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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________________________________
FORM 10-Q
___________________________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM                 TO
Commission File Number 001-38865
___________________________________________________________________
Zoom Video Communications, Inc.
(Exact name of registrant as specified in its Charter)
___________________________________________________________________
Delaware61-1648780
(State or other jurisdiction
of incorporation or organization)
(I.R.S. Employer
Identification No.)
55 Almaden Boulevard, 6th Floor
San Jose, California 95113
(Address of principal executive offices and Zip Code)
(888) 799-9666
(Registrant’s telephone number, including area code)
___________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.001 par value per shareZMThe Nasdaq Global Select Market
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No ☐ 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No   ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  
As of May 10, 2024, the number of shares of the registrant’s Class A common stock outstanding was 263,616,605 and the number of shares of the registrant’s Class B common stock outstanding was 45,660,427.



Zoom Video Communications, Inc.
Quarterly Report on Form 10-Q
For the Quarterly Period Ended April 30, 2024
TABLE OF CONTENTS
Page



2

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations or financial condition; business strategy and plans; and objectives of management for future operations, including our statements regarding the benefits and timing of the roll out of new technology, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about: our future financial performance, including our revenue, cost of revenue, gross profit, margins, and operating expenses; trends in our key business metrics; the sufficiency of our cash and cash equivalents, investments, and cash provided by sales of our products and services to meet our liquidity needs; market trends; our market position and opportunity; our growth strategy and business aspirations for our communications and collaboration platform; our product strategy; our efforts to enhance the security and privacy of our platform; our ability to operate our business and effectively manage our scale under evolving macroeconomic conditions, such as high inflation, recessionary or uncertain environments and fluctuations in foreign currency exchange rates; our ability to become the ubiquitous platform for communications and collaboration; our ability to attract new customers and retain existing customers; our ability to successfully expand into our existing markets and into new markets; our ability to effectively manage our growth and future expenses; and the impact of recent accounting pronouncements on our unaudited condensed consolidated financial statements.
You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that such information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments.
You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the Securities and Exchange Commission as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance, and events and circumstances may be materially different from what we expect.


3


SUMMARY RISK FACTORS
Investing in our Class A common stock involves numerous risks, including the risks described in “Part II—Other Information, Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q. Below are some of these risks, any one of which could materially adversely affect our business, financial condition, results of operations, and prospects.
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 one of our paid offerings. Any decline in new customers, renewals, or upgrades would harm our business.
Our revenue growth rate has fluctuated in prior periods, and may continue to decline in future periods.
Interruptions, delays, or outages in service from our co-located data centers and a variety of other factors, would impair the delivery of our services, require us to issue credits or pay penalties, and harm our business.
We operate in competitive markets, and we must continue to compete effectively. Many of our actual and potential competitors benefit from competitive advantages over us, such as greater name recognition; longer operating histories; more varied products and services; larger marketing budgets; more established marketing relationships; more third-party integration; greater accessibility across devices or applications; greater access to larger user bases; major distribution agreements with hardware manufacturers and resellers; and greater financial, technical, and other resources. In addition, as we introduce new products and services to our platform, and with the introduction of new technologies and market entrants, we expect competition to intensify in the future.
Our business may be significantly affected by changes in the economy, including any resulting effect on consumer or business spending.
As we increase sales to large organizations, our sales cycles have and could continue to lengthen, and we could experience greater deployment challenges.
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.
We have incurred net losses in the past and there are no assurances we will be able to maintain or increase profitability in the future.
We may not be able to respond to rapid technological changes, extend our platform or develop new features.
Our security measures, and those of the third parties with whom we work, have been compromised in the past and may be compromised in the future. If our security measures are compromised in the future or if our information technology fails, this could harm our reputation, expose us to significant fines and liability, impair our sales, and harm our business. 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.
We have a limited operating history at the current scale of our business, which makes it difficult to evaluate our prospects and future results of operations.
The actual or perceived failure by us, our customers, partners, or vendors to comply with stringent and evolving laws and regulations, industry standards, policies, and contractual obligations relating to privacy, data protection, information security laws, and other matters could harm our reputation and business or subject us to significant fines and liability.
If we were to lose the services of our Chief Executive Officer or other members of our senior management team, we may not be able to execute our business strategy.
We have significant and expanding operations outside the United States, which may subject us to increased business, regulatory, and economic risks that could harm our business.
We may be subject to, or respond to requests from law enforcement in connection with enforcement of, a variety of U.S. and international laws that could result in claims, increase the cost of operations, or otherwise harm our business due to changes in the laws, changes in the interpretations of the laws, greater enforcement of the laws, or investigations into compliance with the laws.


4

Zoom Phone is subject to U.S. federal and international regulation, and other products we may introduce in the future may also be subject to U.S. federal, state, or international laws, rules, and regulations. Any failure to comply with such laws, rules, and regulations could harm our business and expose us to liability.
We use generative AI including in our products and services, which may result in operational challenges, legal liability, reputational concerns, competitive risks and regulatory concerns that could adversely affect our business and results of operations.
The dual class structure of our common stock as contained in our amended and restated certificate of incorporation has the effect of concentrating voting control with those stockholders who held our stock prior to our initial public offering, including our executive officers, employees, and directors and their affiliates, limiting your ability to influence corporate matters.
If we are unable to adequately address these and other risks we face, our business may be harmed.


5

PART I—Financial Information
Item 1.    FINANCIAL STATEMENTS
ZOOM VIDEO COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
As of
April 30,
2024
January 31,
2024
Assets(unaudited)
Current assets:
Cash and cash equivalents$1,885,603 $1,558,252 
Marketable securities5,488,737 5,404,233 
Accounts receivable, net of allowances of $22,009 and $32,371 as of April 30, 2024 and January 31, 2024, respectively
527,515 536,078 
Deferred contract acquisition costs, current198,113 208,474 
Prepaid expenses and other current assets182,077 219,182 
Total current assets8,282,045 7,926,219 
Deferred contract acquisition costs, noncurrent121,087 138,724 
Property and equipment, net304,712 293,704 
Operating lease right-of-use assets55,750 58,975 
Strategic investments424,923 409,222 
Goodwill307,295 307,295 
Deferred tax assets673,808 662,177 
Other assets, noncurrent127,010 133,477 
Total assets$10,296,630 $9,929,793 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$18,315 $10,175 
Accrued expenses and other current liabilities501,799 500,164 
Deferred revenue, current1,335,787 1,251,848 
Total current liabilities1,855,901 1,762,187 
Deferred revenue, noncurrent16,405 18,514 
Operating lease liabilities, noncurrent40,284 48,308 
Other liabilities, noncurrent85,216 81,378 
Total liabilities1,997,806 1,910,387 
Commitments and contingencies (Note 7)
Stockholders’ equity:
Common stock, $0.001 par value per share, 2,000,000,000 Class A shares authorized as of April 30, 2024 and January 31, 2024; 263,636,337 and 260,896,822 shares issued and outstanding as of April 30, 2024 and January 31, 2024, respectively; 300,000,000 Class B shares authorized as of April 30, 2024 and January 31, 2024; 45,632,347 and 46,661,531 shares issued and outstanding as of April 30, 2024 and January 31, 2024, respectively
309 307 
Additional paid-in capital5,310,417 5,228,756 
Accumulated other comprehensive (loss) income
(17,490)1,063 
Retained earnings3,005,588 2,789,280 
Total stockholders’ equity8,298,824 8,019,406 
Total liabilities and stockholders’ equity$10,296,630 $9,929,793 
    
