Zoom Communications, Inc 10-K for FY2022

Zoom Communications, Inc. (ZM)

10-K 2022-03-07 For: 2022-01-31

Added on April 07, 2026

About this 10-K

Zoom Communications, Inc filed this 10-K on March 7, 2022, covering the fiscal year ended January 31, 2022 (FY2022).

Headline figures

Fiscal year ended January 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $4.1B; up 54.6% from $2.65B a year earlier
Net income: $1.38B; up 104.6% from net income of $672.32M a year earlier
Diluted EPS: $4.50; up 100.0% from $2.25 a year earlier

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Delaware			61-1648780
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)


	Part I	Page
Item 1.	Business	6
Item 1A.	Risk Factors	12
Item 1B.	Unresolved Staff Comments	42
Item 2.	Properties	42
Item 3.	Legal Proceedings	42
Item 4.	Mine Safety Disclosures	42
	Part II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	43
Item 6.	[Reserved]	44
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	44
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	57
Item 8.	Financial Statements and Supplementary Data	59
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	93
Item 9A.	Controls and Procedures	93
Item 9B.	Other Information	93
Item 9C.	Disclosure Regarding Foreign Jurisdictions That Prevent Inspections	93
	Part III
Item 10.	Directors, Executive Officers and Corporate Governance	94
Item 11.	Executive Compensation	94
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	94
Item 13.	Certain Relationships and Related Transactions, and Director Independence	94
Item 14.	Principal Accountant Fees and Services	94
	Part IV
Item 15.	Exhibits, Financial Statement Schedules	94
Item 16.	Form 10-K Summary	96
	Signatures	97


	Year Ended January 31,
	2022		2021		2020

	(in thousands)
Net cash provided by operating activities	$	1,605,266	$	1,471,177	$	151,892

Less: purchases of property and equipment	(132,590)		(79,972)		(38,084)
Free cash flow (non-GAAP)	$	1,472,676	$	1,391,205	$	113,808
Add: Litigation settlement payments, net	85,000		—		—
Adjusted free cash flow (non-GAAP)	$	1,557,676	$	1,391,205	$	113,808
Net cash used in investing activities	$	(2,859,097)	$	(1,562,420)	$	(499,468)
Net cash provided by financing activities	$	34,068	$	2,050,277	$	615,690


	Year Ended January 31,
			2022		2021		2020

		(in thousands)
Revenue			$	4,099,864	$	2,651,368	$	622,658
Cost of revenue (1)			1,054,554		821,989		115,396
Gross profit			3,045,310		1,829,379		507,262
Operating expenses:
Research and development (1)			362,990		164,080		67,079
Sales and marketing (1)			1,135,959		684,904		340,646
General and administrative (1)			482,770		320,547		86,841
Total operating expenses			1,981,719		1,169,531		494,566
Income from operations			1,063,591		659,848		12,696
Gains on strategic investments, net			43,761		2,538		—
Other (expense) income, net			(5,720)		15,648		13,666
Income before (benefit from) provision for income taxes			1,101,632		678,034		26,362
(Benefit from) provision for income taxes			(274,007)		5,718		1,057
Net income			$	1,375,639	$	672,316	$	25,305

(1) Includes stock-based compensation expense as follows:
Cost of revenue			$	69,612	$	34,960	$	7,860
Research and development			113,000		50,161		11,645
Sales and marketing			229,297		146,377		41,465
General and administrative			65,378		44,320		12,139
Total stock-based compensation expense			$	477,287	$	275,818	$	73,109


	Year Ended January 31,
			2022		2021		2020

		(as a percentage of revenue)
Revenue			100	%	100	%	100	%
Cost of revenue			26		31		19
Gross profit			74		69		81
Operating expenses:
Research and development			8		6		11
Sales and marketing			27		26		55
General and administrative			12		12		13
Total operating expenses			47		44		79
Income from operations			27		25		2
Gains on strategic investments, net			1		—		—
Other (expense) income, net			0		1		2
Income before (benefit from) provision for income taxes			28		26		4
(Benefit from) provision for income taxes			(6)		1		0
Net income			34	%	25	%	4	%


☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


			Payments Due by Period
	Total		Less Than 1 Year		1 – 3 Years		3 – 5 Years		More Than 5 Years

