What changed in this filing

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Item 1. Business

2021-03-18 compared with 2020-03-20 · 110 added, 78 removed, 115 unchanged (62% of the section changed)

Our mission is to make video communications frictionless.

We provide a video-first communications platform that delivers happiness and fundamentally changes how people interact.

We connect people through frictionless video, phone, chat, and content sharing and enable face-to-face video experiences for thousands of people in a single meeting across disparate devices and locations.

Our mission is to make video communications frictionless and secure.

We provide a video-first unified communications platform that delivers happiness and fundamentally changes how people interact.

We connect people through frictionless and secure video, phone, chat, and content sharing and enable face-to-face video experiences for thousands of people in a single meeting across disparate devices and locations.

Our cloud-native platform delivers reliable, high-quality video and voice that is easy to use, manage, and deploy;

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We strive to live up to the trust our customers place in us by delivering a communications solution that “just works.”

The cornerstone of our platform is Zoom Meetings, around which we provide a full suite of products and features designed to give users an easy, reliable, and innovative video-first communications experience.

The cornerstone of our platform is Zoom Meetings, around which we provide a full suite of products and features designed to give users an easy, reliable, and innovative unified communications experience.

Users are comprised of both hosts who organize video meetings and the individual attendees who participate in those video meetings.

In 2019, we launched Zoom Phone, a cloud-based PBX system, creating a unique video-first unified communications platform.

In 2019, we launched Zoom Phone, a cloud-based PBX system, creating a unique unified communications platform.

Many customers also choose to implement Zoom Rooms, our software-based conference room system, which enables users to easily experience Zoom Meetings in their physical meeting spaces.

Our partner ecosystem, App Marketplace, and developer platform help enterprises create elevated experiences with third-party applications to create customized workflows.

Our partner ecosystem, which includes App Marketplace and in-product apps, and developer platform help enterprises create elevated experiences with third-party applications to create customized workflows.

The happiness we bring is recognized by customers.

In 2019, our average customer Net Promoter Score (“NPS”) was over 70.

Zoom has consistently high scores across customer review sites, including Gartner Peer Insights, TrustRadius, and G2 Crowd, including being recognized as a 2020 Gartner Peer Insights Customers’ Choice for Meeting Solutions and a TrustRadius Top Rated Web Conferencing Software.

Industry analysts also recognize our market leadership:

Gartner has named Zoom a Leader in its Magic Quadrant for Meeting Solutions based on our “ability to execute” and “completeness of vision.” Frost & Sullivan selected Zoom as the Company of the Year in the Global Video Conferencing Industry, and for the North American Hosted IP Telephony and UCaaS Competitive Strategy Innovation and Leadership award.

Zoom also has consistently high scores across customer review sites, including Gartner Peer Insights, TrustRadius, and G2 Crowd, including being recognized as a 2020 Gartner Peer Insights Customers’ Choice for Meeting Solutions and a TrustRadius Top Rated Web Conferencing Software.

Gartner has named Zoom a Leader in its Magic Quadrant for Meeting Solutions based on our “ability to execute” and “completeness of vision.” In 2020 we also became a Leader in the Gartner Magic Quadrant for UCaaS.

Frost & Sullivan recognized Zoom with its Global Connected Work Company of the Year award in 2020, as well as awards for Global Video Communications in The COVID-19 Crisis Enabling Technology Leadership, Asia-Pacific Cloud Video Collaboration Services Company of The Year, and Indian Cloud Video Enabling Technology Leadership.

We have a unique model that combines viral enthusiasm for our platform with a multipronged go-to-market strategy for optimal efficiency.

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Our sales efforts funnel this viral demand into routes-to-market that are optimized for each customer opportunity, which can include our direct sales force, online channel, resellers, and strategic partners.

Our Culture of Happiness

We are focused on delivering happiness to our employees and customers.

We strive to change the way business is done through our communications technology and our company culture.

We take happiness so seriously that we have an employee-led happiness committee and crew to facilitate and amplify our efforts to deliver happiness to our employees and customers.

Our culture of delivering happiness drives our mission, vision, and values and is fundamental to everything we do at Zoom:

Our mission is to make video communications frictionless.

