What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-02-27 compared with 2025-02-28 · 112 added, 111 removed, 306 unchanged (42% of the section changed)

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Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in the section titled “Risk Factors” and in other parts of this Annual Report on Form 10-K.

Zoom Workplace with AI Companion is an open, AI-first work platform for human connection.

Our platform is designed to enable seamless communication and collaboration through a suite of products that includes Zoom Meetings, Zoom Phone, Zoom Team Chat, and Zoom Docs, and more, all powered by AI to improve productivity, collaboration, and business outcomes.

We strive to simplify the workday with tools that drive meaningful team collaboration and customer engagement.

Zoom Workplace, our AI-driven platform, supports businesses by providing an open, scalable solution for communication and collaboration.

This includes Zoom Contact Center, Zoom Revenue Accelerator, and Zoom Events, which empower sales, marketing, and customer experience teams to foster stronger customer relationships.

Zoom provides the AI-first, open work platform built for human connection and purposefully designed to move conversations to completion.

Zoom enables customers to seamlessly collaborate, communicate, and drive outcomes across meetings, chat, phone, contact center, events, and more — all with the built-in assistance of Zoom AI Companion.

We strive to simplify the workday with AI-first tools that drive meaningful team collaboration and customer engagement.

Zoom Workplace supports businesses by providing a secure, scalable solution for communication and collaboration.

In addition, Zoom is further helping businesses foster stronger customer and employee relationships through Zoom Business Services, which includes Zoom Contact Center, Zoom Revenue Accelerator, as well as Zoom Events, which empowers sales, marketing, and customer experience teams.

AI is core to Zoom’s product innovation.

In fiscal year 2025, Zoom continued to invest in AI and focused on three key areas regarding AI:

supporting individual productivity, powering better collaboration, and helping customer-facing teams deliver meaningful business value and delight to their customers.

Our federated approach to AI enables users to leverage multiple AI models (including those from OpenAI, Anthropic, and Meta), making AI more accessible and affordable so that more people can incorporate them in their day-to-day workflows.

In line with our commitment to responsible AI, Zoom does not use customer audio, video, chat, screen sharing, attachments, or other communications (such as poll results, whiteboard, and reactions) to train Zoom’s or third-party AI models.

Zoom’s platform prioritizes security and privacy, with 32 co-located data centers globally and robust encryption.

During fiscal year 2026, Zoom has continued to invest in AI, expanding its agentic AI skills, agents, and models, focusing on three key areas:

supporting individual productivity, powering better collaboration, and helping customer-facing teams get more done, do better work, and strengthen relationships with AI Companion.

Our federated approach to AI dynamically leverages multiple Large Language Models (“LLMs”) (including those from OpenAI, Anthropic, and Meta), as well as Small Language Models (“SLMs”), making AI more accessible and affordable so that more people can incorporate it in their day-to-day workflows.

In line with our commitment to responsible AI, Zoom does not use customer audio, video, chat, screen sharing, attachments, or other communications-like customer content (such as poll results, whiteboard, and reactions) to train Zoom’s or its third-party AI models.

Zoom’s platform prioritizes security and privacy, with 20 co-located data centers globally as of January 31, 2026 and robust encryption options.

We are committed to delivering high-quality, real-time video, even in low-bandwidth conditions, while safeguarding our customers' data.

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Our core offerings include Zoom Workplace Pro, Business, and Enterprise bundles, with vertical-specific plans for Education, Healthcare, and Government.

We also offer Zoom Phone, with regional and global calling plans designed to meet diverse customer needs.

We also offer Zoom Phone, with regional and global calling plans, and Zoom Contact Center, providing advanced customer experience solutions designed to meet diverse customer needs.

Our revenue was $4,868.8 million, $4,665.4 million, and $4,527.2 million for the fiscal years ended January 31, 2026, 2025, and 2024, respectively, representing year-over-year growth of 4.4% and 3.1%, respectively.

