What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-28 compared with 2024-03-04 · 157 added, 169 removed, 957 unchanged (25% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ZOOM VIDEO COMMUNICATIONS, INC.

ZOOM COMMUNICATIONS, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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To the Stockholders and Board of Directors

Zoom Video Communications, Inc.:

Zoom Communications, Inc.:

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of Zoom Video Communications, Inc.

We have audited the accompanying consolidated balance sheets of Zoom Communications, Inc.

and subsidiaries (the Company) as of January 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended January 31, 2025, and the related notes and financial statement schedule II:

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San Francisco, California

March 1, 2024

ZOOM VIDEO COMMUNICATIONS, INC.

February 28, 2025

ZOOM COMMUNICATIONS, INC.

CONSOLIDATED BALANCE SHEETS

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Stockholders’ equity:

Preferred stock, $ 0.001 par value per share, 200,000,000 shares authorized as of January 31, 2024 and 2023;

zero shares issued and outstanding as of January 31, 2024 and 2023

Common stock, $ 0.001 par value per share, 2,000,000,000 Class A shares authorized as of January 31, 2025 and 2024;

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Additional paid-in capital 5,130,271 5,228,756

Accumulated other comprehensive income (loss)

1,063 ( 50,385 )

Accumulated other comprehensive income

Retained earnings 3,799,518 2,789,280

2 unchanged sentences

The accompanying notes are an integral part of these consolidated financial statements.

ZOOM VIDEO COMMUNICATIONS, INC.

ZOOM COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

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177,142 109,770 ( 37,571 )

Other income (expense), net 197,263 41,418 ( 5,720 )

Income before provision for (benefit from) income taxes 832,312 249,276 1,101,632

Provision for (benefit from) income taxes 194,850 145,565 ( 274,007 )

Other income, net

325,147 197,263 41,418

Income before provision for income taxes

1,315,584 832,312 249,276

Provision for income taxes

305,346 194,850 145,565

Net income 1,010,238 637,462 103,711

8 unchanged sentences

The accompanying notes are an integral part of these consolidated financial statements.

ZOOM VIDEO COMMUNICATIONS, INC.

ZOOM COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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The accompanying notes are an integral part of these consolidated financial statements.

ZOOM VIDEO COMMUNICATIONS, INC.

ZOOM COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

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Comprehensive

Income (Loss) Retained Earnings Total

(Loss) Income

Retained Earnings Total

Stockholders’

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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

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Issuance of common stock upon release of restricted stock units 11,349,453 11 ( 11 ) — — —

Repurchase of common stock ( 11,170,907 ) ( 11 ) ( 999,992 ) — — ( 1,000,003 )

Issuance of common stock for employee stock purchase plan 921,892 1 54,096 — — 54,097

Stock-based compensation expense — — 1,059,597 — — 1,059,597

Other comprehensive loss — — — ( 32,483 ) — ( 32,483 )

Other comprehensive income — — — 51,448 — 51,448

Net income — — — — 637,462 637,462

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Issuance of common stock upon release of restricted stock units 12,095,006 12 ( 12 ) — — —

Repurchase of common stock, including excise tax ( 15,888,316 ) ( 16 ) ( 1,095,102 ) — — ( 1,095,118 )

Issuance of common stock for employee stock purchase plan 1,066,977 1 54,007 — — 54,008

4 unchanged sentences

The accompanying notes are an integral part of these consolidated financial statements.

ZOOM VIDEO COMMUNICATIONS, INC.

ZOOM COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

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Provision for accounts receivable allowances 20,022 35,244 50,285

Unrealized foreign exchange losses (gains) 12,259 13,266 —

Unrealized foreign exchange losses 17,165 12,259 13,266

Non-cash operating lease cost 24,066 21,066 28,933

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Proceeds from exercise of stock options 4,619 10,195 8,577

Proceeds from employee equity transactions (remitted) to be remitted to employees and tax authorities, net ( 4,106 ) 774 ( 40,004 )

Other — — 337

Net cash provided by (used in) financing activities 60,186 ( 936,942 ) 34,068

Proceeds from employee equity transactions to be remitted (remitted) to employees and tax authorities, net 7,174 ( 4,106 ) 774