	(in thousands)
Operating lease obligations	$	117,763	$	24,490	$	47,787	$	30,171	$	15,315
Non-cancelable purchase obligations	386,594		227,182		159,412		—		—
Total contractual obligations	$	504,357	$	251,672	$	207,199	$	30,171	$	15,315


						Page
Report of Independent Registered Public Accounting Firm						60
Consolidated Balance Sheets						62
Consolidated Statements of Operations						63
Consolidated Statements of Comprehensive Income						64
Consolidated Statements of Convertible Preferred Stock and Stockholders’ (Deficit) Equity						65
Consolidated Statements of Cash Flows						66
Notes to Consolidated Financial Statements						68


	As of January 31,
	2022		2021
Assets
Current assets:
Cash and cash equivalents	$	1,062,820	$	2,240,303
Marketable securities	4,356,446		2,004,410
Accounts receivable, net of allowances of $24,696 and $36,844 as of January 31, 2022 and 2021, respectively	419,673		294,703
Deferred contract acquisition costs, current	199,266		136,630
Prepaid expenses and other current assets	145,602		116,819
Total current assets	6,183,807		4,792,865
Deferred contract acquisition costs, noncurrent	164,714		157,262
Property and equipment, net	222,354		149,924
Operating lease right-of-use assets	95,965		97,649
Strategic investments	367,814		18,668
Goodwill	27,607		24,340
Deferred tax assets	382,296		1,519
Other assets, noncurrent	106,761		55,766
Total assets	$	7,551,318	$	5,297,993
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	7,841	$	8,664
Accrued expenses and other current liabilities	430,415		393,018
Deferred revenue, current	1,141,435		858,284
Total current liabilities	1,579,691		1,259,966
Deferred revenue, noncurrent	38,481		25,211
Operating lease liabilities, noncurrent	85,018		90,415
Other liabilities, noncurrent	68,110		61,634
Total liabilities	1,771,300		1,437,226
Commitments and contingencies (Note 8)

Stockholders’ equity:
Preferred stock, $0.001 par value per share, 200,000,000 shares authorized as of January 31, 2022 and 2021; zero shares issued and outstanding as of January 31, 2022 and 2021	—		—
Common stock, $0.001 par value per share, 2,000,000,000 Class A shares authorized as of January 31, 2022 and 2021; 247,044,454 and 215,737,924 shares issued and outstanding as of January 31, 2022 and 2021, respectively; 300,000,000 Class B shares authorized as of January 31, 2022 and 2021; 51,993,351 and 77,811,299 shares issued and outstanding as of January 31, 2022 and 2021, respectively	299		292
Additional paid-in capital	3,749,514		3,187,168
Accumulated other comprehensive (loss) income	(17,902)		839
Retained earnings	2,048,107		672,468
Total stockholders’ equity	5,780,018		3,860,767
Total liabilities and stockholders’ equity	$	7,551,318	$	5,297,993


	Convertible Preferred Stock			Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive (Loss) Income		(Accumulated Deficit) Retained Earnings		Total Stockholders’ (Deficit) Equity
	Shares	Amount		Shares	Amount
Balance as of January 31, 2019	152,665,804	$	159,552	90,327,435	$	89	$	17,760	$	(135)	$	(25,153)	$	(7,439)
Conversion of convertible preferred stock to common stock upon initial public offering	(152,665,804)	(159,552)		152,665,804	153		159,399		—		—		159,552
Conversion of convertible promissory notes and accrued interest to common stock upon initial public offering	—	—		426,223	—		15,344		—		—		15,344
Issuance of common stock upon initial public offering and private placement, net of underwriting discounts and commissions and other offering costs	—	—		15,819,646	16		541,483		—		—		541,499
Issuance of common stock upon exercise of stock options, net of repurchases and release of restricted stock units	—	—		18,501,767	19		9,752		—		—		9,771
Issuance of common stock reserved for charitable donations	—	—		500,000	—		—		—		—		—
Issuance of common stock for employee stock purchase plan	—	—		490,268	—		15,482		—		—		15,482
Stock-based compensation expense	—	—		—	—		73,485		—		—		73,485
Other comprehensive income	—	—		—	—		—		944		—		944
Net income	—	—		—	—		—		—		25,305		25,305
Balance as of January 31, 2020	—	$	—	278,731,143	$	277	$	832,705	$	809	$	152	$	833,943
Issuance of common stock upon follow-on public offering, net of underwriting discounts and commissions and other offering costs	—	—		5,882,353	6		1,979,538		—		—		1,979,544
Issuance of common stock upon exercise of stock options	—	—		7,378,477	7		29,100		—		—		29,107
Issuance of common stock upon release of restricted stock units	—	—		633,697	1		—		—		—		1
Charitable donation of common stock	—	—		—	—		23,312		—		—		23,312
Issuance of common stock for employee stock purchase plan	—	—		923,553	1		38,432		—		—		38,433
Stock-based compensation expense	—	—		—	—		284,081		—		—		284,081
Other comprehensive income	—	—		—	—		—		30		—		30
Net income	—	—		—	—		—		—		672,316		672,316
Balance as of January 31, 2021	—	$	—	293,549,223	$	292	$	3,187,168	$	839	$	672,468	$	3,860,767
Issuance of common stock upon exercise of stock options	—	—		2,881,485	4		14,806		—		—		14,810
Issuance of common stock upon release of restricted stock units	—	—		1,768,702	2		—		—		—		2