Our vision is to empower people to accomplish more through video communications.

We care for our community, our customers, our company, our teammates, and ourselves.

This culture supports our hiring and serves as a competitive advantage in attracting and retaining top talent.

Comparably ranked Zoom as No.

1 in its 2019 ranking of major U.S.

companies with the happiest employees.

Zoom was also recognized as No.

2 on Glassdoor’s 2019 Best Places to Work.

Our Growth Strategy

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We respond to customer needs with action to drive positive user experiences.

these practices result in our high NPS and will continue to generate referrals from our existing customers, providing meaningful viral adoption for the foreseeable future.

We believe these practices result in our high scores across customer review sites and will continue to generate referrals from our existing customers, providing meaningful viral adoption for the foreseeable future.

• Drive new customer acquisition.

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• Innovate our platform continuously.

Our engineers aim to stay on the cutting edge of video communication and collaboration technologies and released over 300 new features in 2019.

We strive to deliver the best experience to our users by dedicating approximately 20% of engineering capacity to developing on-demand, customer-requested features that would be valuable across our customer base.

Our engineers aim to stay on the cutting edge of video communication and collaboration technologies.

We strive to deliver the best experience to our users by dedicating a portion of

engineering capacity to developing on-demand, customer-requested features that would be valuable across our customer base.

• Accelerate international expansion.

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We have already partnered with several hardware video conferencing and peripheral providers and with software providers, including Atlassian and Dropbox.

Over 2,500 third-party developers are engaged with the Zoom App Marketplace platform to extend the value and adoption for Zoom customers and as private apps for their own companies.

We intend to continue to grow our partnership ecosystem to drive ubiquity and a better user experience.

We provide a video-first unified communications platform that delivers happiness and fundamentally changes how people interact, connecting them through frictionless video, phone, chat, and content sharing.

Our products include Zoom Meetings, Zoom Phone, Zoom Chat, Zoom Rooms, Zoom Conference Room Connector, Zoom Video Webinars, Zoom for Developers, and Zoom App Marketplace.

The following graphic depicts our products:

Third-party developers are able to engage with the Zoom App Marketplace and Zoom Developer Platform to extend the value and adoption of Zoom with our customers through the development of public and private apps and integrations.

We provide a unified communications platform that delivers happiness and fundamentally changes how people interact, connecting them through frictionless and secure video, phone, chat, and content sharing.

Our core products include Zoom Meetings, Zoom Phone, Zoom Chat, Zoom Rooms, Zoom Conference Room Connector, Zoom Video Webinars, Zoom Developer Platform, and Zoom App Marketplace.

Zoom Meetings

Zoom Meetings provide HD video, voice, chat, and content sharing across mobile devices, desktops, laptops, telephones, and conference room systems.

Our architecture can support tens of thousands of video participants in a single meeting.

Our architecture can support up to one thousand video participants in a single meeting.

Conversations can be one to one, one to many, or many to many.

Zoom Meetings feature 49-person video gallery view, virtual backgrounds, MP4/M4A cloud/local recording with transcripts, video breakout rooms, screen sharing with annotation, and integrations with other powerful business applications to help teams get more done together.

Zoom Meetings integrate with tools such as Atlassian, Dropbox, Google, LinkedIn, Microsoft, Salesforce, and Slack.

Zoom Meetings integrate with tools created by companies such as Atlassian, Dropbox, Google, LinkedIn, Microsoft, Salesforce, and Slack.

Our meetings are a flexible tool for on-the-go employees who rely on their mobile device or tablet throughout their business day.

In fact one in six meeting participants join Zoom Meetings through the Zoom mobile app.

An end-to-end encryption (“E2EE”) option is now available to free and paid Zoom customers globally who host meetings with up to 200 participants.

Zoom’s E2EE uses the same AES-256-GCM encryption that secures Zoom meetings by default, but with Zoom’s new E2EE, the meeting host generates encryption keys and uses public key cryptography to distribute these keys to the other meeting participants.

Zoom Phone is an enterprise cloud phone system that provides powerful private branch exchange (“PBX”) features, such as secure call routing, call queuing, call detail reports, call recording, call quality monitoring, voicemail, switch to video, and much more.

