Zoom Communications, Inc 10-K for FY2023

Zoom Communications, Inc. (ZM)

10-K 2023-03-03 For: 2023-01-31

Added on April 07, 2026

About this 10-K

Zoom Communications, Inc filed this 10-K on March 3, 2023, covering the fiscal year ended January 31, 2023 (FY2023).

Headline figures

Fiscal year ended January 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $4.39B; up 7.1% from $4.1B a year earlier
Net income: $103.71M; down 92.5% from net income of $1.38B a year earlier
Diluted EPS: $0.34; down 92.4% from $4.50 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	13
Item 1B.	Unresolved Staff Comments	46
Item 2.	Properties	46
Item 3.	Legal Proceedings	46
Item 4.	Mine Safety Disclosures	46
	Part II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	46
Item 6.	[Reserved]	48
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	48
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	60
Item 8.	Financial Statements and Supplementary Data	62
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	96
Item 9A.	Controls and Procedures	96
Item 9B.	Other Information	96
Item 9C.	Disclosure Regarding Foreign Jurisdictions That Prevent Inspections	97
	Part III
Item 10.	Directors, Executive Officers and Corporate Governance	97
Item 11.	Executive Compensation	97
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	97
Item 13.	Certain Relationships and Related Transactions, and Director Independence	97
Item 14.	Principal Accountant Fees and Services	98
	Part IV
Item 15.	Exhibits, Financial Statement Schedules	98
Item 16.	Form 10-K Summary	100
	Signatures	101


Period	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program(1)	Approximate Dollar Value of Shares that May Yet Be Purchased Under Publicly Announced Program (in thousands)(1)
November 1 - 30, 2022	—	$	—	—	$	9,222
December 1 – 31, 2022	126,407	$	72.98	126,407	$	—
January 1 – 31, 2023	—	$	—	—	$	—
Total	126,407	$	72.98	126,407	—


	Year Ended January 31,
	2023		2022		2021

	(in thousands)
Net cash provided by operating activities	$	1,290,262	$	1,605,266	$	1,471,177

Less: purchases of property and equipment	(103,826)		(132,590)		(79,972)
Free cash flow (non-GAAP)	$	1,186,436	$	1,472,676	$	1,391,205
Net cash used in investing activities	$	(318,322)	$	(2,859,097)	$	(1,562,420)
Net cash (used in) provided by financing activities	$	(936,942)	$	34,068	$	2,050,277


	Year Ended January 31,
			2023		2022		2021

		(in thousands)
Revenue			$	4,392,960	$	4,099,864	$	2,651,368
Cost of revenue (1)			1,100,451		1,054,554		821,989
Gross profit			3,292,509		3,045,310		1,829,379
Operating expenses:
Research and development (1)			774,059		362,990		164,080
Sales and marketing (1)			1,696,590		1,135,959		684,904
General and administrative (1)			576,431		482,770		320,547
Total operating expenses			3,047,080		1,981,719		1,169,531
Income from operations			245,429		1,063,591		659,848
(Losses) gains on strategic investments, net			(37,571)		43,761		2,538
Other income (expense), net			41,418		(5,720)		15,648
Income before provision (benefits) for income taxes			249,276		1,101,632		678,034
Provision (benefits) for income taxes			145,565		(274,007)		5,718
Net income			$	103,711	$	1,375,639	$	672,316

(1) Includes stock-based compensation expense as follows:
Cost of revenue			$	174,546	$	69,612	$	34,960
Research and development			361,720		113,000		50,161
Sales and marketing			532,371		229,297		146,377
General and administrative			217,115		65,378		44,320
Total stock-based compensation expense			$	1,285,752	$	477,287	$	275,818


☒			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	$	105,176	$	25,886	$	48,706	$	22,580	$	8,004
Non-cancelable purchase obligations	298,855		191,902		104,253		2,700		—
Total contractual obligations	$	404,031	$	217,788	$	152,959	$	25,280	$	8,004


						Page
Report of Independent Registered Public Accounting Firm						63
Consolidated Balance Sheets						65
Consolidated Statements of Operations						66
Consolidated Statements of Comprehensive Income						67
Consolidated Statements of Stockholders’ Equity						68
Consolidated Statements of Cash Flows						69
Notes to Consolidated Financial Statements						71