Issuance of common stock for employee stock purchase plan	—	—		838,395	1		59,330		—		—		59,331
Stock-based compensation expense	—	—		—	—		488,210		—		—		488,210
Other comprehensive loss	—	—		—	—		—		(18,741)		—		(18,741)
Net income	—	—		—	—		—		—		1,375,639		1,375,639
Balance as of January 31, 2022	—	$	—	299,037,805	$	299	$	3,749,514	$	(17,902)	$	2,048,107	$	5,780,018



Supplemental disclosures of cash flow information
Cash paid for income taxes, net	$	38,979	$	3,181	$	1,070
Supplemental disclosures of non-cash investing and financing information
Purchase of equipment during the period included in accounts payable and accrued expenses	$	13,728	$	34,514	$	1,422
Vesting of early exercised stock options and restricted stock awards	$	407	$	558	$	725
Conversion of convertible preferred stock to Class B common stock upon initial public offering	$	—	$	—	$	159,552
Conversion of debt to Class A common stock	$	—	$	—	$	15,344





Reconciliation of cash, cash equivalents, and restricted cash within the consolidated balance sheets to the amounts shown in the consolidated statements of cash flows above:
Cash and cash equivalents	$	1,062,820	$	2,240,303	$	283,134
Restricted cash, current included in prepaid expenses and other current assets	10,236		50,575		48,647
Restricted cash, noncurrent included in other assets, noncurrent	297		2,238		2,301
Total cash, cash equivalents, and restricted cash	$	1,073,353	$	2,293,116	$	334,082



	As of January 31, 2022		As of January 31, 2021
	(in thousands)

Accounts receivable, gross	$	444,369	$	331,547
Less: Allowance for credit losses	(17,000)		(20,500)
Less: Allowance for returns	(7,696)		(16,344)
Accounts receivable, net	$	419,673	$	294,703



	January 31, 2022		January 31, 2021

	(in thousands)
Balance as of beginning of year	$	20,500	$	5,150
Provision for credit losses	32,587		25,651
Write-offs	(36,087)		(10,301)
Balance as of end of year	$	17,000	$	20,500


	As of January 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

	(in thousands)





Commercial paper	$	28,723	$	—	$	—	$	28,723
Agency bonds	632,935		2		(3,328)		629,609
Corporate and other debt securities	282,124		5		(1,202)		280,927
U.S. government agency securities	3,046,742		28		(19,261)		3,027,509
Treasury bills	389,826		—		(148)		389,678
Marketable securities	$	4,380,350	$	35	$	(23,939)	$	4,356,446


	Measurement Category
	Fair Value		Measurement Alternative		Equity Method		Total

	(in thousands)
Equity securities	$	168,784	$	91,399	$	93,400	$	353,583
Debt securities	14,231		—		—		14,231
Strategic investments	$	183,015	$	91,399	$	93,400	$	367,814


	As of January 31, 2022
	Fair Value		Level 1		Level 2		Level 3

	(in thousands)
Financial Assets:
Money market funds	$	688,722	$	688,722	$	—	$	—
Treasury bills	107,496		—		107,496		—
Corporate debt securities	749		—		749		—

Cash equivalents	796,967		688,722		108,245		—
Commercial paper	28,723		—		28,723		—
Agency bonds	629,609		—		629,609		—
Corporate and other debt securities	280,927		—		280,927		—
U.S. government agency securities	3,027,509		—		3,027,509		—
Treasury bills	389,678		—		389,678		—
Marketable securities	4,356,446		—		4,356,446		—