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


6

ZOOM VIDEO COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
Three Months Ended April 30,
20242023
Revenue$1,141,234 $1,105,364 
Cost of revenue273,302 263,947 
Gross profit867,932 841,417 
Operating expenses:
Research and development205,558 209,271 
Sales and marketing348,008 422,504 
General and administrative111,344 199,900 
Total operating expenses664,910 831,675 
Income from operations203,022 9,742 
Gains on strategic investments, net17,354 2,275 
Other income, net71,588 31,213 
Income before provision for income taxes291,964 43,230 
Provision for income taxes75,656 27,786 
Net income216,308 15,444 
Net income per share:  
Basic$0.70 $0.05 
Diluted$0.69 $0.05 
Weighted-average shares used in computing net income per share:
Basic308,700,582 295,409,207 
Diluted315,360,678 304,115,913 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


7

ZOOM VIDEO COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
 Three Months Ended April 30,
 20242023
Net income$216,308 $15,444 
Other comprehensive (loss) income:
Unrealized (loss) gain on available-for-sale marketable securities, net of income tax benefit (expense) of $5,692 and $(4,674) for the three months ended April 30, 2024 and 2023, respectively
(18,553)15,514 
Comprehensive income$197,755 $30,958 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


8

ZOOM VIDEO COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share data)
(unaudited)
Three Months Ended April 30, 2024
Common StockAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Retained EarningsTotal
Stockholders’
Equity
SharesAmount
Balance as of January 31, 2024307,558,353 $307 $5,228,756 $1,063 $2,789,280 $8,019,406 
Issuance of common stock upon exercise of stock options109,464 — 1,016 — — 1,016 
Issuance of common stock upon release of restricted stock units4,001,172 4 (4)— —  
Repurchase of common stock(2,400,305)(2)(150,046)— — (150,048)
Stock-based compensation expense— — 230,695 — — 230,695 
Other comprehensive loss— — — (18,553)— (18,553)
Net income— — — — 216,308 216,308 
Balance as of April 30, 2024309,268,684 $309 $5,310,417 $(17,490)$3,005,588 $8,298,824 
Three Months Ended April 30, 2023
Common StockAdditional
Paid-In
Capital
Accumulated Other Comprehensive LossRetained EarningsTotal
Stockholders’
Equity
SharesAmount
Balance as of January 31, 2023293,822,850 $294 $4,104,880 $(50,385)$2,151,818 $6,206,607 
Issuance of common stock upon exercise of stock options501,968 1 4,268 — — 4,269 
Issuance of common stock upon release of restricted stock units3,130,908 3 (3)— —  
Stock-based compensation expense— — 282,273 — — 282,273 
Other comprehensive income— — — 15,514 — 15,514 
Net income— — — — 15,444 15,444 
Balance as of April 30, 2023297,455,726 $298 $4,391,418 $(34,871)$2,167,262 $6,524,107 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


9

ZOOM VIDEO COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended April 30,
20242023
Cash flows from operating activities:
Net income$216,308 $15,444 
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense229,425 282,345 
Amortization of deferred contract acquisition costs68,125 73,230 
Depreciation and amortization26,667 24,076 
Deferred income taxes(7,952)21,511 
Gains on strategic investments, net(17,354)(2,275)
Provision for accounts receivable allowances6,782 15,433 
Unrealized foreign exchange losses7,237 3,316 
Non-cash operating lease cost5,368 5,381 
Amortization of discount/premium on marketable securities(17,668)(6,765)
Other98 (5,471)
Changes in operating assets and liabilities:
Accounts receivable12,260 (29,101)
Prepaid expenses and other assets35,839 (6,659)
Deferred contract acquisition costs(40,128)(46,338)
Accounts payable7,276 1,881 
Accrued expenses and other liabilities(14,942)24,640 
Deferred revenue77,964 53,340 
Operating lease liabilities, net(7,114)(5,501)
Net cash provided by operating activities588,191 418,487 
Cash flows from investing activities:
Purchases of marketable securities(867,911)(768,230)
Maturities of marketable securities776,941 559,686 
Purchases of property and equipment(18,508)(21,826)
Purchases of strategic investments(3,000)(51,000)
Proceeds from strategic investments4,654  
Cash paid for acquisition, net of cash acquired (199,416)
Net cash used in investing activities(107,824)(480,786)
Cash flows from financing activities:
Proceeds from exercise of stock options1,016 4,268 
Proceeds from employee equity transactions to be remitted to employees and tax authorities, net6,581 2,751 
Cash paid for repurchases of common stock(150,048) 
Net cash (used in) provided by financing activities(142,451)7,019 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(6,852)(2,553)
Net increase (decrease) in cash, cash equivalents, and restricted cash331,064 (57,833)
Cash, cash equivalents, and restricted cash – beginning of period1,565,380 1,100,243 
Cash, cash equivalents, and restricted cash – end of period$1,896,444 $1,042,410 
Reconciliation of cash, cash equivalents, and restricted cash within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows above:
Cash and cash equivalents$1,885,603 $1,029,546 
Restricted cash, current included in prepaid expenses and other current assets10,588 12,610 
Restricted cash, noncurrent included in other assets, noncurrent253 254 
Total cash, cash equivalents, and restricted cash$1,896,444 $1,042,410 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


10

ZOOM VIDEO COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1.Summary of Business and Significant Accounting Policies
Description of Business
Zoom Video Communications, Inc. and its subsidiaries (collectively, “Zoom,” the “Company,” “we,” “us,” or “our”) provide a workplace collaboration platform that connects people through frictionless and secure meetings, phone, chat, content sharing and more. We were incorporated in the state of Delaware in April 2011, and are headquartered in San Jose, California.
Fiscal Year
Our fiscal year ends on January 31. References to fiscal year 2025, for example, refer to the fiscal year ending January 31, 2025.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and applicable regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting, and include the accounts of Zoom Video Communications, Inc., its subsidiaries, and variable interest entities for which we are the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation.
The condensed consolidated balance sheet as of January 31, 2024 included herein was derived from the audited financial statements as of that date, but does not include all disclosures, including certain notes required by GAAP on an annual reporting basis. The unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the balance sheets, statements of operations, statements of comprehensive income, statements of stockholders’ equity, and statements of cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year or any future period. 
The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended January 31, 2024, filed with the SEC on March 4, 2024.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant items subject to such estimates and assumptions include, but are not limited to, the estimated expected benefit period for deferred contract acquisition costs, stock-based compensation expense, the fair value of marketable securities, acquired intangible assets and goodwill, the valuation of deferred income tax assets and uncertain tax positions, and accruals and contingencies. Actual results could materially differ from those estimates.
Summary of Significant Accounting Policies
Our significant accounting policies are discussed in Note 1. “Summary of Business and Significant Accounting Policies” in the notes to consolidated financial statements included in our Annual Report on Form 10-K for the year ended January 31, 2024, filed with the SEC on March 4, 2024. Except for an update to our stock-based compensation policy covering our recently granted restricted stock units (“RSUs”) that contain both service and performance conditions as noted below, there have been no significant changes to these policies during the three months ended April 30, 2024.
Stock-Based Compensation
Stock-based compensation expense related to stock awards with only service conditions, including stock options, RSUs, and employee stock purchase plan (“ESPP”), are measured based on the fair value of the awards granted and recognized as an expense on a straight-line basis over the requisite service period. For RSU’s with service and performance conditions, expense is recognized over the requisite service period if it is probable the performance condition will be achieved. The probability of achievement is assessed quarterly, and the effect of any change in the estimated number of performance-based awards expected to vest is recognized in the period those estimates are revised as a cumulative catch-up adjustment to stock-based compensation expense.