Net cash (used in) provided by financing activities ( 1,028,077 ) 60,186 ( 936,942 )

Effect of exchange rate changes on cash, cash equivalents, and restricted cash ( 15,170 ) ( 10,196 ) ( 8,108 )

Net increase (decrease) in cash, cash equivalents, and restricted cash 465,137 26,890 ( 1,219,763 )

Net (decrease) increase in cash, cash equivalents, and restricted cash ( 203,963 ) 465,137 26,890

Cash, cash equivalents, and restricted cash—beginning of year 1,565,380 1,100,243 1,073,353

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Purchase of equipment during the period included in accounts payable and accrued expenses $ 20,393 $ 16,206 $ 11,946

Excise tax on share repurchases included in accrued expenses $ 1,240 $ — $ —

Vesting of early exercised stock options $ — $ — $ 238

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The accompanying notes are an integral part of these consolidated financial statements.

ZOOM VIDEO COMMUNICATIONS, INC.

ZOOM COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Description of Business

Zoom Video Communications, Inc.

and its subsidiaries (collectively, “Zoom,” the “Company,” “we,” “us,” or “our”) provide a unified communications and collaboration platform that connects people through frictionless and secure meetings, phone, chat, content sharing and more.

Zoom provides an open, AI-first work platform for human connection.

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

We were incorporated in the state of Delaware in April 2011, and are headquartered in San Jose, California.

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Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and include the accounts of Zoom Video Communications, Inc., its subsidiaries, and a variable interest entity for which we are the primary beneficiary.

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and include the accounts of Zoom Communications, Inc., its subsidiaries, and a variable interest entity for which we are the primary beneficiary.

All intercompany balances and transactions have been eliminated in consolidation.

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Allowance for credit losses ( 17,262 ) ( 25,916 )

Allowance for returns ( 6,455 ) ( 8,306 )

Other reserves

( 4,816 ) ( 6,455 )

Accounts receivable, net $ 495,228 $ 536,078

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We reassess the adequacy of the allowance for credit losses each reporting period.

Furthermore, the allowance for sales returns is recorded as an offset to accounts receivable, and changes to the allowance are classified as a reduction in revenue in the consolidated statements of operations.

We estimate returns from sales to customers based on historical chargebacks and return rates.

For the fiscal year ended January 31, 2024, our assessment considered the recent changes in macroeconomic conditions such as inflation, recessionary and uncertain environments, and fluctuations in foreign currency exchange rates has on our estimates of credit and collectibility trends.

Other reserves generally represent a reduction of accounts receivable with an offsetting reduction to deferred revenue.

For the fiscal year ended January 31, 2025, our assessment took into account recent changes in macroeconomic conditions such as inflation pressures, fluctuations in foreign currency exchange rates, and uncertain environments, which may impact our estimates of credit and collectibility trends.

Below is a rollforward of our allowance for credit losses for the fiscal year ended January 31, 2025.

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On a quarterly basis, we assess our privately held debt and equity securities in our strategic investment portfolio for indicators for impairment.

As of January 31, 2024, we recognized an immaterial amount of impairment to our privately held debt and equity securities.

For the fiscal years ended January 31, 2025, 2024, and 2023, we recognized an immaterial amount of impairment to our privately held debt and equity securities.

Fair Value Measurements

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ROU assets represent our right to use an underlying asset during the reasonably certain lease term, and lease liabilities represent our obligation to make lease payments arising from the lease.

Our lease terms may include options to extend or terminate the lease when it is

reasonably certain that we will exercise that option.

Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of fixed payments not yet paid over the lease term.

We use our incremental borrowing rate based on the information available at the commencement date in determining the lease liabilities as our leases generally do not provide an implicit rate.

We use our incremental

borrowing rate based on the information available at the commencement date in determining the lease liabilities as our leases generally do not provide an implicit rate.

Our incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, in an economic environment where the leased asset is located.

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Acquisition costs, such as legal and consulting fees, are expensed as incurred.

Uncertain tax positions and tax-related valuation allowances are initially established in connection with a business combination as of the acquisition date.

We continue to collect information and reevaluate these estimates and assumptions quarterly.

We will record any adjustments to our preliminary estimates to goodwill, provided that it is within the one-year measurement period.

