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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 July 31, 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 filer☒Accelerated filer☐
Non-accelerated filer☐Smaller 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 August 9, 2024, the number of shares of the registrant’s Class A common stock outstanding was 262,128,624 and the number of shares of the registrant’s Class B common stock outstanding was 45,660,591.


Zoom Video Communications, Inc.
Quarterly Report on Form 10-Q
For the Quarterly Period Ended July 31, 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
July 31,
2024		January 31,
2024
Assets(unaudited)
Current assets:
Cash and cash equivalents$1,539,457 $1,558,252 
Marketable securities5,980,575 5,404,233 
Accounts receivable, net of allowances of $22,799 and $32,371 as of July 31, 2024 and January 31, 2024, respectively
528,237 536,078 
Deferred contract acquisition costs, current197,502 208,474 
Prepaid expenses and other current assets149,374 219,182 
Total current assets8,395,145 7,926,219 
Deferred contract acquisition costs, noncurrent120,603 138,724 
Property and equipment, net347,714 293,704 
Operating lease right-of-use assets53,045 58,975 
Strategic investments438,529 409,222 
Goodwill307,295 307,295 
Deferred tax assets718,066 662,177 
Other assets, noncurrent126,795 133,477 
Total assets$10,507,192 $9,929,793 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$10,611 $10,175 
Accrued expenses and other current liabilities439,459 500,164 
Deferred revenue, current1,391,278 1,251,848 
Total current liabilities1,841,348 1,762,187 
Deferred revenue, noncurrent15,416 18,514 
Operating lease liabilities, noncurrent36,052 48,308 
Other liabilities, noncurrent89,129 81,378 
Total liabilities1,981,945 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 July 31, 2024 and January 31, 2024; 262,335,183 and 260,896,822 shares issued and outstanding as of July 31, 2024 and January 31, 2024, respectively; 300,000,000 Class B shares authorized as of July 31, 2024 and January 31, 2024; 45,660,441 and 46,661,531 shares issued and outstanding as of July 31, 2024 and January 31, 2024, respectively
308 307 
Additional paid-in capital5,298,145 5,228,756 
Accumulated other comprehensive income
2,191 1,063 
Retained earnings3,224,603 2,789,280 
Total stockholders’ equity8,525,247 8,019,406 
Total liabilities and stockholders’ equity$10,507,192 $9,929,793 
    
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


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ZOOM VIDEO COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
Three Months Ended July 31, Six Months Ended July 31,
2024202320242023
Revenue$1,162,520 $1,138,676 $2,303,754 $2,244,040 
Cost of revenue285,089 266,559 558,391 530,506 
Gross profit877,431 872,117 1,745,363 1,713,534 
Operating expenses:
Research and development206,756 191,802 412,314 401,073 
Sales and marketing358,770 373,373 706,778 795,877 
General and administrative109,535 129,324 220,879 329,224 
Total operating expenses675,061 694,499 1,339,971 1,526,174 
Income from operations202,370 177,618 405,392 187,360 
Gains on strategic investments, net3,107 31,670 20,461 33,945 
Other income, net87,412 41,085 159,000 72,298 
Income before provision for income taxes292,889 250,373 584,853 293,603 
Provision for income taxes73,874 68,399 149,530 96,185 
Net income219,015 181,974 435,323 197,418 
Net income per share:  
Basic$0.71 $0.61 $1.41 $0.66 
Diluted$0.70 $0.59 $1.38 $0.65 
Weighted-average shares used in computing net income per share:
Basic309,137,807 299,093,452 308,921,610 297,281,846 
Diluted314,027,192 305,932,596 314,696,351 305,054,771 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


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ZOOM VIDEO COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
 Three Months Ended July 31, Six Months Ended July 31,
 2024202320242023
Net income$219,015 $181,974 $435,323 $197,418 
Other comprehensive income (loss):
Unrealized gain (loss) on available-for-sale marketable securities, net of income tax (expense) benefit of $(6,038) and $553 for the three months ended July 31, 2024 and 2023, respectively, and $(346) and $(4,121) for the six months ended July 31, 2024 and 2023, respectively
19,681 (1,836)1,128 13,678 
Comprehensive income$238,696 $180,138 $436,451 $211,096 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