11

The fair value of each option and ESPP award is estimated on the grant date using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires the use of assumptions, including the fair value of the underlying common stock, the expected term of the award, the expected volatility of the price of our common stock, risk-free interest rates, and the expected dividend yield of our common stock.
The fair value of each RSU award is based on the fair value of the underlying common stock as of the grant date.
The assumptions used to determine the fair value of the stock awards represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment. We account for forfeitures as they occur instead of estimating the number of awards expected to be forfeited.
Recent Accounting Pronouncements Not Yet Adopted
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which aims to improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis to enable investors to develop more decision-useful financial analyses. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. This ASU will likely result in us including the additional required disclosures when adopted. We are currently evaluating the impact from the adoption of this ASU on our consolidated financial statements and will adopt it for the year ending January 31, 2025.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which aims to improve the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 and early adoption is permitted. We are currently evaluating the impact from the adoption of this ASU on our consolidated financial statements.
2.    Revenue Recognition
Disaggregation of Revenue
The following table summarizes revenue by region based on the billing address of customers:
Three Months Ended April 30,
20242023
AmountPercentage of
Revenue
AmountPercentage of
Revenue
(in thousands, except percentages)
Americas$818,683 71.7 %$784,597 71.0 %
Asia Pacific (“APAC”)
138,314 12.1 140,870 12.7 
Europe, Middle East, and Africa (“EMEA”)
184,237 16.2 179,897 16.3 
Total$1,141,234 100.0 %$1,105,364 100.0 %
Contract Balances
We receive payments from customers based on a billing schedule as established in our customer contracts. Accounts receivable are recorded when we contractually have the right to consideration. In some arrangements, a right to consideration for our performance under the customer contract may occur before invoicing to the customer, resulting in an unbilled accounts receivable. The amount of unbilled accounts receivable included within accounts receivable, net was $137.7 million and $124.8 million as of April 30, 2024 and January 31, 2024, respectively, and the amount of unbilled accounts receivable included within other assets, noncurrent was immaterial as of April 30, 2024 and January 31, 2024.
Contract liabilities consist of deferred revenue. Revenue is deferred when we have the right to invoice in advance of performance under a customer contract. The current portion of deferred revenue balances is recognized over the next 12 months. The amount of revenue recognized during the three months ended April 30, 2024 and 2023 that was included in deferred revenue at the beginning of each period was $592.5 million and $576.8 million, respectively.
Remaining Performance Obligations


12

The terms of our subscription agreements are monthly, annual, and multiyear, and we may bill for the full term in advance or on an annual, quarterly, or monthly basis, depending on the billing terms with customers. As of April 30, 2024, the aggregate amount of the transaction price allocated to our remaining performance obligations was $3,665.7 million, which consists of both billed consideration in the amount of $1,352.2 million and unbilled consideration in the amount of $2,313.5 million that we expect to recognize as revenue. We expect to recognize 59% of our remaining performance obligations as revenue over the next 12 months and the remainder thereafter.
3.    Investments
Marketable Securities
As of April 30, 2024 and January 31, 2024, our marketable securities consisted of the following:
As of April 30, 2024
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
(in thousands)
Commercial paper$19,737 $ $ $19,737 
Agency bonds1,752,707 24 (6,482)1,746,249 
Corporate and other debt securities652,318 104 (2,633)649,789 
U.S. government agency securities3,032,764 4 (14,488)3,018,280 
Treasury bills54,727  (45)54,682 
Marketable securities$5,512,253 $132 $(23,648)$5,488,737 
As of January 31, 2024
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
(in thousands)
Commercial paper$41,564 $ $ $41,564 
Agency bonds1,667,601 2,426 (3,344)1,666,683 
Corporate and other debt securities663,122 1,161 (1,124)663,159 
U.S. government agency securities3,003,224 7,859 (6,241)3,004,842 
Treasury bills27,992  (7)27,985 
Marketable securities$5,403,503 $11,446 $(10,716)$5,404,233 
Unrealized losses for securities that have been in an unrealized loss position for less than 12 months were $21.8 million and $6.0 million as of April 30, 2024 and January 31, 2024, respectively. Unrealized losses for securities that have been in an unrealized loss position for 12 months or longer were $1.9 million and $4.8 million as of April 30, 2024 and January 31, 2024, respectively. We review the individual securities that have unrealized losses on a regular basis to evaluate whether or not any security has experienced, or is expected to experience, credit losses resulting in the decline in fair value. We evaluate, among other factors, whether we have the intention to sell any of these marketable securities and whether it is more likely than not that we will be required to sell any of them before recovery of the amortized cost basis. We have not recorded an allowance for credit losses, as we believe any such losses would be immaterial based on the high-grade credit rating for each of our marketable securities as of the end of each period. There were no material realized gains or losses from available-for-sale securities that were reclassified out of accumulated other comprehensive loss for the three months ended April 30, 2024 and 2023.


13

The following table presents the contractual maturities of our marketable securities as of April 30, 2024 and January 31, 2024:
As of
April 30, 2024January 31, 2024
(in thousands)
Less than one year$3,017,465 $2,883,598 
Due in one to five years2,471,272 2,520,635 
Total$5,488,737 $5,404,233 
Strategic Investments
Strategic investments by form and measurement category as of April 30, 2024 were as follows:
Measurement Category
Fair ValueMeasurement AlternativeEquity MethodTotal
(in thousands)
Equity securities$24,200 $299,651 $97,208 $421,059 
Debt securities3,864 — — 3,864 
Strategic investments$28,064 $299,651 $97,208 $424,923 
Strategic investments by form and measurement category as of January 31, 2024 were as follows:
Measurement Category
Fair ValueMeasurement AlternativeEquity MethodTotal
(in thousands)
Equity securities$23,160 $285,509 $96,725 $405,394 
Debt securities3,828 — — 3,828 
Strategic investments$26,988 $285,509 $96,725 $409,222 