Goodwill and Intangible Assets

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We derive our revenue primarily from subscription agreements with customers for access to our unified communications and collaboration platform and services.

We also provide other services, which include professional services, consulting

services, and online event hosting, which were immaterial to our consolidated financial statements.

We also provide other services, which include professional services, consulting services, and online event hosting, which were immaterial to our consolidated financial statements.

Revenue is recognized when a customer obtains control of promised services.

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These costs are composed of co-located data center costs, third-party cloud hosting costs, integrated third-party PSTN services, personnel-related expenses, amortization of capitalized software development costs and acquired intangible assets, royalty payments, and allocated overhead costs.

Indirect overhead costs associated with corporate facilities and related depreciation, health care benefits, training, and other employee benefits are allocated to cost of revenue and operating expenses based on applicable headcount.

Indirect overhead

costs associated with corporate facilities and related depreciation, health care benefits, training, and other employee benefits are allocated to cost of revenue and operating expenses based on applicable headcount.

Research and Development

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Stock-Based Compensation

Stock-based compensation expense related to stock awards (including stock options, RSUs, and ESPP) is 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.

Stock-based compensation expense related to stock awards with only service conditions, including stock options, RSUs, and 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.

The fair value of each option and ESPP award is estimated on the grant date using the Black-Scholes option pricing model.

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We consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations.

We record uncertain tax positions in accordance with ASC 740, Income Taxes on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

We record uncertain tax positions on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

We consider many factors when evaluating our uncertain tax positions, which involve significant judgment and may require periodic adjustments.

The resolution of these uncertain tax positions in a manner inconsistent with management's expectations could have a material impact on our consolidated financial statements.

We recognize interest and penalties related

to uncertain tax positions as a component of our provision for income taxes.

We recognize interest and penalties related to uncertain tax positions as a component of our provision for income taxes.

Accrued interest and penalties are included with the related tax liability.

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Diluted net income per share attributable to common stockholders is computed by dividing the resulting net income attributable to common stockholders by the weighted-average number of fully diluted common shares outstanding.

Segment Information

We operate in one operating segment.

Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker, who is our CEO, in deciding how to allocate resources and assessing performance.

Our chief operating decision maker allocates resources and assesses performance based upon consolidated financial information.

Revenue by geographical region can be found in the revenue recognition disclosures in Note 2 below.

The following table presents our property and equipment, net of depreciation and amortization, by geographic region:

As of January 31,

(in thousands)

Americas $ 202,022 $ 189,486

APAC 45,321 39,325

EMEA 46,361 24,010

Total property and equipment, net $ 293,704 $ 252,821

Recent Accounting Pronouncements Not Yet Adopted

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU No.

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Early adoption is permitted.

We are currently evaluating the impact from the adoption of this ASU on our consolidated financial statements.

We adopted the ASU as of February 1, 2024, and applied the amendments in this Update retrospectively to all prior periods presented in these financial statements.

Our adoption resulted in the addition of a note to consolidated financial statements, “14.

Segment Information.”

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU No.

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We are currently evaluating the impact from the adoption of this ASU on our consolidated financial statements.

In November 2024, the FASB issued ASU No.

2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses , which aims to improve financial reporting by requiring additional disclosure about specific expense categories in the notes to financial statements at interim and annual reporting periods.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

We are currently evaluating the impact from the adoption of this ASU on our consolidated financial statements.

Revenue Recognition

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Unrealized losses for securities that have been in an unrealized loss position for less than 12 months were $ 6.2 million and $ 6.0 million as of January 31, 2025 and 2024, respectively.

Unrealized losses for securities that have been in an unrealized loss position for 12 months or longer were $ 4.8 million and $ 42.0 million as of January 31, 2024 and 2023, respectively.

Unrealized losses for securities that have been in an unrealized loss position for 12 months or longer were immaterial as of January 31, 2025 and $ 4.8 million as of January 31, 2024.

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.

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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 fiscal year.

There were no material realized gains or losses from available-for-sale securities that were reclassified out of accumulated other comprehensive (loss) income for the fiscal years ended January 31, 2024, 2023, and 2022.