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Macroeconomic Conditions and Other Factors

The macroeconomic environment including geopolitical conflicts, tariffs and trade tensions, inflationary pressures, interest rate fluctuations, and foreign currency exchange rate volatility continues to create uncertainty in demand for subscriptions to our unified communications and collaboration platform.

These factors, along with responses by central banks and government policies, have placed pressure on consumer and business behavior, leading to elongated sales cycles and increased scrutiny of IT budgets among existing and potential customers.

For the fiscal year ended January 31, 2025, compared to the fiscal year ended January 31, 2024, we experienced continued growth in total revenue and revenue from Enterprise customers.

However, several factors have impacted and may continue to impact our growth rate, such as higher market penetration, increased competition, and the maturation of our business, among others.

While we have seen improvement in the macroeconomic environment in recent periods, we continue to monitor the potential effects of these circumstances as well as the overall global economy and geopolitical landscape on our business and financial results, as well as the overall global economy.

The implications of macroeconomic conditions on our business, results of operations, and overall financial position, particularly in the long term, remain uncertain.

The macroeconomic environment, including geopolitical and trade uncertainties, changing monetary policy, and ongoing foreign currency exchange rate volatility, has created and may continue to create uncertainty in demand for subscriptions to our open work platform.

Although headline inflation in many major economies has moderated compared with prior years and moved closer to central bank targets, cost pressures remain uneven across regions, and uncertainties around interest rates, policy actions, and global growth continue to influence corporate spending patterns.

These dynamics, together with shifts in customers’ internal priorities, including budget realignment toward digital transformation and AI initiatives, have contributed to elongated sales cycles and continued caution in enterprise spending, potentially affecting customer upsell, downsell, or renewal activity.

We continue to monitor the potential effects of these circumstances as well as the overall global economy and geopolitical landscape on our business and financial results.

The implications of macroeconomic conditions on our business, results of operations, and overall financial position, particularly over the long term, remain uncertain.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, introducing several significant corporate income tax provisions, including the option to immediately deduct domestic research and development expenses or continue to capitalize and amortize such expenses for tax years beginning after December 31, 2024, the permanent extension of 100% bonus depreciation for qualified property placed in service after January 19, 2025, and modifications to international tax rules

such as future changes to the calculation of Global Intangible Low-Taxed Income (GILTI) and the Foreign-Derived Intangible Income (FDII) deduction.

The impacts of OBBBA on our financial statements for the fiscal year ended January 31, 2026 were not material;

however, OBBBA resulted in a favorable impact on cash taxes and an increase in our effective tax rate.

As our business operations or financial results change, or as additional regulations and administrative guidance are issued, we will evaluate any further impacts to our consolidated financial statements.

Refer to “Part I, Item 1A.

Risk Factors” of this Annual Report on Form 10-K for further discussions of the potential impacts of the current macroeconomic conditions on our business.

Key Factors Affecting Our Performance

Acquiring New Customers

We are focused on continuing to grow the number of customers who use Zoom Workplace and Zoom Business Services.

Key Business Metrics and Factors Affecting Our Performance

We review the following key business metrics and strategic factors to measure our performance, identify trends, formulate financial projections, and make strategic decisions, including evaluating our ability to grow the number of customers who use Zoom Workplace and Zoom Business Services.

Our operating results and growth prospects will depend, in part, on our ability to attract new customers.

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We will need to continue to invest in sales and marketing in order to address this opportunity by hiring, developing, and retaining talented sales personnel who are able to achieve desired productivity levels in a reasonable period of time.

Expansion of Zoom Across Existing Enterprise Customers

Large Enterprise Customers - Customers Contributing More Than $100,000 of Trailing 12 Months Revenue

We focus on growing the number of customers who contribute more than $100,000 of trailing 12 months revenue since it is a measure of our ability to scale with our customers and attract larger organizations to Zoom.