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4.    Fair Value Measurements
The following tables present information about our financial instruments that are measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value:
As of April 30, 2024
Fair ValueLevel 1Level 2Level 3
(in thousands)
Financial Assets:
Money market funds$1,347,656 $1,347,656 $ $ 
Treasury bills40,325  40,325  
Commercial paper9,466  9,466  
U.S. government agency securities3,504  3,504  
Cash equivalents1,400,951 1,347,656 53,295  
Commercial paper19,737  19,737  
Agency bonds1,746,249  1,746,249  
Corporate and other debt securities649,789  649,789  
U.S. government agency securities3,018,280  3,018,280  
Treasury bills54,682  54,682  
Marketable securities5,488,737  5,488,737  
Certificates of deposit included in other assets, noncurrent253  253  
Publicly held equity securities included in strategic investments24,200 24,200   
Privately held debt securities included in strategic investments3,864   3,864 
Total financial assets$6,918,005 $1,371,856 $5,542,285 $3,864 
As of January 31, 2024
Fair ValueLevel 1Level 2Level 3
(in thousands)
Financial Assets:
Money market funds$851,100 $851,100 $ $ 
Treasury bills100,629  100,629  
Corporate debt securities2,715  2,715  
Agency bonds20,155  20,155  
Cash equivalents974,599 851,100 123,499  
Commercial paper41,564  41,564  
Agency bonds1,666,683  1,666,683  
Corporate and other debt securities663,159  663,159  
U.S. government agency securities3,004,842  3,004,842  
Treasury bills27,985  27,985  
Marketable securities5,404,233  5,404,233  
Certificates of deposit included in other assets, noncurrent254  254  
Publicly held equity securities included in strategic investments23,160 23,160   
Privately held debt securities included in strategic investments3,828   3,828 
Total financial assets$6,406,074 $874,260 $5,527,986 $3,828 
We classify our highly liquid money market funds and publicly held equity securities within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. We classify our commercial paper, agency bonds, corporate and other debt securities, U.S. government agency securities, treasury bills, and certificates of deposit within Level 2 because they are valued using inputs other than quoted prices that are directly or indirectly observable in the market, including readily available pricing sources for the identical underlying security, which may not be actively traded. We classify


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our privately held debt securities as Level 3 due to the lack of relevant observable market data over fair value inputs, such as the probability weighting of the various scenarios that can impact settlement of the arrangement.
5.    Business Combinations
Workvivo Limited
On April 21, 2023, we acquired 100% of the issued and outstanding share capital of Workvivo Limited (“Workvivo”), a private technology company that provides an employee experience platform, for an all-cash purchase consideration of $221.8 million. The acquisition extends our platform and offers our customers new ways to keep employees informed, engaged, and connected. The acquisition has been accounted for as a business combination.
In allocating the purchase consideration, $184.7 million was attributed to goodwill, $28.0 million to intangible assets (primarily consisting of $10.8 million to developed technology and $17.0 million to customer relationships), and $9.1 million to other net assets acquired. The goodwill amount represents synergies related to our existing products expected to be realized from the acquisition and assembled workforce. The associated goodwill is not deductible for tax purposes.
At the date of the acquisition, the developed technology and customer relationships both had an estimated useful life of 5.0 years, and both are amortized using the straight-line method over their respective estimated useful lives. Amortization of developed technology and customer relationships is recorded within cost of revenue and sales and marketing expense, respectively, within the condensed consolidated statements of operations. As of April 30, 2024, the developed technology and customer relationships both had a remaining useful life of 4.0 years.
Transaction costs incurred in connection with the acquisition were immaterial. The results of operations of Workvivo, which are not material, have been included in our condensed consolidated financial statements from the date of the acquisition. Pro forma and historical results of operations of the company have not been presented, as the results do not have a material effect on any of the periods presented in our condensed consolidated statements of operations.
6.    Balance Sheet Components
Accounts Receivable, Net
Accounts receivable are recorded for invoiced amounts and amounts for which revenue has been recognized, but not invoiced, net of allowances. Our short-term accounts receivable consist of the following:
As of
April 30, 2024January 31, 2024
(in thousands)
Accounts receivable, gross$549,524 $568,449 
Less: allowance for credit losses(17,011)(25,916)
Less: allowance for returns(4,998)(6,455)
Accounts receivable, net$527,515 $536,078 
Below is a rollforward of our allowance for credit losses for the three months ended April 30, 2024 and 2023:
20242023
 (in thousands)
Balance as of January 31$25,916 $24,900 
Provision for credit losses4,533 21,737 
Write-offs(13,438)(8,516)
Balance as of April 30$17,011 $38,121 


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Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following:
As of
April 30, 2024January 31, 2024
(in thousands)
Prepaid expenses$151,427 $188,259 
Restricted cash
10,588 6,874 
Other20,062 24,049 
Prepaid expenses and other current assets$182,077 $219,182 
Property and Equipment, Net
Property and equipment consisted of the following:
As of
April 30, 2024January 31, 2024
(in thousands)
Servers$360,672 $340,868 
Software101,639 95,409 
Computer and office equipment43,057 44,571 
Leasehold improvements49,329 43,981 
Furniture and fixtures 5,213 5,192 
Property and equipment, gross559,910 530,021 
Less: accumulated depreciation and amortization(255,198)(236,317)
Property and equipment, net$304,712 $293,704 
Depreciation and amortization expense was $23.3 million and $22.0 million for the three months ended April 30, 2024 and 2023, respectively.
Other Assets, Noncurrent
Other assets, noncurrent consisted of the following:
As of
April 30, 2024January 31, 2024
(in thousands)
Accounts receivable, noncurrent$18,073 $26,099 
Intangible assets subject to amortization, net43,609 46,935 
Indefinite-lived intangible assets25,239 25,239 
Prepaid expenses, noncurrent28,297 23,351 
Other11,792 11,853 
Other assets, noncurrent$127,010 $133,477 


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Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following:
As of
April 30, 2024January 31, 2024
(in thousands)
Accrued expenses$172,398 $173,993 
Accrued compensation and benefits127,708 185,128 
Income tax liabilities71,257 21,880 
Sales and other non-income tax liabilities33,664 35,460 
Customer deposit liabilities44,065 40,142 
Operating lease liabilities, current27,572 24,645 
Other25,135 18,916 
Accrued expenses and other current liabilities$501,799 $500,164 
Other Liabilities, Noncurrent
Other liabilities, noncurrent consisted of the following:
As of
April 30, 2024January 31, 2024
(in thousands)
Sales and other non-income tax liabilities$42,515 $42,254 
Long-term income tax liabilities
37,060 33,864 
Other5,641 5,260 
Other liabilities, noncurrent$85,216 $81,378 