There were no material realized gains or losses from available-for-sale securities that were reclassified out of accumulated other comprehensive income (loss) for the fiscal years ended January 31, 2025, 2024, and 2023.

The following table presents the contractual maturities of our marketable securities as of January 31, 2025 and 2024:

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Strategic investments $ 26,988 $ 285,509 $ 96,725 $ 409,222

During the fiscal year ended January 31, 2024, we made a total of $ 70.5 million of strategic investments in equity securities of private companies.

Based on the terms of these privately-held securities, we determined that we do not have a controlling interest nor the ability to exercise significant influence over the operating and financial policies of the investees.

Therefore these investments are currently accounted for under the measurement alternative method.

In addition, during the fiscal year ended January 31, 2024, we recorded a $ 85.6 million net unrealized gain on our investments accounted for under the measurement alternative method, mainly driven by changes in the fair value of these investments.

During the fiscal year ended January 31, 2024, we sold a total of $ 169.9 million of strategic investments in equity securities of public companies.

The net gains on sale, which were not material, were recorded through gains (losses) on strategic investments, net in the consolidated statements of operations.

During the fiscal year ended January 31, 2025, we recorded net unrealized gains of $ 151.4 million on our investments accounted for under the measurement alternative method, mainly driven by changes in the fair value, sales of investments, along with dividends received from these investments.

Fair Value Measurements

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Treasury bills 17,965 — 17,965 —

Corporate debt securities 2,715 — 2,715 —

government agency securities 20,155 — 20,155 —

Agency Bonds 23,992 — 23,992 —

Cash equivalents 867,001 825,044 41,957 —

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Marketable securities 6,442,329 — 6,442,329 —

Certificates of deposit included in other assets, noncurrent 254 — 254 —

Publicly held equity securities included in strategic investments 35,280 35,280 — —

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Money market funds $ 851,100 $ 851,100 $ — $ —

Treasury bills 100,629 — 100,629 —

Corporate debt securities 2,715 — 2,715 —

government agency securities 20,155 — 20,155 —

Cash equivalents 974,599 851,100 123,499 —

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Business Combinations

On May 19, 2022, we acquired 100 % of the issued and outstanding share capital of Solvvy, Inc., a private technology company specializing in customer support automation, for an all-cash purchase consideration of $ 121.2 million.

The acquisition adds to our customer service capabilities and enhances our integrated platform by providing conversational AI capabilities.

The acquisition has been accounted for as a business combination.

In allocating the purchase consideration, $ 95.0 million was attributed to goodwill, $ 26.7 million to intangible assets (consisting of $ 12.0 million to developed technology and $ 14.7 million to customer relationships), and $ 0.5 million to other net liabilities 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 expense of developed technology is recorded within cost of revenue in the consolidated statements of operations and amortization expense of customer relationships is recorded within sales and marketing in the consolidated statements of operations.

As of January 31, 2024, the developed technology and customer relationships both had a remaining useful life of 3.3 years.

Transaction costs incurred in connection with the acquisition were immaterial.

The results of operations of Solvvy, Inc., which are not material, have been included in our 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 consolidated statements of operations.

Workvivo Limited

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Amortization of developed technology and customer relationships is recorded within cost of revenue and sales and marketing expense, respectively, within the consolidated statements of operations.

As of January 31, 2025, the developed technology and customer relationships both had a remaining useful life of 3.2 years.

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Prepaid expenses 166,924 188,259

Restricted cash from international employee stock sales 6,874 13,141

Restricted cash

Other 21,718 24,049

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Servers $ 427,664 $ 340,868

Computer and office equipment 44,571 48,325

Software 123,259 95,409

Computer and office equipment 47,021 44,571

Leasehold improvements 54,885 43,981

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Accounts receivable, noncurrent $ 19,266 $ 26,099

Prepaid expense, noncurrent 23,351 9,695

Indefinite-lived intangible assets 25,239 25,239

Intangible assets subject to amortization, net 33,410 46,935

Indefinite-lived intangible assets 25,239 25,239

Prepaid expense, noncurrent 52,156 23,351

Income tax receivable, noncurrent

Other 11,772 11,853

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Sales and other non-income tax liabilities $ 41,517 $ 42,254

Uncertain tax position liabilities

Long-term income tax liabilities

49,449 33,864

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During the fiscal year ended January 31, 2024, we acquired Workvivo, and recorded goodwill of $ 184.7 million.

