Zoom Communications, Inc 10-K for FY2021

Zoom Communications, Inc. (ZM)

10-K 2021-03-18 For: 2021-01-31

Added on April 07, 2026

About this 10-K

Zoom Communications, Inc filed this 10-K on March 18, 2021, covering the fiscal year ended January 31, 2021 (FY2021).

Headline figures

Fiscal year ended January 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $2.65B; up 325.8% from $622.66M a year earlier
Net income: $672.32M; up 2556.9% from net income of $25.31M a year earlier
Diluted EPS: $2.25; up 2400.0% from $0.09 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	42
Item 6.	Selected Consolidated Financial Data	43
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	45
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	58
Item 8.	Financial Statements and Supplementary Data	60
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	93
Item 9A.	Controls and Procedures	93
Item 9B.	Other Information	94
	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	97
	Signatures	98


	Year Ended January 31,
	2021		2020		2019		2018		2017

	(in thousands, except share and per share data)
Consolidated Statements of Operations Data:
Revenue	$	2,651,368	$	622,658	$	330,517	$	151,478	$	60,817
Cost of revenue(1)	821,989		115,396		61,001		30,780		12,472
Gross profit	1,829,379		507,262		269,516		120,698		48,345
Operating expenses:
Research and development(1)	164,080		67,079		33,014		15,733		9,218
Sales and marketing(1)	684,904		340,646		185,821		82,707		31,580
General and administrative(1)	320,547		86,841		44,514		27,091		7,547
Total operating expenses	1,169,531		494,566		263,349		125,531		48,345
Income (loss) from operations	659,848		12,696		6,167		(4,833)		0
Interest income and other, net	18,186		13,666		2,182		1,315		158
Income (loss) before provision for income taxes	678,034		26,362		8,349		(3,518)		158
Provision for income taxes	5,718		1,057		765		304		172
Net income (loss)	$	672,316	$	25,305	$	7,584	$	(3,822)	$	(14)
Distributed earnings attributable to participating securities	—		—		—		(4,405)		(14,366)
Undistributed earnings attributable to participating securities	(789)		(3,555)		(7,584)		—		—
Net income (loss) attributable to common stockholders	$	671,527	$	21,750	$	0	$	(8,227)	$	(14,380)
Net income (loss) per share attributable to common stockholders:
Basic	$	2.37	$	0.09	$	0.00	$	(0.11)	$	(0.20)
Diluted	$	2.25	$	0.09	$	0.00	$	(0.11)	$	(0.20)
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders:
Basic	283,853,654		233,641,336		84,483,094		78,119,865		70,309,256
Diluted	298,127,669		254,298,014		116,005,681		78,119,865		70,309,256


	Year Ended January 31,
	2021		2020		2019		2018		2017

	(in thousands)
Cost of revenue	$	34,960	$	7,860	$	1,119	$	204	$	87
Research and development	50,161		11,645		1,369		360		278
Sales and marketing	146,377		41,465		3,540		812		467
General and administrative	44,320		12,139		2,913		8,953		207
Total stock-based compensation expense	$	275,818	$	73,109	$	8,941	$	10,329	$	1,039


	As of January 31,
	2021		2020		2019		2018

	(in thousands)
Consolidated Balance Sheets Data:
Cash and cash equivalents	$	2,240,303	$	283,134	$	63,624	$	36,146
Marketable securities	$	2,004,410	$	572,060	$	112,777	$	103,056
Working capital	$	3,532,899	$	761,692	$	124,378	$	114,633
Total assets	$	5,297,993	$	1,289,845	$	354,565	$	215,019
Deferred revenue, current and noncurrent	$	883,495	$	230,536	$	125,773	$	54,262
Convertible promissory notes, net(1)	$	—	$	—	$	14,858	$	—
Convertible preferred stock	$	—	$	—	$	159,552	$	159,552
Retained earnings (accumulated deficit)	$	672,468	$	152	$	(25,153)	$	(32,737)
Total stockholders’ equity (deficit)	$	3,860,767	$	833,943	$	(7,439)	$	(26,671)