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ZOOM VIDEO COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share data)
(unaudited)
Three Months Ended July 31, 2024
Common StockAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
(Loss) Income
Retained EarningsTotal
Stockholders’
Equity
SharesAmount
Balance as of April 30, 2024309,268,684 $309 $5,310,417 $(17,490)$3,005,588 $8,298,824 
Issuance of common stock upon exercise of stock options112,363 — 839 — — 839 
Issuance of common stock upon release of restricted stock units2,777,616 3 (3)— — — 
Issuance of common stock for employee stock purchase plan666,051 1 34,262 — — 34,263 
Repurchase of common stock(4,829,090)(5)(287,640)— — (287,645)
Stock-based compensation expense— — 240,270 — — 240,270 
Other comprehensive income— — — 19,681 — 19,681 
Net income219,015 219,015 
Balance as of July 31, 2024307,995,624 $308 $5,298,145 $2,191 $3,224,603 $8,525,247 
Three Months Ended July 31, 2023
Common StockAdditional
Paid-In
Capital		Accumulated Other Comprehensive LossRetained EarningsTotal
Stockholders’
Equity
SharesAmount
Balance as of April 30, 2023297,455,726 $298 $4,391,418 $(34,871)$2,167,262 $6,524,107 
Issuance of common stock upon exercise of stock options542,954 — 3,417 — — 3,417 
Issuance of common stock upon release of restricted stock units2,404,443 3 (3)— — — 
Issuance of common stock for employee stock purchase plan552,904 1 32,512 — — 32,513 
Stock-based compensation expense— — 262,177 — — 262,177 
Other comprehensive loss— — — (1,836)— (1,836)
Net income— — — — 181,974 181,974 
Balance as of July 31, 2023300,956,027 $302 $4,689,521 $(36,707)$2,349,236 $7,002,352 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


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ZOOM VIDEO COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share data)
(unaudited)
Six Months Ended July 31, 2024
Common StockAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income
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 options221,827 — 1,855 — — 1,855 
Issuance of common stock upon release of restricted stock units6,778,788 7 (7)— — — 
Issuance of common stock for employee stock purchase plan666,051 1 34,262 — — 34,263 
Repurchases of common stock(7,229,395)(7)(437,686)— — (437,693)
Stock-based compensation expense— — 470,965 — — 470,965 
Other comprehensive income— — — 1,128 — 1,128 
Net income— — — — 435,323 435,323 
Balance as of July 31, 2024307,995,624 $308 $5,298,145 $2,191 $3,224,603 $8,525,247 
Six Months Ended July 31, 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 options1,044,922 1 7,685 — — 7,686 
Issuance of common stock upon release of restricted stock units5,535,351 6 (6)— — — 
Issuance of common stock for employee stock purchase plan552,904 1 32,512 — — 32,513 
Stock-based compensation expense— — 544,450 — — 544,450 
Other comprehensive income— — — 13,678 — 13,678 
Net income— — — — 197,418 197,418 
Balance as of July 31, 2023300,956,027 $302 $4,689,521 $(36,707)$2,349,236 $7,002,352 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