Certificates of deposit included in other assets, noncurrent	297		—		297		—

Publicly held equity securities included in strategic investments	168,784		168,784		—		—
Privately held debt securities included in strategic investments	14,231		—		—		14,231
Total financial assets	$	5,336,725	$	857,506	$	4,464,988	$	14,231


	As of January 31, 2022
	(in thousands)
Year Ending January 31,
2023	$	24,491
2024	24,234
2025	23,552
2026	18,467
2027	11,704
Thereafter	15,315
Total operating lease payments	$	117,763
Less: imputed interest	(12,048)
Total operating lease liabilities	$	105,715


	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)
Outstanding as of January 31, 2021	9,239,504	$	7.17	7.0	$	3,371,457

Exercised	(2,881,485)	$	5.00		$	842,989
Canceled/forfeited/expired	(162,814)	$	11.24
Outstanding as of January 31, 2022	6,195,205	$	8.08	6.0	$	905,744
Vested and expected to vest as of January 31, 2022	6,195,205	$	8.08	6.0	$	905,744
Exercisable as of January 31, 2022	4,898,249	$	5.72	5.9	$	727,701



						Year Ended January 31, 2020
Expected term (years)						5.0 - 6.1
Expected volatility						49.9% - 53.2%
Risk-free interest rate						1.6% - 2.5%
Expected dividend yield						—


	RSUs
	Unvested RSUs	Weighted-Average Grant Date Fair Value Per Share
Unvested as of January 31, 2021	4,510,730	$	194.57
Granted	3,195,949	$	265.12

Vested	(1,768,702)	$	190.36
Canceled/forfeited	(391,611)	$	250.92
Unvested as of January 31, 2022	5,546,366	$	232.58


Unrecognized Tax Benefits (in thousands)	Year Ended January 31,
	2022		2021		2020

Balance, beginning of year	$	14,884	$	8,106	$	2,778
Tax Positions taken in prior year:
Gross increases	—		314		—
Gross decreases	(3,764)		—		—
Tax Positions taken in current year:
Gross increases	8,211		6,001		5,328
Gross decreases	—		—		—
Lapse of Statute of Limitations	(160)		(422)		—
Acquisitions	—		885		—



Balance, end of year	$	19,171	$	14,884	$	8,106


	Balance at Beginning of Year		Additions		Write-offs or Deductions		Balance at End of Year

	(in thousands)
Year ended January 31, 2022
Accounts receivable allowances	$	36,844	$	50,467	$	(62,615)	$	24,696
Deferred tax asset valuation allowance	$	335,051	$	5,511	$	(327,957)	$	12,605
Year ended January 31, 2021
Accounts receivable allowances	$	7,634	$	47,405	$	(18,195)	$	36,844
Deferred tax asset valuation allowance	$	36,353	$	298,698	$	—	$	335,051
Year ended January 31, 2020
Accounts receivable allowances	$	2,071	$	8,583	$	(3,020)	$	7,634
Deferred tax asset valuation allowance	$	877	$	35,476	$	—	$	36,353


	ZOOM VIDEO COMMUNICATIONS, INC.

Date: March 7, 2022	By:	/s/ Eric S. Yuan
		Eric S. Yuan
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: March 7, 2022	By:	/s/ Kelly Steckelberg
		Kelly Steckelberg
		Chief Financial Officer
		(Principal Financial Officer)


Name of Subsidiary						Jurisdiction of Organization
Zoom Voice Communications, Inc.						United States of America
ZVC UK LTD						United Kingdom
ZVC Australia PTY LTD						Australia
ZVC Netherlands B.V.						Netherlands
ZVC Japan KK						Japan
Zoom Video Communications (Suzhou) Inc.						China
Saasbee Inc. (Hefei) Ltd.						China
SaasBee Software (Hangzhou) Co., Ltd.						China
ZVC France SAS						France
ZVC India PVT LTD						India
ZVC Canada LTD						Canada
Zoom Video Communications (Hong Kong) LTD Zoom Video Communications (Shanghai) Co., Ltd.						Hong Kong China
ZVC Singapore Pte. Ltd.						Singapore
ZVC Germany GmbH						Germany
Keybase LLC						United States of America
Zoom Video Communications (Shanghai) Co., Ltd.						China