7.    Commitments and Contingencies
Non-cancelable Purchase Obligations
During the three months ended April 30, 2024, there have been no material changes to our non-cancelable purchase obligations from those disclosed in Note 9. “Commitments and Contingencies” in the notes to consolidated financial statements included in our Annual Report on Form 10-K for the year ended January 31, 2024 filed with the SEC on March 4, 2024.
Other Contingencies
In June 2020, we received a grand jury subpoena from the Department of Justice’s U.S. Attorney’s Office for Eastern District of New York (“EDNY”), which requested information regarding our interactions with foreign governments and foreign political parties, including the Chinese government, as well as information regarding storage of and access to user data, the development and implementation of Zoom’s privacy policies, and the actions we took responding to law enforcement requests from the Chinese government. In July 2020, we received subpoenas from the Department of Justice’s U.S. Attorney’s Office for the Northern District of California (“NDCA”) and the SEC. Both subpoenas seek documents and information relating to various security, data protection and privacy matters, including our encryption, and our statements relating thereto, as well as calculation of usage metrics and related public statements. In addition, the NDCA subpoena seeks information relating to any contacts between our employees and representatives of the Chinese government, and any attempted or successful influence by any foreign government in our policies, procedures, practices, and actions as they relate to users in the United States. We have since received additional subpoenas from EDNY and NDCA seeking related information. We are fully cooperating with all of these investigations and have been conducting our own thorough internal investigation. These investigations are ongoing, and we do not know when they will be completed, which facts we will ultimately discover as a result of the investigations, or what actions the government may or may not take. We cannot predict the outcome of these investigations, and a negative outcome in any or all of these matters could cause us to incur substantial fines, penalties, or other financial exposure, as well as reputational harm.


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Legal Proceedings
On June 11, 2020 and July 30, 2020, purported shareholder derivative complaints were filed in the United States District Court for the District of Delaware. The first complaint names as defendants nine of our officers and directors, and the second complaint names eight of our officers and directors. The lawsuits assert state and federal claims and are based on the same alleged misstatements as the shareholder class action complaint. The lawsuits accuse our board of directors of failing to exercise reasonable and prudent supervision over our management, policies, practices, and internal controls. The plaintiffs seek unspecified monetary damages on behalf of us as well as governance reforms. On September 25, 2020, the derivative cases were consolidated. On October 27, 2021, a third substantially identical lawsuit was filed in the same court against the same defendants, seeking unspecified monetary damages and governance reforms. On November 17, 2021, all three derivative lawsuits were consolidated. The consolidated case was stayed pending resolution of the motion to dismiss the securities class action. On April 11, 2023, the court entered a stipulated order that requires defendants to answer, move, or otherwise respond to the operative complaint by June 12, 2023. On June 12, 2023, defendants filed a motion to dismiss the consolidated case. On August 11, 2023, the plaintiff in the consolidated case filed an amended complaint. On October 18, 2023, defendants filed their motion to dismiss the amended complaint. On October 18, 2023, defendants filed their motion to dismiss the amended complaint. On December 22, 2023, plaintiff filed her opposition to the motion to dismiss, and on January 26, 2024, defendants filed their reply in support of the motion to dismiss.
We are vigorously defending ourselves against these lawsuits. Given the uncertainty of litigation and the legal standards that must be met for, among other things, class certification and success on the merits, we cannot estimate the reasonably possible loss or range of loss that may result from these actions.
On April 7, 2020 and April 8, 2020, securities class action complaints were filed against us and two of our officers in the United States District Court for the NDCA. The plaintiffs are purported stockholders of ours. The complaints allege, among other things, that we violated Sections 10(b) and 20(a) of the Exchange Act, and Rule 10b-5 by making false and misleading statements and omissions of material fact about our data privacy and security measures. The complaints seek unspecified damages, interest, fees, and costs. On May 18, 2020, the actions were consolidated. On November 4, 2020, the court appointed a lead plaintiff. On December 23, 2020, the lead plaintiff filed a consolidated complaint. We filed a motion to dismiss the consolidated complaint on May 20, 2021. Plaintiff filed an opposition to our motion to dismiss on July 9, 2021. Our reply in support of the motion to dismiss was filed on August 9, 2021. On February 16, 2022, the court granted in part, and denied in part, our motion to dismiss. On March 14, 2022, we moved for reconsideration of the court’s ruling on the motion to dismiss. On March 22, 2022, the court ordered plaintiff to respond to our motion, which plaintiff did on March 29, 2022. On April 22, 2022, we answered the complaint. On March 8, 2023, the court denied our motion for reconsideration. On April 6, 2023, the court entered a scheduling order. On July 17, 2023, the parties entered into a stipulation and agreement of settlement (the “Stipulation”) to resolve this matter. Under the terms of the stipulation, in exchange for the release and dismissal with prejudice of all claims against all defendants in the matter, we have agreed to pay and/or cause our insurance carriers to pay a total of $150.0 million. The Stipulation and settlement remain subject to preliminary and final approval by the court. On July 25, 2023, the court entered an order staying further proceedings in the matter pending the filing of a motion for preliminary approval of the settlement. On October 17, 2023, lead plaintiff filed a motion for preliminary approval of the settlement. A hearing on the motion for preliminary approval of the settlement is scheduled for June 13, 2024. As a result of the settlement, we made net payments of $60.0 million ($150.0 million for the settlement net of $90.0 million covered by insurance) during the fiscal year ended January 31, 2024, of which $7.5 million had been accrued during the year ended January 31, 2023 and $52.5 million was recorded as a general and administrative expense in our consolidated statement of operations for the fiscal year ended January 31, 2024.
In addition, from time to time, we are involved in various other legal proceedings arising from the normal course of business activities. We are not presently a party to any other such litigation the outcome of which, we believe, if determined adversely to us, would individually, or taken together, have a material adverse effect on our business, operating results, cash flows, or financial condition. Defending such proceedings is costly and can impose a significant burden on management and employees. We may receive unfavorable preliminary or interim rulings in the course of litigation, and there can be no assurances that favorable final outcomes will be obtained.
8.    Stockholders’ Equity and Equity Incentive Plans
Common Stock
Our amended and restated certificate of incorporation authorizes the issuance of 2,000,000,000 shares of Class A common stock, $0.001 par value per share, and 300,000,000 shares of Class B common stock, $0.001 par value per share. Class A and Class B common stock are referred to as common stock throughout the notes to the condensed consolidated financial statements, unless otherwise noted.


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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. Repurchases of our Class A common stock may be effected from time to time, either on the open market (including preset trading plans), in privately negotiated transactions, and other transactions in accordance with applicable securities laws. The program does not obligate us to repurchase any specific number of shares and may be discontinued at any time.
During the three months ended April 30, 2024, we repurchased and subsequently retired 2,400,305 shares of our Class A common stock for an aggregate amount of $150.0 million. As of April 30, 2024, $1,350.0 million of the repurchase authorization remained available.
Equity Incentive Plans
We have two equity incentive plans: the 2011 Global Share Plan (“2011 Plan”) and the 2019 Equity Incentive Plan (“2019 Plan”). All shares that remain available for future grants are under the 2019 Plan.
Stock Options
A summary of stock option activity under our equity incentive plan and related information is as follows:
 Stock Options
Outstanding
Stock
Options
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
(in thousands, except share, life, and per share data)
Balance as of January 31, 20243,314,228 $8.21 3.9$189,921 
Exercised(109,464)$9.28 $6,146 
Canceled/forfeited/expired(1,875)$94.87 
Outstanding and exercisable as of April 30, 2024
3,202,889 $8.12 3.7$172,975 
As of April 30, 2024, all options have vested and there is no unrecognized stock-based compensation expense remaining.
Restricted Stock Units
A summary of RSU activity under our equity incentive plan and related information is as follows:
RSUs
RSUsWeighted-
Average
Grant Date Fair Value Per Share
Unvested as of January 31, 202426,040,557 $83.14 
Granted5,073,584 $64.56 
Vested(4,001,172)$84.99 
Canceled/forfeited(1,099,816)$83.83 
Unvested as of April 30, 202426,013,153 $79.20 
As of April 30, 2024, unrecognized stock-based compensation expense related to RSUs was $1,787.9 million, which is expected to be recognized over a weighted-average period of 2.6 years.
For the three months ended April 30, 2024, we granted 1.7 million RSUs that contain both service and performance vesting criteria. The ultimate number of shares eligible to vest pursuant to these RSUs range from 0% to 100% of the target number of shares depending on achievement of the performance metrics. The number of RSUs with service and performance vesting conditions included in the granted amount in the table above reflects the shares that would be eligible to vest at 100% of the target amount.