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ZOOM VIDEO COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended July 31,
20242023
Cash flows from operating activities:
Net income$435,323 $197,418 
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense467,375 543,854 
Amortization of deferred contract acquisition costs139,813 138,744 
Depreciation and amortization55,751 50,202 
Deferred income taxes(57,866)13,975 
Gains on strategic investments, net(20,461)(33,945)
Provision for accounts receivable allowances12,518 22,204 
Unrealized foreign exchange losses7,229 4,683 
Non-cash operating lease cost11,957 10,657 
Amortization of discount/premium on marketable securities(35,840)(18,014)
Other(1,225)(3,415)
Changes in operating assets and liabilities:
Accounts receivable7,637 13,631 
Prepaid expenses and other assets61,035 (83,888)
Deferred contract acquisition costs(110,719)(92,927)
Accounts payable267 4,999 
Accrued expenses and other liabilities(53,967)(58,951)
Deferred revenue133,629 56,332 
Operating lease liabilities, net(14,931)(11,101)
Net cash provided by operating activities1,037,525 754,458 
Cash flows from investing activities:
Purchases of marketable securities(2,181,315)(1,826,166)
Maturities of marketable securities1,644,169 1,543,120 
Purchases of property and equipment(102,742)(68,426)
Purchases of strategic investments(13,500)(51,000)
Proceeds from strategic investments4,654 107,244 
Cash paid for acquisition, net of cash acquired— (204,918)
Net cash used in investing activities(648,734)(500,146)
Cash flows from financing activities:
Proceeds from exercise of stock options1,855 7,686 
Proceeds from issuance of common stock for employee stock purchase plan34,263 32,513 
Proceeds from employee equity transactions to be remitted to employees and tax authorities, net2,859 1,259 
Cash paid for repurchases of common stock(437,693)— 
Net cash (used in) provided by financing activities(398,716)41,458 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(6,146)(3,781)
Net (decrease) increase in cash, cash equivalents, and restricted cash(16,071)291,989 
Cash, cash equivalents, and restricted cash – beginning of period1,565,380 1,100,243 
Cash, cash equivalents, and restricted cash – end of period$1,549,309 $1,392,232 
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$1,539,457 $1,380,121 
Restricted cash, current included in prepaid expenses and other current assets9,852 11,856 
Restricted cash, noncurrent included in other assets, noncurrent— 255 
Total cash, cash equivalents, and restricted cash$1,549,309 $1,392,232 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


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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 fiscal year 2025 grants of 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 six months ended July 31, 2024.
Stock-Based Compensation
Stock-based compensation expense related to stock awards with only service conditions, including stock options, RSUs, and shares issued pursuant to our 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.


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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 July 31, Six Months Ended July 31,
2024202320242023
AmountPercentage of
Revenue		AmountPercentage of
Revenue		AmountPercentage of
Revenue		AmountPercentage of
Revenue
(in thousands, except percentages)
Americas$835,728 71.9 %$808,425 71.0 %$1,654,411 71.8 %$1,593,022 71.0 %
Asia Pacific (“APAC”)
142,315 12.2 144,915 12.7 280,629 12.2 285,786 12.7 
Europe, Middle East, and Africa (“EMEA”)
184,477 15.9 185,336 16.3 368,714 16.0 365,232 16.3 
Total$1,162,520 100.0 %$1,138,676 100.0 %$2,303,754 100.0 %$2,244,040 100.0 %
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 $119.9 million and $124.8 million as of July 31, 2024 and January 31, 2024, respectively, and the amount of unbilled accounts receivable included within other assets, noncurrent was immaterial as of July 31, 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 July 31, 2024 and 2023 that was included in deferred


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revenue at the beginning of each period was $609.4 million and $593.9 million, respectively, and $955.4 million and $939.2 million during the six months ended July 31, 2024 and 2023, respectively.
Remaining Performance Obligations
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 July 31, 2024, the aggregate amount of the transaction price allocated to our remaining performance obligations was $3,778.3 million, which consists of both billed consideration in the amount of $1,406.7 million and unbilled consideration in the amount of $2,371.6 million that we expect to recognize as revenue. We expect to recognize 60% of our remaining performance obligations as revenue over the next 12 months and the remainder thereafter.
3.    Investments
Marketable Securities
As of July 31, 2024 and January 31, 2024, our marketable securities consisted of the following:
As of July 31, 2024
Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Estimated
Fair
Value
(in thousands)
Commercial paper$19,636 $— $— $19,636 
Agency bonds1,770,254 1,049 (2,591)1,768,712 
Corporate and other debt securities711,321 1,434 (532)712,223 
U.S. government agency securities3,356,712 5,993 (3,146)3,359,559 
Treasury bills120,449 13 (17)120,445 
Marketable securities$5,978,372 $8,489 $(6,286)$5,980,575 
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 $2.9 million and $6.0 million as of July 31, 2024 and January 31, 2024, respectively. Unrealized losses for securities that have been in an unrealized loss position for 12 months or longer were $3.4 million and $4.8 million as of July 31, 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 and six months ended July 31, 2024 and 2023.