☒			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	$	121,980	$	19,949	$	41,623	$	35,600	$	24,808
Non-cancelable purchase obligations	498,626		219,217		271,721		7,688		—
Total contractual obligations	$	620,606	$	239,166	$	313,344	$	43,288	$	24,808


						Page
Report of Independent Registered Public Accounting Firm						61
Consolidated Balance Sheets						63
Consolidated Statements of Operations						64
Consolidated Statements of Comprehensive Income						65
Consolidated Statements of Convertible Preferred Stock and Stockholders’ (Deficit) Equity						66
Consolidated Statements of Cash Flows						67
Notes to Consolidated Financial Statements						69


	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, 2018	152,665,804	$	159,552	82,609,638	$	80	$	6,517	$	(531)	$	(32,737)	$	(26,671)
Issuance of common stock upon exercise of stock options	—	—		7,717,797	9		2,302		—		—		2,311
Stock-based compensation expense	—	—		—	—		8,941		—		—		8,941
Other comprehensive income	—	—		—	—		—		396		—		396
Net income	—	—		—	—		—		—		7,584		7,584
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


Supplemental disclosures of cash flow information
Cash paid for income taxes, net	$	3,181	$	1,070	$	214
Supplemental disclosures of non-cash investing and financing information
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	$	—
Purchase of equipment during the period included in accounts payable and accrued expenses	$	34,514	$	1,422	$	3,284
Vesting of early exercised stock options and restricted stock awards	$	558	$	725	$	277
Deferred offering costs, accrued but not paid	$	—	$	—	$	1,490



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	$	2,240,303	$	283,134	$	63,624
Restricted cash, current included in prepaid expenses and other current assets	50,575		48,647		200
Restricted cash, noncurrent included in other assets, noncurrent	2,238		2,301		2,144
Total cash, cash equivalents, and restricted cash	$	2,293,116	$	334,082	$	65,968



	As of January 31, 2021

	(in thousands)
Accounts receivable, gross	$	331,547
Less: Allowance for credit losses	(20,500)
Less: Allowance for returns	(16,344)
Accounts receivable, net	$	294,703




	(in thousands)
Balance as of January 31, 2020	$	5,150
Provision for credit losses	25,651
Write-offs	(10,301)
Balance as of January 31, 2021	$	20,500


	As of January 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

	(in thousands)





Commercial paper	$	26,222	$	—	$	—	$	26,222
Agency bonds	461,335		79		(49)		461,365
Corporate and other debt securities	465,207		1,113		(64)		466,256
U.S. government agency securities	834,894		28		(257)		834,665
Treasury bills	215,902		6		(6)		215,902
Marketable securities	$	2,003,560	$	1,226	$	(376)	$	2,004,410


	As of January 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

	(in thousands)


Commercial paper	$	37,894	$	—	$	—	$	37,894
Agency bonds	141,157		49		(43)		141,163
Corporate and other debt securities	320,407		775		(16)		321,166
U.S. government agency securities	71,794		45		(2)		71,837

Marketable securities	$	571,252	$	869	$	(61)	$	572,060


	Year Ended January 31,
	2021		2020		2019

	(in thousands)
Net cash provided by operating activities	$	1,471,177	$	151,892	$	51,332

Less: purchases of property and equipment	(79,972)		(38,084)		(28,432)


Free cash flow (non-GAAP)	$	1,391,205	$	113,808	$	22,900
Net cash used in investing activities	$	(1,562,420)	$	(499,468)	$	(39,719)
Net cash provided by financing activities	$	2,050,277	$	615,690	$	17,534


	As of January 31,
	2021		2020

	(in thousands)
Americas	$	138,093	$	48,519
APAC	10,033		7,464
EMEA	1,798		1,155
Total property and equipment, net	$	149,924	$	57,138


	Year Ended January 31,
	2021		2020

	(in thousands)
Beginning balance	$	91,130	$	55,516
Additions to deferred contract acquisition costs	307,068		72,715
Amortization of deferred contract acquisition costs	(104,306)		(37,101)
Ending balance	$	293,892	$	91,130
Deferred contract acquisition costs, current (to be amortized in next 12 months)	$	136,630	$	44,885
Deferred contract acquisition costs, noncurrent	157,262		46,245
Total deferred contract acquisition costs	$	293,892	$	91,130