During the fiscal year ended January 31, 2023, we acquired Solvvy, Inc., and recorded goodwill of $ 95.0 million.

See Note 5 for additional information related to these acquisitions.

See Note 5 for additional information related to the acquisition.

The following table summarizes intangible assets with a finite useful life included within other asset, noncurrent on the consolidated balance sheet:

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Total $ 65,725 $ ( 32,315 ) $ 33,410 $ 65,725 $ ( 18,790 ) $ 46,935

Intangible asset amortization expense was $ 12.5 million and $ 5.3 million for the years ended January 31, 2024 and 2023, respectively, and less than $ 1.0 million for the year ended January 31, 2022.

Intangible asset amortization expense was $ 13.5 million, $ 12.5 million, and $ 5.3 million for the fiscal years ended January 31, 2025, 2024 and 2023, respectively.

Estimated amortization expense for each of the five succeeding fiscal years and thereafter is as follows:

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Domain and IP Addresses $ 20,232 $ 20,232

Patents and Tradenames 5,007 5,007

Patents and trade names

Total $ 25,239 $ 25,239

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In many jurisdictions, non-income-based taxes, such as sales and use tax and other indirect taxes, are assessed on our operations.

Although we are diligent in collecting and remitting such taxes, there is uncertainty as to what constitutes sufficient presence for a jurisdiction to levy taxes, fees, and surcharges for sales made over the Internet.

Although we are diligent in collecting and remitting such taxes,

there is uncertainty as to what constitutes sufficient presence for a jurisdiction to levy taxes, fees, and surcharges for sales made over the Internet.

As of January 31, 2025 and 2024, we recorded sales and other tax liabilities of $ 83.3 million and $ 77.7 million, respectively, of which $ 41.8 million and $ 35.5 million are included in accrued expenses and other current liabilities, respectively, and $ 41.5 million and $ 42.3 million are included in other liabilities, noncurrent, respectively, in our consolidated balance sheets, based on our best estimate of the probable liability for the loss contingency incurred as of those dates.

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however, changes in our assumptions may occur in the future as we obtain new information, which can result in adjustments to the recorded liability.

Other Contingencies

Legal Proceedings

In June 2020, we received a grand jury subpoena from the Department of Justice’s U.S.

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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.

Legal Proceedings

We are fully cooperating with all of these investigations and have conducted our own thorough internal investigation.

These investigations are ongoing, 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.

During the fiscal year ended January 31, 2025, we recorded an $ 18.0 million accrual with respect to a tentative settlement offer for the SEC matter that remains subject to SEC approval.

We do not know when these matters will be completed, including the SEC matter, which facts we will ultimately discover as a result of the investigations, or what actions the government may or may not take.

We are unable to predict the ultimate outcome of these matters and are unable to reasonably estimate any range of possible loss beyond the $ 18.0 million settlement offer for the SEC matter.

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.

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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 April 11, 2023, the court entered a stipulated order that required 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.

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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.

On April 1, 2024, the parties notified the court that the parties are engaged in good-faith, material settlement discussions, and requested that the court stay any proceedings and rulings in connection with the pending motion to dismiss while the parties attempt to reach a proposed resolution of this action.

On April 2, 2024, the Court stayed the case.

On January 14, 2025, the parties executed a Stipulation of Settlement (“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, Zoom agreed to enact certain corporate governance reforms and to pay plaintiff’s counsel a fee award of up to $ 1.35 million.

The Stipulation and settlement remain subject to preliminary and final approval by the court.

On January 16, 2025, plaintiff filed a motion for preliminary approval of the settlement.

On February 6, 2025, the court held a hearing on the motion for preliminary approval of the settlement.

We accrued the $ 1.35 million fee award and recorded it as a general and administrative expense in our consolidated statement of operations for the year ended January 31, 2025.

We are vigorously defending ourselves against these lawsuits.

Given the uncertainty of litigation, the preliminary stage of the cases, 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.

Beginning on March 30, 2020, multiple putative class actions were filed against us in various U.S.

federal district courts and state courts relating to our alleged privacy and security practices, including alleged data sharing with third parties (the “U.S.