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The following table presents the contractual maturities of our marketable securities as of July 31, 2024 and January 31, 2024:
As of
July 31, 2024January 31, 2024
(in thousands)
Less than one year$3,268,071 $2,883,598 
Due in one to five years2,712,504 2,520,635 
Total$5,980,575 $5,404,233 
Strategic Investments
Strategic investments by form and measurement category as of July 31, 2024 were as follows:
Measurement Category
Fair ValueMeasurement AlternativeEquity MethodTotal
(in thousands)
Equity securities$26,880 $309,650 $97,596 $434,126 
Debt securities4,403 — — 4,403 
Strategic investments$31,283 $309,650 $97,596 $438,529 
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 July 31, 2024
Fair ValueLevel 1Level 2Level 3
(in thousands)
Financial Assets:
Money market funds$898,494 $898,494 $— $— 
Treasury bills113,107 — 113,107 — 
Commercial paper1,988 — 1,988 — 
Cash equivalents1,013,589 898,494 115,095 — 
Commercial paper19,636 — 19,636 — 
Agency bonds1,768,712 — 1,768,712 — 
Corporate and other debt securities712,223 — 712,223 — 
U.S. government agency securities3,359,559 — 3,359,559 — 
Treasury bills120,445 — 120,445 — 
Marketable securities5,980,575 — 5,980,575 — 
Certificate of deposit included in prepaid expenses and other current assets251 — 251 — 
Publicly held equity securities included in strategic investments26,880 26,880 — — 
Privately held debt securities included in strategic investments4,403 — — 4,403 
Total financial assets$7,025,698 $925,374 $6,095,921 $4,403 
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 July 31, 2024, the developed technology and customer relationships both had a remaining useful life of 3.7 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
July 31, 2024January 31, 2024
(in thousands)
Accounts receivable, gross$551,036 $568,449 
Less: allowance for credit losses(18,988)(25,916)
Less: allowance for returns(3,811)(6,455)
Accounts receivable, net$528,237 $536,078 
Below is a rollforward of our allowance for credit losses for the six months ended July 31, 2024 and 2023:
20242023
 (in thousands)
Balance as of January 31$25,916 $24,900 
Provision for credit losses13,052 30,250 
Write-offs(19,980)(17,057)
Balance as of July 31$18,988 $38,093 


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Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following:
As of
July 31, 2024January 31, 2024
(in thousands)
Prepaid expenses$129,490 $188,259 
Restricted cash
9,852 6,874 
Other10,032 24,049 
Prepaid expenses and other current assets$149,374 $219,182 
Property and Equipment, Net
Property and equipment consisted of the following:
As of
July 31, 2024January 31, 2024
(in thousands)
Servers$410,222 $340,868 
Software110,152 95,409 
Computer and office equipment43,776 44,571 
Leasehold improvements53,396 43,981 
Furniture and fixtures 5,468 5,192 
Property and equipment, gross623,014 530,021 
Less: accumulated depreciation and amortization(275,300)(236,317)
Property and equipment, net$347,714 $293,704 
Depreciation and amortization expense was $25.7 million and $22.6 million for the three months ended July 31, 2024 and 2023, respectively, and $49.0 million and $44.6 million for the six months ended July 31, 2024 and 2023, respectively.
Other Assets, Noncurrent
Other assets, noncurrent consisted of the following:
As of
July 31, 2024January 31, 2024
(in thousands)
Accounts receivable, noncurrent$14,743 $26,099 
Intangible assets subject to amortization, net40,209 46,935 
Indefinite-lived intangible assets25,239 25,239 
Prepaid expenses, noncurrent25,574 23,351 
Income tax receivable, noncurrent
9,800 — 
Other11,230 11,853 
Other assets, noncurrent$126,795 $133,477 