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Zoom Phone provides inbound and outbound calling via its support for native connectivity to the public switched telephone network (“PSTN”).

In the fiscal year ended January 31, 2020, Zoom Phone provided native PSTN connectivity in Australia, Canada, Ireland, New Zealand, Puerto Rico, United Kingdom (“U.K.”), and the United States (“U.S.”).

In the fiscal year ended January 31, 2021, Zoom Phone provided native PSTN connectivity in 44 countries and territories including Australia, Canada, Ireland, New Zealand, Puerto Rico, United Kingdom (“U.K.”), and the United States (“U.S.”).

Zoom Phone also supports Premise Peering and Cloud Peering, which provide enterprise customers with the flexibility of keeping their current PSTN service providers by redirecting existing third-party voice circuits to the Zoom Phone cloud.

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This unique capability allows customers to enjoy all of the benefits and features of Zoom Phone while keeping their existing service provider contracts, phone numbers, and calling rates with their preferred carrier of record.

Zoom Chat is included in the Zoom client for meeting and phone customers, and allows teams to stay connected with sharing messages, images, audio files, and content instantly across desktop, laptop, tablet, and mobile devices.

Organizations use Zoom Chat to collaborate in groups or 1-1 channels, share files and information, and stay connected.

Zoom Chat allows easy invitation to people outside a user’s organization, and users can easily switch from a chat to a phone call or video meeting during a conversation.

Zoom Chat can also store content, offering discoverability to users who want to review their conversations or shared files.

There are more than 60 chatbots available in the Zoom App Marketplace that provide notifications and improved workflow to other enterprise systems.

Zoom Chat, which is included in the Zoom client for meeting and phone customers, enables organizations and teams to communicate and collaborate in groups, channels, or 1-1s and to stay connected by instantly sharing messages, images, audio files, and other content across desktop, laptop, tablet, and mobile devices.

With Zoom Chat users can easily invite people outside a user’s organization to a chat conversation, and users can quickly switch from a chat to a phone call or video meeting

during a conversation.

Zoom Chat also features content storage for users who want discoverability and the ability to review their conversations or shared files.

There are dozens of Zoom Chat compatible applications available in the Zoom App Marketplace that provide notifications and improved workflow for other enterprise systems.

Zoom Rooms is our software-based conference room system that transforms every room–from executive offices, huddle rooms, training rooms, to broadcast studios–into a collaboration space that is easy to use, simple to deploy, and effortless to manage.

Designed to increase workforce collaboration across in-room and virtual participants, Zoom Rooms bring one-click to join meetings, wireless multi-sharing, interactive whiteboarding, and intuitive room controls for a frictionless Zoom Meeting experience.

Zoom Rooms can leverage purpose-built hardware, such as Zoom Rooms Appliances, for a turnkey deployment, or customize room builds with Zoom’s open hardware ecosystem and professional audio/visual equipment, enabling organizations to build video conference rooms for any use case.

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The Zoom Conference Room Connector is a gateway for SIP/H.323 endpoints to join Zoom meetings.

For organizations that use SIP/H.323 conference room systems from providers, such as Poly and Cisco, Zoom’s Conference Room Connector can take these traditional hardware video conferencing systems to the cloud, allowing users to leverage their existing investments

while taking advantage of the Zoom platform.

As organizations transition from legacy hardware-based conference rooms to software-based Zoom Rooms, IT admins save cost on layers of service, maintenance, and support contracts and bridge their endpoints with Zoom Conference Room Connector.

As organizations transition from legacy hardware-based conference rooms to software-based Zoom Rooms, IT administrators save cost on layers of service, maintenance, and support contracts and bridge their endpoints with Zoom Conference Room Connector.

With the cost-savings, organizations can reinvest in video-enabling more rooms and continue to leverage their existing SIP/H.323 endpoints with a consistent, cloud-based experience across all their rooms.

Zoom Video Webinars

Zoom Video Webinars allows users to conduct large-scale online events, such as town hall meetings, workshops, and marketing presentations.

Up to 100 panelists with full video, voice, chat, and content sharing are able to communicate to over 10,000 view-only attendees.