Privacy Class Actions”).

The plaintiffs claim violations of a variety of state consumer protection and privacy laws, and also assert state constitutional and common law claims, such as negligence and unjust enrichment.

Privacy Class Actions seek to certify both nationwide and state-specific classes of individuals using our services in certain time periods.

The plaintiffs seek various forms of injunctive and monetary relief, including restitution, statutory and actual damages, punitive damages, and attorneys’ fees.

The federal cases have been transferred to and consolidated in the NDCA with our consent;

lead plaintiffs’ counsel have been appointed;

and plaintiffs filed their first amended consolidated class action complaint on October 28, 2020.

On March 11, 2021, the court granted in part, and denied in part, our motion to dismiss, and gave plaintiffs leave to amend.

On July 30, 2021, we entered into a settlement agreement with plaintiffs to settle the action on a classwide basis, and plaintiffs filed a motion for preliminary approval of the settlement with the court on July 31, 2021.

On October 21, 2021, the Court preliminarily approved the settlement.

Under the terms of the settlement, we have paid $ 85.0 million into an escrow account that will be used to pay claims filed by settlement class members, attorneys’ fees and expenses, administrative costs, and service payments to plaintiffs.

On April 21, 2022, the Court granted final approval of the settlement.

On May 19, 2022, two objectors to the settlement appealed the Court's final approval order.

On May 20, 2022, a third objector appealed the Court’s final approval order.

On October 17, 2022, we, plaintiffs, and all three objector-appellants agreed to settle the appeals, and on October 27, 2022, we and plaintiffs initiated proceedings in the district court to obtain Court approval of the settlements, which the district court approved on December 16, 2022.

On January 13, 2023, a new objector appealed the court’s December 16, 2022 approval of the settlements of the prior appeals, and on March 31, 2023, the Ninth Circuit dismissed the new appeal.

With the appeals resolved, the class action settlement is final and the settlement administrator is in the process of making payments to claimants.

Given the uncertainty of litigation, the preliminary stage of the cases, and the legal standards that must be met for, among other things, class certification and success on the merits,

except as otherwise described above, 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.

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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 is not currently scheduled.

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 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 year ended January 31, 2024.

A hearing on the motion for preliminary approval was held on June 13, 2024, but the court has yet to enter a preliminary approval order.

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 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 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.

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Stock Repurchase Plan

In February 2022, our Board of Directors authorized a stock repurchase program of up to $ 1.0 billion of our Class A common stock, which was completed in December 2022.

During the year ended January 31, 2023, we purchased and subsequently retired 11,170,907 shares of our Class A common stock for an aggregate amount of $ 1.0 billion.

In February 2024, our Board of Directors authorized a new stock repurchase program of up to $ 1.5 billion of our Class A common stock.

See Note 14, "Subsequent Events" for additional information related to the authorized 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.

In November 2024, our Board of Directors authorized the repurchase of an additional $ 1.2 billion of our outstanding 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 fiscal year ended January 31, 2025, we repurchased and subsequently retired 15,888,316 shares of our Class A common stock for an aggregate amount of $ 1.1 billion.

As of January 31, 2025, $ 1.6 billion of the repurchase authorization remained available.

Equity Incentive Plans

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Unvested as of January 31, 2025 23,870,513 $ 73.48

In October 2021, we added a feature that modified certain existing RSU awards to provide for a supplemental award based on certain future stock price criteria.

The feature was subsequently modified in March and October 2022 to provide potential additional supplemental awards.

The features and resulting modifications resulted in incremental stock-based compensation expense that is being recognized from the respective modification dates through the remaining requisite service period for each of the original awards.

In November 2022, we cancelled one of the features related to a sub-population of the modified awards.

As a result, the amount of the unrecognized compensation cost as calculated using a Monte Carlo valuation approach related to the cancelled awards of $ 207.7 million was recognized during the fiscal year ended January 31, 2023.

As of January 31, 2024, unrecognized stock-based compensation expense related to outstanding unvested RSUs was $ 1,782.2 million, including the impact of the modification, which is expected to be recognized over a weighted-average period of 2.5 years.