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2019 Employee Stock Purchase Plan
In April 2019, we adopted the 2019 ESPP. As of April 30, 2024, unrecognized stock-based compensation expense related to the ESPP was $26.8 million, which is expected to be recognized over a weighted-average period of 1.0 year.
Stock-Based Compensation
The stock-based compensation expense by line item in the accompanying condensed consolidated statements of operations is summarized as follows:
Three Months Ended April 30,
20242023
(in thousands)
Cost of revenue$31,575 $38,089 
Research and development82,569 81,466 
Sales and marketing77,234 112,593 
General and administrative38,047 50,197 
Total stock-based compensation expense$229,425 $282,345 
Benefit from income taxes(43,474)(49,677)
Total stock-based compensation expense recorded to net income$185,951 $232,668 
9.    Restructuring Activities
On February 7, 2023, we announced a restructuring plan (the “Plan”) intended to reduce operating costs and continue advancing our ongoing commitment to profitable growth. The Plan included a reduction of our then-current workforce by approximately 15%. The execution of the Plan was completed as of July 31, 2023, and therefore no restructuring expense was recorded for the three months ended April 30, 2024.
For the three months ended April 30, 2023, we recorded net restructuring costs of $73.2 million, which consisted of $54.8 million related to employee transition, severance payments, and employee benefits; $17.3 million related to stock-based compensation awards; and $1.1 million for other related expenses.
The following table summarizes our restructuring expenses that were recorded as an operating expense in the condensed consolidated statement of operations for the three months ended April 30, 2023:
Three Months Ended
 April 30, 2023
 (in thousands)
Cost of revenue$7,095 
Research and development19,302 
Sales and marketing33,841 
General and administrative12,942 
Total restructuring expenses$73,180 
There was no restructuring liability as of January 31, 2024 and April 30, 2024.
10.    Income Taxes
We compute our provision for income taxes by applying the estimated annual effective tax rate to year-to-date ordinary income and adjust the provision for discrete tax items recorded in the period. In each quarter, we update the estimated annual effective tax rate and make a year-to-date adjustment to the provision.


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The following table provides details of the provision for income taxes:
Three Months Ended April 30,
20242023
(in thousands, except percentages)
Income before provision for income taxes$291,964 $43,230 
Provision for income taxes75,656 27,786 
Effective tax rate25.9 %64.3 %
The year-over-year change in effective tax rate for the three months ended April 30, 2024 was due primarily to the increase in income before taxes and tax shortfalls and windfalls on stock-based compensation. For both the three months ended April 30, 2024 and April 30, 2023, the effective tax rate differed from the U.S. federal statutory rate due primarily to the foreign-derived intangible income deduction and research credits, offset by tax shortfalls on stock-based compensation, and other compensation-related permanent differences.
As required by the 2017 Tax Cuts and Jobs Act, we started capitalizing research and development expenses incurred beginning in fiscal year 2023. These expenses are capitalized and amortized over five years for domestic research and fifteen years for international research. The mandatory capitalization requirement increases our cash tax liabilities but also decreases our effective tax rate due to increasing the foreign-derived intangible income deduction. The cash flow impact will decrease over time as capitalized research and development expenditures continue to amortize.
11.    Net Income Per Share
The following table sets forth the computation of basic and diluted net income per share for the periods presented:
Three Months Ended April 30,
20242023
Class AClass BClass AClass B
(in thousands, except share and per share data)
Numerator:
Net income, basic$184,070 $32,238 $13,004 $2,440 
Reallocation of net income(1,292)1,292 (135)135 
Net income, diluted$182,778 $33,530 $12,869 $2,575 
Denominator:
Weighted-average shares used in computing net income per share, basic262,693,481 46,007,101 248,731,065 46,678,142 
Weighted-average shares used in computing net income per share, diluted266,476,843 48,883,835 253,394,377 50,721,536 
Net income per share, basic$0.70 $0.70 $0.05 $0.05 
Net income per share, diluted$0.69 $0.69 $0.05 $0.05 
The potential shares of common stock that were excluded from the computation of diluted net income per share for the periods presented, because including them would have been anti-dilutive, are as follows:
Three Months Ended April 30,
20242023
Class AClass BClass AClass B
Unvested RSUs10,342,542  10,884,907  
Purchase rights committed under the ESPP1,040,285  2,068,828  
Outstanding stock options102,354  124,051  
Total11,485,181  13,077,786  
The table above does not include 405,156 shares of issued Class A common stock held by us as of April 30, 2024 and 2023 that are reserved for the sole purpose of being transferred to nonprofit organizations.


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Item 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in the section titled “Risk Factors” and in other parts of this Quarterly Report on Form 10-Q.
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 AI-powered, open collaboration platform built for modern work. Zoom Workplace along with AI Companion, Business Services for sales, marketing, and customer care teams, including Zoom Contact Center, and our robust ecosystem with over 2,500 apps and integration, help drive impact, reimagine teamwork, strengthen customer relationships, and enable seamless experiences. 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.
We’re on a mission to reimagine the way we communicate and collaborate in a flexible working world. Zoom Workplace, our AI-powered collaboration platform is designed to help organizations reimagine teamwork by streamlining communications, increasing employee engagement, optimizing in-person time, and improve productivity across flexible work. 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.
We continue to invest in AI and focus on three key areas regarding AI innovation: supporting individual productivity, powering better collaboration, and helping customer-facing teams delight their customers. We launched Zoom AI Companion, our smart assistant that is designed to empower workers to increase productivity, improve team effectiveness, and enhance skills. 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. 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.
We believe that face-to-face communications build greater empathy and trust. We strive to live up to the trust our customers place in us by delivering a communications solution while prioritizing their privacy and security. Our 33 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 generate revenue from the sale of subscriptions to our Zoom Workplace collaboration platform and Business Services. 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. 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. Our Zoom Workplace 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 Workplace bundles: Zoom Workplace Pro, Business, Business Plus, Enterprise, Enterprise Plus, and Enterprise Premier. The Zoom Workplace bundles are designed for different business needs and are composed of Zoom Meetings, Zoom Team Chat, Zoom Whiteboard and Mail and Calendar, Zoom Clips, as well as Zoom Phone, Zoom Webinars and Zoom Rooms for our Enterprise plans. 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 also offer Regional Unlimited and Regional Metered calling plans in four specific markets (Australia/New Zealand, Japan, United Kingdom/Ireland and United States/Canada). In addition, we offer a Global Select plan that allows customers to select from local numbers and domestic calling in more than 45 countries and territories where Zoom has local public switched telephone network (“PSTN”) coverage.
Our revenue was $1,141.2 million and $1,105.4 million for the three months ended April 30, 2024 and 2023, respectively, representing period-over-period growth of 3.2%. We had net income of $216.3 million and $15.4 million for the