	As of January 31,
	2023		2022
Assets
Current assets:
Cash and cash equivalents	$	1,086,830	$	1,062,820
Marketable securities	4,325,836		4,356,446
Accounts receivable, net of allowances of $33,206 and $24,696 as of January 31, 2023 and 2022, respectively	557,404		419,673
Deferred contract acquisition costs, current	223,250		199,266
Prepaid expenses and other current assets	163,092		145,602
Total current assets	6,356,412		6,183,807
Deferred contract acquisition costs, noncurrent	179,991		164,714
Property and equipment, net	252,821		222,354
Operating lease right-of-use assets	80,906		95,965
Strategic investments	398,992		367,814
Goodwill	122,641		27,607
Deferred tax assets	558,428		382,296
Other assets, noncurrent	177,874		106,761
Total assets	$	8,128,065	$	7,551,318
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	14,414	$	7,841
Accrued expenses and other current liabilities	457,716		430,415
Deferred revenue, current	1,266,514		1,141,435
Total current liabilities	1,738,644		1,579,691
Deferred revenue, noncurrent	41,932		38,481
Operating lease liabilities, noncurrent	73,687		85,018
Other liabilities, noncurrent	67,195		68,110
Total liabilities	1,921,458		1,771,300
Commitments and contingencies (Note 9)

Stockholders’ equity:
Preferred stock, $0.001 par value per share, 200,000,000 shares authorized as of January 31, 2023 and 2022; zero shares issued and outstanding as of January 31, 2023 and 2022	—		—
Common stock, $0.001 par value per share, 2,000,000,000 Class A shares authorized as of January 31, 2023 and 2022; 247,151,956 and 247,044,454 shares issued and outstanding as of January 31, 2023 and 2022, respectively; 300,000,000 Class B shares authorized as of January 31, 2023 and 2022; 46,670,894 and 51,993,351 shares issued and outstanding as of January 31, 2023 and 2022, respectively	294		299
Additional paid-in capital	4,104,880		3,749,514
Accumulated other comprehensive loss	(50,385)		(17,902)
Retained earnings	2,151,818		2,048,107
Total stockholders’ equity	6,206,607		5,780,018
Total liabilities and stockholders’ equity	$	8,128,065	$	7,551,318


	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Stockholders’ Equity
		Shares									Amount
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 income		—	—		—		(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
Issuance of common stock upon exercise of stock options		1,299,758	1		8,814		—		—		8,815
Issuance of common stock upon release of restricted stock units		3,977,915	4		(4)		—		—		—
Repurchase of common stock		(11,170,907)	(11)		(999,992)		—		—		(1,000,003)
Issuance of common stock for employee stock purchase plan		678,279	1		53,709		—		—		53,710
Stock-based compensation expense		—	—		1,292,839		—		—		1,292,839
Other comprehensive loss		—	—		—		(32,483)		—		(32,483)
Net income		—	—		—		—		103,711		103,711
Balance as of January 31, 2023		293,822,850	$	294	$	4,104,880	$	(50,385)	$	2,151,818	$	6,206,607


Supplemental disclosures of cash flow information
Cash paid for income taxes, net	$	309,084	$	38,979	$	3,181
Supplemental disclosures of non-cash investing and financing information
Purchase of equipment during the period included in accounts payable and accrued expenses	$	11,946	$	13,728	$	34,514
Vesting of early exercised stock options	$	238	$	407	$	558







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	$	1,086,830	$	1,062,820	$	2,240,303
Restricted cash, current included in prepaid expenses and other current assets	13,141		10,236		50,575
Restricted cash, noncurrent included in other assets, noncurrent	272		297		2,238
Total cash, cash equivalents, and restricted cash	$	1,100,243	$	1,073,353	$	2,293,116



	As of January 31, 2023		As of January 31, 2022
	(in thousands)

Accounts receivable, gross	$	590,610	$	444,369
Less: Allowance for credit losses	(24,900)		(17,000)
Less: Allowance for returns	(8,306)		(7,696)
Accounts receivable, net	$	557,404	$	419,673



	January 31, 2023		January 31, 2022

	(in thousands)
Balance as of beginning of year	$	17,000	$	20,500
Provision for credit losses	45,211		32,587
Write-offs	(37,311)		(36,087)
Balance as of end of year	$	24,900	$	17,000


	As of January 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

	(in thousands)