As of January 31, 2025, unrecognized stock-based compensation expense related to outstanding unvested RSUs was $ 1,495.8 million, which is expected to be recognized over a weighted-average period of 2.6 years.

For the fiscal year ended January 31, 2025, 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.

2019 Employee Stock Purchase Plan

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The first offering period began on April 18, 2019.

During the fiscal years ended January 31, 2024, 2023, and 2022, 921,892 , 678,279 , and 838,395 shares, respectively, of our Class A common stock were purchased under the ESPP.

During the fiscal years

ended January 31, 2025, 2024, and 2023, 1,066,977 , 921,892 , and 678,279 shares, respectively, of our Class A common stock were purchased under the ESPP.

As of January 31, 2025, unrecognized stock-based compensation expense related to the ESPP was $ 36.2 million, which is expected to be recognized over a weighted-average period of 1.6 years.

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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.

The execution of the Plan was completed as of July 31, 2023, and therefore no restructuring expense was recorded for the year ended January 31, 2025.

For the year ended January 31, 2024, we recorded net restructuring costs of $ 73.0 million, which consisted of $ 54.4 million related to employee transition, severance payments, and employee benefits;

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Total restructuring expenses $ 72,993

The following table summarizes our restructuring liability that is included in accrued expenses and other current liabilities on the consolidated balance sheet:

Severance and termination benefits Other

(in thousands)

Balance as of January 31, 2023 $ — $ —

Restructuring expenses 54,361 1,339

Cash payments ( 54,361 ) ( 1,339 )

Balance as of January 31, 2024

The components of the net income before the provision for (benefit from) income taxes were as follows:

There was no restructuring liability as of January 31, 2025 and January 31, 2024.

The components of the net income before the provision for income taxes were as follows:

Year Ended January 31,

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Total $ 1,315,584 $ 832,312 $ 249,276

The provision for (benefit from) income taxes was as follows:

The provision for income taxes was as follows:

Year Ended January 31,

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Foreign 20,086 9,159 18,473

Total current income tax expense (benefit)

Total current income tax expense

395,897 311,529 306,526

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Foreign 800 ( 8,368 ) ( 3,693 )

Total deferred income tax expense (benefit)

Total deferred income tax expense

( 90,551 ) ( 116,679 ) ( 160,961 )

Total provision for (benefit from) income taxes

Total provision for income taxes

$ 305,346 $ 194,850 $ 145,565

The provision for (benefit from) income taxes differs from the amount computed by applying the statutory federal tax rate as follows:

The provision for income taxes differs from the amount computed by applying the statutory federal tax rate as follows:

Year Ended January 31,

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Permanent items

10,371 4,016 9,090

Foreign-derived intangible income deduction ( 56,630 ) ( 63,571 ) ( 76,686 )

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Operating right-of-use assets ( 14,233 ) ( 14,396 )

Other liabilities

Strategic investments

( 75,290 ) ( 35,480 )

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The realization of tax benefits of net deferred tax assets is dependent upon future levels of taxable income, of an appropriate character, in the periods the items are expected to be deductible or taxable.

As of January 31, 2024, management concluded that the valuation allowance related to the U.K.

net deferred tax assets was no longer needed primarily due to its assessment of income/loss in recent periods and the forecast of future taxable income.

Based on evaluation of all positive and

negative evidence, management believes it is more likely than not that the net deferred tax assets will be realized for U.K.

Accordingly, management has recognized a non-recurring tax benefit of $ 10.7 million related to the valuation allowance release.

Based on the available objective evidence during the year ended January 31, 2025, we believe that it is more likely than not that the tax benefits relating to U.S.

losses that are capital in nature and certain state and other foreign deferred tax assets may not be realized prior to expiration.

losses that are capital in nature and certain state deferred tax assets may not be realized prior to expiration.

Accordingly, we have maintained a valuation allowance against these deferred tax assets and intend to maintain the applicable valuation allowance until sufficient positive evidence exists to support a reversal of, or decrease in, the valuation allowance.

As of January 31, 2024, we had net operating loss carryforwards of approximately $ 12.3 million for federal income tax purposes, $ 14.2 million for state income tax purposes, which will begin to expire in the year 2033 if unused.