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three months ended April 30, 2024 and 2023, respectively. Net cash provided by operating activities was $588.2 million and $418.5 million for the three months ended April 30, 2024 and 2023, respectively.
Macroeconomic Conditions and Other Factors
Macroeconomic factors, including geopolitical conflicts, global economic slowdown, high inflation, increased interest rates, and the responses by central banking authorities, and fluctuations in foreign currency exchange rates, have introduced uncertainty to our business. For the three months ended April 30, 2024, compared to the three months ended April 30, 2023, we continued to experience growth in total revenue and revenue from Enterprise customers. However, macroeconomic conditions have impacted and may continue to impact the future demand for subscriptions to our unified communications and collaboration platform. For example, we have been experiencing elongated sales cycles as well as a decrease in customers’ overall corporate spending. 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.
We are continuously monitoring the impact of these circumstances on our business and financial results, as well as the overall global economy and geopolitical landscape. The implications of macroeconomic conditions on our business, results of operations and overall financial position, particularly in the long term, remain uncertain.
Refer to “Part II—Other Information, Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q 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 the Zoom Workplace and our Business Services offerings. 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. We will need to continue to invest in sales and marketing in order to address this opportunity by hiring, developing, and retaining talented sales personnel who are able to achieve desired productivity levels in a reasonable period of time.
Expansion of Zoom Across Existing Enterprise Customers
We believe that there is a large opportunity for growth with many of our existing customers. Historically customers have increased the size of their subscriptions as they have expanded their use of our platform across their operations. Despite recent macroeconomic headwinds that have impacted the rate of expansion, we believe there continues to be opportunity for future expansion with our existing customers as we innovate our platform with additional product offerings and the use of AI. 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. 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. 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 58.3% and 57.2% of total revenue for the three months ended April 30, 2024 and 2023, respectively. 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 users within a customer and the purchase of additional products, and compares our subscription revenue from the same set of Enterprise customers across comparable periods. We calculate net dollar expansion rate as of a period end by starting with the annual recurring revenue (“ARR”) from all Enterprise customers as of 12 months prior (“Prior Period ARR”). We define ARR as the annualized revenue run rate of subscription agreements from all customers at a point in time. We calculate ARR by taking the monthly recurring revenue (“MRR”) and multiplying it by 12. MRR is defined as the recurring revenue run-rate of subscription agreements from all Enterprise customers for the last month of the period, including revenue from monthly subscribers who have not provided any indication that they intend to cancel their subscriptions. We then calculate the ARR from these Enterprise customers as of the current period end (“Current Period ARR”), which includes any upsells, contraction, and attrition. We divide the Current Period ARR by the Prior Period ARR to arrive at the net dollar expansion rate. For the trailing 12-months calculation, we take an average of the net dollar expansion rate over the trailing 12 months. Our net dollar expansion rate may fluctuate as a result of a number of factors, including the level of penetration within our customer base, expansion of products and features, and our


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ability to retain our Enterprise customers. Our trailing 12-month net dollar expansion rate for Enterprise customers as of April 30, 2024 and 2023 was 99% and 112%, 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” or “Online business”). Online customers represent a diverse customer base, ranging from individual users to small and medium size businesses. We continue to focus on acquisition and retention of our Online customers through various strategies to improve the features and functionalities of our products and services. Revenue from Online customers represented 41.7% and 42.8% of total revenue for the three months ended April 30, 2024 and 2023, respectively. Our ability to retain these Online customers will have an impact on our future revenue. The online monthly average churn for our Online customers was 3.2% and 3.1% per month for the three months ended April 30, 2024 and 2023, respectively. One of the dynamics in the Online business is the MRR contribution from customers that have retained Zoom services for a certain portion of time as these customers tend to maintain their subscriptions and contribute meaningfully to the Online business. As of April 30, 2024 and 2023, the percentage of total Online MRR from Online customers with a continual term of service of at least 16 months was 73.8% and 72.0%, respectively.
We calculate the Online average monthly churn by starting with the Online customer MRR as of the beginning of the applicable quarter (“Entry MRR”). We define Entry MRR as the recurring revenue run-rate of subscription agreements from all Online customers except for subscriptions that we recorded as churn in a previous quarter based on the customers' earlier indication to us of their intention to cancel that subscription. We then determine the MRR related to customers who canceled or downgraded their subscription or notified us of that intention during the applicable quarter (“Applicable Quarter MRR Churn”) and divide the Applicable Quarter MRR Churn by the applicable quarter Entry MRR to arrive at the MRR churn rate for Online customers. We then divided that amount by three to calculate the Online average monthly churn for the applicable quarter.
Innovation and Expansion of Our Platform
We continue to invest resources to enhance the capabilities of the Zoom Workplace and our Business Services offerings. For example, we have 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. We also deliver Zoom Phone calling plans in more than 45 countries and territories as of April 30, 2024.
We also recently announced several upcoming products including Zoom Docs and an enhanced version of AI Companion that is designed to allow the handling of complex tasks across our platform using information from multiple sources including third party applications. These products are expected to be generally available in 2024.
Third-party developers are also a key component of our strategy for platform innovation to make it easier for customers and developers to extend our product portfolio with new functionalities. We believe that as more developers and other third parties use our platform to integrate major third-party applications, we will become the ubiquitous platform for communications and collaboration. We will need to expend additional resources to continue introducing new products, features, and functionality, and supporting the efforts of third parties to enhance the value of our platform with their own applications.
An end-to-end encryption (“E2EE”) option is available to free and paid Zoom customers globally who host meetings with up to 200 participants as well as on Zoom Phone. Zoom’s E2EE uses the same AES-256-GCM encryption that secures Zoom meetings by default, but with Zoom’s E2EE, the meeting host, or originating caller in the case of Zoom Phone, as opposed to Zoom's servers, generates encryption keys and uses public key cryptography to distribute these keys to the other meeting participants or call recipient.
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 28.3% and 29.0% of our total revenue for the three months ended April 30, 2024 and 2023, respectively. We plan to add local sales support in further select international markets over time. We use strategic partners and resellers to sell in certain international markets where we have limited or no direct sales presence. 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.


