to 74.9% for the fiscal year ended January 31, 2023 from 74.3% for the fiscal year ended January 31, 2022.
Gross margin increased to 76.2% for the fiscal year ended January 31, 2024 from 74.9% for the fiscal year ended January 31, 2023. The increase in gross margin was mainly due to the decrease in personnel-related expenses.
For example, we have recently introduced a number of product enhancements, including new features for Zoom Phone, Zoom Meetings, Zoom Webinars, and Zoom Events and launched Zoom Contact Center, Zoom Virtual Agent, Zoom IQ for sales, Zoom Whiteboard and Zoom Mail and Calendar.
For example, we have recently introduced a number of new products and enhancements including Zoom AI Companion, new features for Zoom Contact Center, Zoom Notes, integration of Workvivo into the Zoom desktop client, and ongoing enhancements for Zoom Phone, Meetings, Zoom Rooms, Huddles, Webinars and Zoom Events.
These estimates are developed based on historical experience and various other assumptions that we believe to be reasonable under the circumstances.
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.
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.
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 $ 78,411 $ 26,922 $ 35,405 $ 15,467 $ 617 Non-cancelable purchase obligations 615,761 247,361 356,536 11,864 — Total contractual obligations $ 694,172 $ 274,283 $ 391,941 $ 27,331 $ 617 The contractual commitment amounts in the table above are associated with agreements that are enforceable and legally binding.
Our customers in Russia, Belarus, and Ukraine represented less than 1% of our net assets and total consolidated revenue as of the year ended January 31, 2023. If the Russia-Ukraine war continues or worsens, leading to additional sanctions, tightened export restrictions, and greater global economic disruptions and uncertainty, our business and results of operations could be materially impacted.
If the conflicts in these regions persist or worsen, possibly leading to additional sanctions, tightened export restrictions, and greater global economic disruptions and uncertainty, our business and results of operations could be materially impacted. Refer to “Part I, Item 1A.
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.
Sales and Marketing Year Ended January 31, 2024 2023 $ Change % Change (in thousands, except percentages) Sales and marketing $ 1,541,307 $ 1,696,590 $ (155,283) (9.2) % Sales and marketing expense for the fiscal year ended January 31, 2024, decreased by $155.3 million, or 9.2%, compared to the fiscal year ended January 31, 2023.
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.
Risk Factors” of this Annual Report on Form 10-K for further discussions of the potential impacts of the current macroeconomic conditions on our business. Key Factors Affecting Our Performance Acquiring New Customers We are focused on continuing to grow the number of customers that use our platform.
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.
The increase was primarily due to a $15.7 million increase in personnel-related expenses, which includes a $25.8 million increase in payroll taxes and benefits, and $19.6 million in restructuring and related expenses, partially offset by a $29.7 million decrease in stock-based compensation expense, driven by a prior year change in our equity program.
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.
The decrease was primarily due to a $22.5 million decrease in personnel-related expenses, which includes a $32.6 million decrease in stock-based compensation expense, driven by a prior year change in our equity program, partially offset by restructuring and related expenses of $7.1 million and a $2.9 million increase in payroll taxes and benefits.
Macroeconomic Conditions and other Factors Recent changes in macroeconomic conditions such as high inflation, recessionary and uncertain environments, and fluctuations in foreign currency exchange rates, have and may continue to cause uncertainty in our business. For the year ended January 31, 2023, we experienced continued growth in total revenue and revenue from Enterprise customers.
Macroeconomic Conditions and other Factors Recent macroeconomic shifts, including high inflation, elevated interest rates, and the responses by central banking authorities, potential recessionary environments, and fluctuations in foreign currency exchange rates, have introduced uncertainty to our business.
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.
Provision for Income Taxes Year Ended January 31, 2024 2023 $ Change % Change (in thousands, except percentages) Provision for income taxes $ 194,850 $ 145,565 $ 49,285 33.9 % Provision for income taxes for the fiscal year ended January 31, 2024 increased by $49.3 million, or 33.9%, compared to the fiscal year ended January 31, 2023.
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.
The increase in general and administrative expense was primarily due to $34.8 million increase in legal expense, including litigation settlements, and restructuring and related expenses of $13.3 million; partially offset by $24.3 million decrease in stock-based compensation expense, driven by a prior year change in our equity program and $14.4 million decrease in administrative overhead.
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.
Stock Repurchase Program In February 2024, our Board of Directors authorized a stock repurchase program of up to $1.5 billion of our Class A common stock.
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.
The decrease in sales and marketing expense was primarily due to a $167.5 million decrease personnel-related expenses, which includes a $159.3 million decrease in stock-based compensation expense, driven by a prior year change in our equity program, and a $41.0 million decrease in payroll taxes and benefits, partially offset by 57 Table of Contents restructuring and related expenses of $32.9 million.
Obligations under contracts that we can cancel without a significant penalty are not included in the table above.
Obligations under contracts that we can cancel without a significant penalty are not included in the table above. Refer to 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 Annual Report on Form 10-K for more details.
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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.
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Overview Our mission is to provide one platform that delivers limitless human connection. Zoom is an intelligent, secure collaboration platform that makes connecting easier, more immersive, and more dynamic for businesses and individuals. We’re committed to evolving our platform in ways that empower limitless human connection and solve real business problems.
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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.
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All of our product innovation has a unified goal: to help streamline the workday through effective communication and collaboration tools. The Zoom platform makes teamwork more meaningful, drives impact with intelligence, strengthens customer relationships, and enables seamless workflows. Additionally, trust is a cornerstone of the 50 Table of Contents Zoom platform.
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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.
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We equip users with a comprehensive set of tools to make their interactions safe, secure, and private. We believe that strong security should never compromise a great user experience. We’re on a mission to reimagine the way we communicate and collaborate in a hybrid working world. The Zoom platform brings employee and customer experience together that people love to use.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeFor 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.
Biggest changeFor the fiscal year ending January 31, 2024, 2023 and 2022, 19.3% , 20.0% and 22.6% of our revenue, respectively and 13.7%, 10.8% and 16.8% of our expenses, respectively were denominated in currencies other than the U.S. dollar.
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.
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, 2024, 2023, and 2022.
As the impact of foreign currency exchange rates has not been material to our historical operating results, we have not entered into derivative or hedging transactions, but we may do so in the future if our exposure to foreign currency becomes more significant.
As the impact of 62 Table of Contents foreign currency exchange rates has not been material to our historical operating results, we have not entered into derivative or hedging transactions, but we may do so in the future if our exposure to foreign currency becomes more significant.
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
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, 2024, 2023, and 2022. 63 Table of Contents
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.
Interest Rate Risk We had cash and cash equivalents of $1.6 billion and marketable securities of $5.4 billion as of January 31, 2024. Cash and cash equivalents consist of bank deposits, money market funds and high-grade commercial paper, and agency bonds.

Other ZM 10-K year-over-year comparisons