Commercial paper	$	77,701	$	—	$	—	$	77,701
Agency bonds	823,027		63		(12,440)		810,650
Corporate and other debt securities	555,354		385		(4,845)		550,894
U.S. government agency securities	2,910,572		150		(49,507)		2,861,215
Treasury bills	25,404		1		(29)		25,376
Marketable securities	$	4,392,058	$	599	$	(66,821)	$	4,325,836


	Measurement Category
	Fair Value		Measurement Alternative		Equity Method		Total

	(in thousands)
Equity securities	$	171,975	$	118,763	$	93,854	$	384,592
Debt securities	14,400		—		—		14,400
Strategic investments	$	186,375	$	118,763	$	93,854	$	398,992


	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, 2023
	Fair Value		Level 1		Level 2		Level 3

	(in thousands)
Financial Assets:
Money market funds	$	310,571	$	310,571	$	—	$	—



Cash equivalents	310,571		310,571		—		—
Commercial paper	77,701		—		77,701		—
Agency bonds	810,650		—		810,650		—
Corporate and other debt securities	550,894		—		550,894		—
U.S. government agency securities	2,861,215		—		2,861,215		—
Treasury bills	25,376		—		25,376		—
Marketable securities	4,325,836		—		4,325,836		—


Certificates of deposit included in other assets, noncurrent	272		—		272		—

Publicly held equity securities included in strategic investments	171,975		171,975		—		—
Privately held debt securities included in strategic investments	14,400		—		—		14,400
Total financial assets	$	4,823,054	$	482,546	$	4,326,108	$	14,400


	As of January 31, 2023
	(in thousands)
Year Ending January 31,
2024	$	25,886
2025	27,165
2026	21,541
2027	14,119
2028	8,461
Thereafter	8,004
Total operating lease payments	$	105,176
Less: imputed interest	(8,699)
Total operating lease liabilities	$	96,477


	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, 2022	6,195,205	$	8.08	6.0	$	905,744

Exercised	(1,299,758)	$	6.60		$	121,539
Canceled/forfeited/expired	(94,831)	$	21.11
Outstanding as of January 31, 2023	4,800,616	$	8.22	4.9	$	322,929
Vested and expected to vest as of January 31, 2023	4,800,616	$	8.22	4.9	$	322,929
Exercisable as of January 31, 2023	4,747,885	$	7.77	4.9	$	321,287


	RSUs
	Unvested RSUs	Weighted-Average Grant Date Fair Value Per Share
Unvested as of January 31, 2022	5,546,366	$	232.58
Granted	22,136,660	$	93.20

Vested	(3,977,915)	$	173.22
Forfeited	(1,836,578)	$	148.82
Unvested as of January 31, 2023	21,868,533	$	109.31


Unrecognized Tax Benefits (in thousands)	Year Ended January 31,
	2023		2022		2021

Balance, beginning of year	$	19,171	$	14,884	$	8,106
Tax Positions taken in prior year:
Gross increases	877		—		314
Gross decreases	—		(3,764)		—
Tax Positions taken in current year:
Gross increases	10,547		8,211		6,001
Gross decreases	—		—		—
Lapse of Statute of Limitations	(191)		(160)		(422)
Acquisitions	—		—		885



Balance, end of year	$	30,404	$	19,171	$	14,884


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

	(in thousands)
Year ended January 31, 2023
Accounts receivable allowances	$	24,696	$	57,142	$	(48,632)	$	33,206
Deferred tax asset valuation allowance	$	12,605	$	40,965	$	—	$	53,570
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


	ZOOM VIDEO COMMUNICATIONS, INC.

Date: March 3, 2023	By:	/s/ Eric S. Yuan
		Eric S. Yuan
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: March 3, 2023	By:	/s/ Kelly Steckelberg
		Kelly Steckelberg
		Chief Financial Officer
		(Principal Financial Officer)


Class of Eligible Director:			Annual Grant Begins:
All Class III Eligible Directors and Eligible Directors initially appointed after February 23, 2022			Commencing on the 2022 Annual Meeting
All Class I Eligible Directors and Class II Eligible Directors who hold a Pre-IPO Grant			Commencing on the 2023 Annual Meeting
Class II Eligible Directors who do not hold a Pre-IPO Grant			Commencing on the 2024 Annual Meeting


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
Solvvy, LLC						United States of America
Zoom Software (Hangzhou) Co., Ltd.						China
Zoom Video Communications Korea, LLC						Korea