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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. Increasing awareness of our platform and capabilities, coupled with the mainstream adoption of our technology, has expanded the diversity of our customer base to include organizations of all sizes across all industries. Over time, we expect revenue from Enterprise customers to represent a larger share of our business. As of April 30, 2024 and 2023, we had approximately 191,000 and 215,900 Enterprise customers, respectively. During the three months ended April 30, 2024, in order to enhance customer experience and improve efficiency, we transitioned approximately 26,800 Enterprise customers with lower MRR away from working with direct sales teams, resellers, or strategic partners. These customers are now considered Online customers and no longer included in our Enterprise customer total as of April 30, 2024. The impact of this transition did not have a material impact on the percent of revenue from Enterprise and Online customers, net dollar expansion rate, or Online average monthly churn.
Customers Contributing More Than $100,000 of Trailing 12 Months Revenue
We focus on growing the number of customers that contribute more than $100,000 of trailing 12 months revenue as it is a measure of our ability to scale with our customers and attract larger organizations to Zoom. Revenue from these customers represented 29.9% and 28.6% of total revenue for the three months ended April 30, 2024 and 2023, respectively. As of April 30, 2024 and 2023, we had 3,883 and 3,580 customers, respectively, that contributed more than $100,000 of trailing 12 months revenue, demonstrating our increasing penetration of larger organizations, including enterprises. 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 believe that FCF is a useful indicator of liquidity that provides information to management and investors about the amount of cash generated from our operations that, after investments in property and equipment, can be used for future growth. FCF is presented for supplemental informational purposes only and has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of other GAAP financial measures, such as net cash provided by operating activities. 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.
The following table presents a summary of our cash flows for the periods presented and a reconciliation of FCF to net cash provided by operating activities, the most directly comparable financial measure calculated in accordance with GAAP:
Three Months Ended April 30,
20242023
(in thousands)
Net cash provided by operating activities$588,191 $418,487 
Less: purchases of property and equipment(18,508)(21,826)
Free cash flow (non-GAAP)$569,683 $396,661 
Net cash used in investing activities$(107,824)$(480,786)
Net cash (used in) provided by financing activities$(142,451)$7,019 
Components of Results of Operations
Revenue
We derive our revenue from subscription agreements with customers for access to our unified communications and collaboration platform. Our customers generally do not have the ability to take possession of our software. We also provide


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services, which include professional services, consulting services, and online event hosting, which are generally considered distinct from the access to our unified communications and collaboration platform. 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. 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.
Operating Expenses
Research and Development
Research and development expenses primarily consist of personnel-related expenses directly associated with our research and development organization, depreciation of equipment used in research and development, and allocated overhead. Research and development costs are expensed as incurred.
Sales and Marketing
Sales and marketing expenses primarily consist of personnel-related expenses directly associated with our sales and marketing organization. Other sales and marketing expenses include advertising and promotional events to promote our brand, such as awareness programs, digital programs, public relations, tradeshows, and our user conference, Zoomtopia, and allocated overhead. Sales and marketing expenses also include credit card processing fees related to sales and amortization of deferred contract acquisition costs.
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.
Gains on Strategic Investments, Net
Gains on strategic investments, net consist primarily of remeasurement gains on our equity investments.
Other Income, Net
Other income, net consists primarily of interest income and net accretion on our marketable securities and effect of changes in foreign currency exchange rates.
Provision for Income Taxes
Provision for income taxes consists primarily of income taxes related to federal, state, and foreign jurisdictions where we conduct business.


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Results of Operations
The following tables set forth selected condensed consolidated statements of operations data and such data as a percentage of revenue for each of the periods indicated:
Three Months Ended April 30,
20242023
(in thousands)
Revenue$1,141,234 $1,105,364 
Cost of revenue (1)
273,302 263,947 
Gross profit867,932 841,417 
Operating expenses:
Research and development (1)
205,558 209,271 
Sales and marketing (1)
348,008 422,504 
General and administrative (1)
111,344 199,900 
Total operating expenses664,910 831,675 
Income from operations203,022 9,742 
Gains on strategic investments, net17,354 2,275 
Other income, net71,588 31,213 
Income before provision for income taxes291,964 43,230 
Provision for income taxes75,656 27,786 
Net income$216,308 $15,444 
(1) Includes stock-based compensation expense as follows:
Cost of revenue$31,575 $38,089 
Research and development82,569 81,466 
Sales and marketing77,234 112,593 
General and administrative38,047 50,197 
Total stock-based compensation expense$229,425 $282,345 

Three Months Ended April 30,
20242023
(as a percentage of revenue)
Revenue100.0 %100.0 %
Cost of revenue23.9 23.9 
Gross profit76.1 76.1 
Operating expenses:
Research and development18.0 18.9 
Sales and marketing30.5 38.2 
General and administrative9.8 18.1 
Total operating expenses58.3 75.2 
Income from operations17.8 0.9 
Gains on strategic investments, net1.5 0.2 
Other income, net6.3 2.8 
Income before provision for income taxes25.6 3.9 
Provision for income taxes6.6 2.5 
Net income19.0 %1.4 %


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Comparison of the Three Months Ended April 30, 2024 and 2023
Revenue
Three Months Ended April 30,
20242023% Change
(in thousands) 
Revenue$1,141,234 $1,105,364 3.2 %
Revenue for the three months ended April 30, 2024, increased by $35.9 million, or 3.2%, compared to the three months ended April 30, 2023. The increase was driven by a 5.3% increase in revenue from Enterprise customers, of which 42.7% and 57.3% were from existing and new customers, respectively. Revenue from Online customers remained flat year over year.
Cost of Revenue
Three Months Ended April 30,
20242023% Change
(in thousands)
Cost of revenue$273,302 $263,947 3.5 %
Gross profit867,932 841,417 3.2 %
Gross margin76.1 %76.1 %
Cost of revenue for the three months ended April 30, 2024, increased by $9.4 million, or 3.5%, compared to the three months ended April 30, 2023. The increase was primarily driven by higher hosting costs, partially offset by lower restructuring costs as a result of the prior year restructuring plan.
Gross margin remained flat at 76.1% for the three months ended April 30, 2024, as the revenue increase was partially offset by the higher hosting costs.
Operating Expenses
Research and Development
Three Months Ended April 30,
20242023% Change
(in thousands) 
Research and development$205,558 $209,271 (1.8)%
Research and development expense for the three months ended April 30, 2024, decreased by $3.7 million, or 1.8%, compared to the three months ended April 30, 2023. The decrease was primarily due to a $8.1 million decrease in personnel-related expenses, including a $19.3 million decrease in restructuring costs as a result of the prior year restructuring plan, offset by a $5.8 million increase in salaries, payroll taxes and benefits, and a $5.4 million increase in stock-based compensation expense.
Sales and Marketing
Three Months Ended April 30,
20242023% Change
(in thousands)
Sales and marketing$348,008 $422,504 (17.6)%
Sales and marketing expense for the three months ended April 30, 2024, decreased by $74.5 million, or 17.6%, compared to the three months ended April 30, 2023. The decrease was primarily due to a $78.1 million decrease in personnel-related


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expenses, including a $33.8 million decrease in restructuring costs as a result of the prior year restructuring plan, a $27.2 million decrease in stock-based compensation expense, and a $12.5 million decrease in commissions expense.
General and Administrative
Three Months Ended April 30,
20242023% Change
(in thousands)
General and administrative$111,344 $199,900 (44.3)