Zoom Video Webinars includes features, such as Q&A, reporting, invitations, and CRM and marketing automation software integrations.

It also easily integrates with Facebook Live, YouTube, and other custom streaming services, providing access to large bases of viewers.

Zoom for Developers and Zoom App Marketplace

Zoom for Developers allows developers to integrate our video, phone, chat, and content sharing into other applications, as well as manage Zoom accounts from any system, with full access to their usage and network metrics data.

With our SDKs and APIs, Zoom, third-party developers, and partners build applications that integrate our platform with other cloud services.

Zoom Video Webinars support interactive video presentations to large audiences from almost anywhere in the world and from many devices.

Zoom webinars scale up to 50,000 people including up to 100 interactive video panelists.

With webinars, hosts have control over the video viewing experience and attendees join to listen, learn and interact using chat, Q&A, live polling and more.

Our powerful third-party integrations help users maximize usage of their webinars and expand capabilities with paid registration, marketing automation, lead nurturing and learning management.

Zoom Developer Platform and Zoom App Marketplace

Zoom Developer Platform allows developers to integrate our video, phone, chat, and content sharing into other applications, as well as manage Zoom accounts from any system, with full access to their usage and network metrics data.

With our SDKs, APIs and webhooks, Zoom, third-party developers, and partners build applications that integrate our platform with other cloud services.

Our customers can also develop highly customizable private applications that integrate Zoom into their systems.

Our rich toolbox of extensible APIs, cross-platform SDKs, and MobileRTC powered an average of more than 170 million API engagements per month for the fiscal year ended January 31, 2020.

Our rich toolbox of extensible APIs, cross-platform SDKs, and MobileRTC powered an average of more than 1.6 billion API engagements per month for calendar year 2020.

Our App Marketplace brings together these integrations built by Zoom and third-party developers, making it easy for developers to publish their apps and for customers to enhance their Zoom experience with new functionalities.

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Zoom App Marketplace features apps and bots with services such as Salesforce, Microsoft Teams, and Google, as well as deep product integrations with Dropbox, Box, Atlassian, and Marketo.

OnZoom and Zoom Apps

We recently announced two additions to the Zoom platform:

OnZoom and Zoom Apps.

OnZoom is a new platform for Zoom users to create, host, and monetize online events.

OnZoom is an extension of Zoom’s unified communications platform with robust monetization (ticketing and fundraising) and simpler event management capabilities.

OnZoom is currently offered as a public beta for U.S.

users to host and attend online events.

Zoom Apps are a new app type coming soon to the Zoom App

These in-product integrations will be accessible directly from Zoom Meetings and the Zoom Desktop client and are designed to facilitate collaboration and engagement during meetings.

Zoom Hardware-as-a-Service

Our Zoom Hardware-as-a-Service offering allows customers to access the latest and greatest video communication technology.

Customers can deploy a world-class communications experience with a variety of subscription options for phone and meeting room hardware.

Zoom customers will be able to scale video conference rooms and phones with hardware options and hardware refreshes at an affordable, fixed monthly price.

Our Technology and Infrastructure

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Our online channel supports high-volume, high-velocity, self-service sales.

Our marketing team’s primary objective is to create preference for our brand by leveraging our viral growth, building awareness, and engaging our users in person.

Our marketing team’s primary objective is to create preference for our brand by leveraging our viral growth, enhancing brand perception, and engaging our users with virtual events, social media, and customer advisory councils.

We complement our viral growth with targeted online and out-of-home advertising.

We also participated in more than 210 marketing and customer events around the world in 2019 and connect with and celebrate our users at Zoomtopia, our annual user conference.

We shifted our events strategy from in-person to online during the pandemic, including hosting Zoomtopia, our annual user conference, to over 150,000 unique virtual attendees.

Research and Development

We drive our business with constant innovation.

We have research and development presence in both the United States and China, which we believe is a strategic advantage for us, allowing us to invest more in increasing our product capabilities in an efficient manner.

We have research and development presence in the United States, India, Singapore and China, which we believe is a strategic advantage for us, allowing us to invest more in increasing our product capabilities in an efficient manner with a “follow the sun” strategy.