As of January 31, 2025, we had net operating loss carryforwards of approximately $ 1.8 million for federal income tax purposes, and $ 12.5 million for state income tax purposes, which will begin to expire in the year 2033 if unused.

We also had certain foreign net operating loss carryforwards of $ 22.4 million, which have an indefinite life.

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The federal research and development tax credits have a twenty-year carryover period while the state research and development tax credits carry forward indefinitely.

The federal and state net operating loss carryforwards may be subject to significant limitations under Section 382 and Section 383 of the Internal Revenue Code of 1986 and similar provisions under state law.

Such provisions limit the net operating loss carryforwards that may be used in any given year in the event of special occurrences, including significant ownership changes.

We have completed a Section 382 review and determined that materially none of our operating losses will expire solely due to Section 382 limitation(s).

We indefinitely reinvest earnings from our foreign subsidiaries and therefore no deferred tax liability has been recognized on the basis difference created by such earnings.

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federal jurisdiction, various state jurisdictions, and various foreign jurisdictions.

As of January 31, 2024, all of the years remain open to examination by the federal and state tax authorities, for three or four years from the tax year in which net operating losses or tax credits are utilized.

As of January 31, 2025, all of the years in which net operating losses or tax credits were utilized remain open to examination by the federal and state tax authorities.

We believe that an adequate provision has been made for any adjustments that may result from tax examinations.

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For the years ended January 31, 2025, 2024, and 2023, the table above does not include 405,156 of issued Class A common stock held by us that are reserved for the sole purpose of being transferred to nonprofit organizations.

Subsequent Events

We have evaluated subsequent events from the balance sheet date through March 1, 2024, the date at which the consolidated financial statements were available to be issued.

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 pre-set trading plans), in privately negotiated transactions, and other transactions in accordance with applicable securities laws.

The timing and the amount of any repurchased Class A common stock will be determined by our management based on its evaluation of market conditions and other factors.

The repurchase program will be funded using our working capital.

Any repurchased shares of Class A common stock will be retired.

The repurchase program does not obligate us to acquire any particular amount of Class A common stock, and the repurchase program may be suspended or discontinued at any time at our discretion.

As of March 1, 2024, there have been no repurchases made.

Segment Information

Our CEO is the Chief Operating Decision Maker (“CODM”) of the Company.

The Company manages the business activities on a consolidated basis and all information provided to and reviewed by our CODM is compiled at the consolidated entity level.

Therefore, we have only one operating and reportable segment.

The description of the types of products and services from which the reportable segment derives its revenue is the same as those described in the Summary of Business and Significant Accounting Policies.

The measure of segment profit or loss that our CODM uses to allocate resources and assess performance is our consolidated net income.

The CODM uses net income to monitor results and to decide whether to reinvest profits.

Our CODM does not assess segment performance or make decisions using asset or liability information.

The following table summarizes the significant segment expenses regularly provided to the CODM as well as other segment items:

Year Ended January 31,

2025 2024 2023

Revenue $ 4,665,433 $ 4,527,224 $ 4,392,960

Adjusted cost of revenue (1)

984,916 908,283 912,913

Adjusted research and development (1)

500,177 430,117 393,548

Adjusted sales and marketing (1)

1,090,294 1,116,356 1,153,660

Adjusted general and administrative (1)

252,152 297,580 353,755

Stock-based compensation expense 931,309 1,057,161 1,285,752

Interest income ( 340,474 ) ( 210,009 ) ( 54,103 )

Other segment items (2)

( 68,525 ) 95,424 98,159

Provision for income taxes 305,346 194,850 145,565

Segment net income 1,010,238 637,462 103,711

Adjustments and reconciling items

Consolidated net income 1,010,238 637,462 103,711

(1) Excludes stock-based compensation expense and related payroll taxes, acquisition-related expenses, restructuring expenses, and litigation settlements, net

(2) Includes stock-based compensation related payroll taxes, acquisition-related expenses, restructuring expenses, litigation settlements, net, gains on strategic investments, net, and other income, net excluding interest income

The following table presents our property and equipment, net of depreciation and amortization, by geographic region:

As of January 31,

(in thousands)

Americas $ 238,328 $ 202,022

APAC 51,036 45,321

EMEA 41,111 46,361

Total property and equipment, net $ 330,475 $ 293,704

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data