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Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following:
As of
July 31, 2024January 31, 2024
(in thousands)
Accrued expenses$169,509 $173,993 
Accrued compensation and benefits121,722 185,128 
Income tax liabilities18,450 21,880 
Sales and other non-income tax liabilities36,203 35,460 
Customer deposit liabilities44,653 40,142 
Operating lease liabilities, current27,975 24,645 
Other20,947 18,916 
Accrued expenses and other current liabilities$439,459 $500,164 
Other Liabilities, Noncurrent
Other liabilities, noncurrent consisted of the following:
As of
July 31, 2024January 31, 2024
(in thousands)
Sales and other non-income tax liabilities$43,628 $42,254 
Long-term income tax liabilities
40,668 33,864 
Other4,833 5,260 
Other liabilities, noncurrent$89,129 $81,378 

7.    Commitments and Contingencies
Non-cancelable Purchase Obligations
As of July 31, 2024, we had outstanding non-cancelable purchase obligations with a term of 12 months or longer of approximately $75.4 million in addition to the amount disclosed in our Annual Report on Form 10-K for the year ended January 31, 2024 filed with the SEC on March 4, 2024, mainly related to third-party software services.
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 was held on 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 and six months ended July 31, 2024, we repurchased and subsequently retired 4,829,090 and 7,229,395 shares of our Class A common stock, respectively, for an aggregate amount of $287.6 million and $437.7 million, respectively. As of July 31, 2024, $1,062.3 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(221,827)$8.36 $12,034 
Canceled/forfeited/expired(6,188)$92.67 
Outstanding and exercisable as of July 31, 2024
3,086,213 $8.03 3.4$164,855 
As of July 31, 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 
Granted8,361,293 $62.62 
Vested(6,778,788)$86.27 
Canceled/forfeited(1,932,193)$81.53 
Unvested as of July 31, 202425,690,869 $75.76 
As of July 31, 2024, unrecognized stock-based compensation expense related to RSUs was $1,688.1 million, which is expected to be recognized over a weighted-average period of 2.6 years.
For the six months ended July 31, 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 July 31, 2024, unrecognized stock-based compensation expense related to the ESPP was $50.5 million, which is expected to be recognized over a weighted-average period of 1.5 years.
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 July 31, Six Months Ended July 31,
2024202320242023
(in thousands)
Cost of revenue$31,299 $37,535 $62,874 $75,624 
Research and development81,597 82,037 164,166 163,503 
Sales and marketing84,225 93,918 161,459 206,511 
General and administrative40,829 48,019 78,876 98,216 
Total stock-based compensation expense$237,950 $261,509 $467,375 $543,854 
Benefit from income taxes(43,742)(48,766)(87,216)(98,443)
Total stock-based compensation expense recorded to net income$194,208 $212,743 $380,159 $445,411 
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 six months ended July 31, 2024.
For the three months ended July 31, 2023, we recorded net restructuring (benefits) costs of $(0.2) million, which consisted of $(0.4) million related to employee transition, severance payments, and employee benefits; and $0.2 million for other related expenses. For the six months ended July 31, 2023, we recorded net restructuring costs of $73.0 million, which consisted of $54.4 million related to employee transition, severance payments, and employee benefits; $17.3 million related to stock-based compensation awards; and $1.3 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 and six months ended July 31, 2023:
Three Months Ended
 July 31, 2023
Six Months Ended July 31, 2023
 (in thousands)
Cost of revenue$24 $7,119 
Research and development327 19,629 
Sales and marketing(911)32,930 
General and administrative373 13,315 
Total restructuring (benefits) costs
$(187)$72,993 
There was no restructuring liability as of January 31, 2024 or July 31, 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 July 31, Six Months Ended July 31,
2024202320242023
(in thousands, except percentages)
Income before provision for income taxes$292,889 $250,373 $584,853 $293,603 
Provision for income taxes73,874 68,399 149,530 96,185 
Effective tax rate25.2 %27.3 %25.6 %32.8 %
The year-over-year change in effective tax rate for the three and six months ended July 31, 2024 was due primarily to the increase in income before taxes and a decrease in net tax shortfalls and windfalls on stock-based compensation. For both the three and six months ended July 31, 2024 and July 31, 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, state income taxes, 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.


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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 July 31, Six Months Ended July 31,
2024202320242023
Class AClass BClass AClass BClass AClass BClass AClass B
(in thousands, except share and per share data)
Numerator:
Net income, basic$186,687 $32,328 $153,573 $28,401 $370,754 $64,569 $166,420 $30,998