Our Competition

The markets in which we operate are highly competitive.

We face competition from legacy web-based meeting services providers, including Cisco Webex and LogMeIn GoToMeeting, and bundled productivity solution providers with video functionality, including Microsoft Teams and Google G Suite, as well as UCaaS and legacy PBX providers, including Avaya, RingCentral, and 8x8.

We face competition from legacy web-based meeting services providers, including Cisco Webex and LogMeIn GoToMeeting, and bundled productivity solution providers with video functionality, including Google G Suite and Microsoft Teams, as well as UCaaS and legacy PBX providers, including 8x8.

Avaya, and RingCentral.

We believe we compete favorably based on the following competitive factors:

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• ease of use and reliability;

• brand awareness and preference;

• ability to utilize existing infrastructure, such as legacy conference room hardware;

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Intellectual Property

Intellectual property is an important aspect of our business, and we seek protection for our intellectual property as appropriate.

To establish and protect our proprietary rights, we rely upon a combination of patent, copyright, trade secret and trademark laws, and contractual restrictions, such as confidentiality agreements, licenses, and intellectual property assignment agreements.

We maintain a policy requiring our employees, contractors, consultants, and other third parties to enter into confidentiality and proprietary rights agreements to control access to our proprietary information.

These laws, procedures, and restrictions provide only limited protection, and any of our intellectual property rights may be challenged, invalidated, circumvented, infringed, or misappropriated.

Furthermore, the laws of certain countries do not protect proprietary rights to the same extent as the laws of the United States, and we therefore may be unable to protect our proprietary technology in certain jurisdictions.

Moreover, our platform incorporates software components licensed to the general public under open source software licenses.

We obtain many components from software developed and released by contributors to independent open source components of our platform.

Open source licenses grant licensees broad permissions to use, copy, modify, and redistribute our platform.

As a result, open source development and licensing practices can limit the value of our software copyright assets.

We continually review our development efforts to assess the existence and patentability of new intellectual property.

We pursue the registration of our domain names, trademarks, and service marks in the United States and in certain locations outside the United States.

To protect our brand, we file trademark registrations in some jurisdictions.

Legal Proceedings

From time to time, we are involved in various legal proceedings arising from the normal course of business activities.

We are not presently a party to any 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.

We rely on a combination of patents, trademarks, copyrights, and trade secrets, as well as contractual protections, to establish and protect our intellectual property rights.

We actively seek patent protection covering inventions originating from our company.

We also pursue the registration and enforcement of trademarks and domain names in the United States and in various jurisdictions outside the United States.

We control access to and use of our proprietary technology and other confidential information through internal and external controls, including contractual protections with employees, contractors, customers, and partners.

Our software is protected by U.S.

and international intellectual property laws.

Our policy requires employees and independent contractors to sign agreements (1) assigning to us any inventions, trade secrets, works of authorship, and other intellectual property generated by them in the course of their employment, and (2) agreeing to protect our confidential information.

In certain circumstances, we license intellectual property from third parties for use in our products.

This may include open source software.

We take steps to ensure compliance with the terms of the licenses governing such licensed technology.

We believe our business is not materially dependent on any individual patent, trademark, copyright, trade secret, license, or other intellectual property right.

For information on the risks associated with our intellectual property, see “Item 1A - Risk Factors.”

Government Regulation

Our business activities are subject to various federal, state, local, and foreign laws, rules, and regulations.

Compliance with these laws, rules, and regulations has not had, and is not expected to have, a material effect on our capital expenditures, results of operations and competitive position as compared to prior periods.

Nevertheless, compliance with existing or future governmental regulations, including, but not limited to, those pertaining to global trade, business acquisitions, consumer and data protection, and taxes, could have a material impact on our business in subsequent periods.

For more information on the potential impacts of government regulations affecting our business, see “Item 1A - Risk Factors.”

Human Capital

As of January 31, 2021, we had 4,422 full-time employees.

Of these employees, 2,662 are in the United States and 1,760 are in our international locations.

None of our employees are represented by a labor union or covered by collective bargaining agreements, and we have not experienced any work stoppages.