	As of January 31, 2021
	Fair Value		Level 1		Level 2		Level 3

	(in thousands)
Financial Assets:
Money market funds	$	958,357	$	958,357	$	—	$	—
Treasury bills	618,498		—		618,498		—


Cash equivalents	1,576,855		958,357		618,498		—
Commercial paper	26,222		—		26,222		—
Agency bonds	461,365		—		461,365		—
Corporate and other debt securities	466,256		—		466,256		—
U.S. government agency securities	834,665		—		834,665		—
Treasury bills	215,902		—		215,902		—
Marketable securities	2,004,410		—		2,004,410		—
Certificate of deposit included in prepaid expenses and other current assets	100		—		100		—

Certificates of deposit included in other assets, noncurrent	2,238		—		2,238		—

Convertible note included in other assets, noncurrent	5,130		—		—		5,130
Total financial assets	$	3,588,733	$	958,357	$	2,625,246	$	5,130


	As of January 31, 2021
	(in thousands)
Year Ending January 31,
2022	$	19,949
2023	21,313
2024	20,310
2025	20,216
2026	15,384
Thereafter	24,808
Total operating lease payments	$	121,980
Less: imputed interest	(15,964)
Total operating lease liabilities	$	106,016


	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, 2020	16,833,009	$	5.73	7.6	$	1,191,881
Granted	—	$	—
Exercised	(7,378,477)	$	3.87		$	1,786,657
Canceled/forfeited/expired	(215,028)	$	8.05
Balance as of January 31, 2021	9,239,504	$	7.17	7.0	$	3,371,457
Vested and exercisable as of January 31, 2021	4,641,908	$	3.98	6.6	$	1,708,663


	RSUs
	Unvested RSUs	Weighted-Average Grant Date Fair Value Per Share
Unvested as of January 31, 2020	1,964,668	$	79.11
Granted	3,351,979	$	241.32

Vested	(625,163)	$	86.29
Canceled/forfeited	(180,754)	$	181.18
Unvested as of January 31, 2021	4,510,730	$	194.57


	Unrecognized Tax Benefits
	(in thousands)

Balance - January 31, 2018	$	1,976
Increases related to current year’s tax positions	802

Balance - January 31, 2019	2,778
Increases related to current year’s tax positions	5,328

Balance - January 31, 2020	8,106
Increases related to current year’s tax positions	6,001
Increases related to prior year’s tax positions	314
Current year acquisitions	885
Lapse of statute of limitations	(422)

Balance - January 31, 2021	$	14,884


	Three Months Ended
	January 31, 2021		October 31, 2020		July 31, 2020		April 30, 2020		January 31, 2020		October 31, 2019		July 31, 2019		April 30, 2019

	(in thousands)
Revenue	$	882,485	$	777,196	$	663,520	$	328,167	$	188,251	$	166,593	$	145,826	$	121,988
Gross profit	$	615,201	$	518,469	$	471,249	$	224,460	$	155,704	$	135,748	$	117,926	$	97,884
Income (loss) from operations	$	256,117	$	192,242	$	188,104	$	23,385	$	10,553	$	(1,679)	$	2,265	$	1,557
Net income attributable to common stockholders	$	260,393	$	198,440	$	185,742	$	27,036	$	15,313	$	2,207	$	5,521	$	198
Net income per share attributable to common stockholders:
Basic	$	0.91	$	0.70	$	0.66	$	0.10	$	0.06	$	0.01	$	0.02	$	0.00
Diluted	$	0.87	$	0.66	$	0.63	$	0.09	$	0.05	$	0.01	$	0.02	$	0.00


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

	(in thousands)
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
Year ended January 31, 2019
Accounts receivable allowances	$	560	$	3,763	$	(2,252)	$	2,071
Deferred tax asset valuation allowance	$	3,154	$	—	$	(2,277)	$	877


	ZOOM VIDEO COMMUNICATIONS, INC.

Date: March 18, 2021	By:	/s/ Eric S. Yuan
		Eric S. Yuan
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: March 18, 2021	By:	/s/ Kelly Steckelberg
		Kelly Steckelberg
		Chief Financial Officer
		(Principal Financial Officer)