Revenue from these customers represented 32.8%, 31.0%, and 29.2% of total revenue for the fiscal years ended January 31, 2026, 2025, and 2024, respectively.

As of January 31, 2026, 2025, and 2024, we had 4,468, 4,088, and 3,810 customers, respectively, that contributed more than $100,000 of trailing 12 months revenue, demonstrating our penetration of larger organizations, including enterprises.

These customers are a subset of Enterprise customers, as defined in the following section.

Expansion of Zoom Across Existing Enterprise Customers - Net Dollar Expansion Rate

We believe that there is a large opportunity for growth with many of our existing customers.

Historically, customers have increased the size of their subscriptions as they have expanded their use of our platform across their operations.

Over the past few years, macroeconomic headwinds have resulted in slower hiring and higher seat count downsells from our existing Enterprise customers in key markets that has impacted the rate of expansion and have caused our net dollar expansion rate for Enterprise customers to drop below one hundred percent.

Despite the decline in our rate of expansion, we believe there are still opportunities for future growth with our existing customers as we innovate our platform with additional product offerings and the use of AI.

This expansion in the use of our platform also provides us with opportunities to market and sell additional products to our customers, such as Zoom Phone, Contact Center, and Workvivo.

In order for us to address this opportunity and expand the use of our products with our existing customers, we will need to maintain the reliability of our platform and produce new features and functionality that are responsive to our customers’ requirements for enterprise-grade solutions.

Over the past few years, macroeconomic headwinds have resulted in slower hiring and higher seat count downsells from our existing Enterprise customers in key markets, which have impacted the rate of expansion and have caused our net dollar expansion rate for Enterprise customers to drop below one hundred percent.

Despite the decline, we believe there are still opportunities for future growth with our existing customers as we innovate our platform with additional product offerings and the use of AI.

This expansion in the use of our platform also provides us with opportunities to market and sell additional products to our customers, such as Zoom Phone, Zoom Contact Center, and Workvivo.

To address this opportunity and expand the use of our products with our existing customers, we will need to maintain the reliability of our platform and produce new features and functionality that are responsive to our customers’ requirements for enterprise-grade solutions.

We quantify our expansion across existing Enterprise customers through our net dollar expansion rate.

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Our trailing 12 month net dollar expansion rate for Enterprise customers was 98%, 98%, and 101% as of January 31, 2026, 2025, and 2024, respectively.

Retention of Online Customers

Retention of Online Customers - Average Monthly Churn Rate & Percentage of MRR from ≥16-Month Customers

In addition to Enterprise customers, we also have a significant number of customers who subscribe to our services directly through our website (“Online customers” or “Online business”).

Online customers represent a diverse customer base, ranging from individual consumers to small and medium-size businesses.

Online customers represent a diverse customer base, ranging from individual consumers to solopreneurs to small and medium-size businesses.

We continue to focus on acquisition and retention of our Online customer base through various strategies to improve the features and functionalities of our products and services.

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The online monthly average churn for our Online customers was 2.8%, 2.9%, and 3.1% per month for the fiscal years ended January 31, 2026, 2025, and 2024, respectively.

One of the dynamics in the Online portion of the business is the MRR contribution from customers who have retained Zoom services for a certain portion of time as these customers tend to maintain their subscriptions and contribute meaningfully to the Online business.

One of the dynamics in the Online portion of our business is the MRR contribution from customers who have retained Zoom services for a certain portion of time as these customers tend to maintain their subscriptions and contribute meaningfully to the Online business.

As of January 31, 2026, 2025, and 2024 the percentage of total Online MRR from Online customers with a continual term of service of at least 16 months was 74.9%, 75.1% and 74.2% respectively.

We calculate our online average monthly churn by starting with the Online customer MRR as of the beginning of the applicable quarter (“Entry MRR”).

We define Entry MRR as the recurring revenue run-rate of subscription agreements from all Online customers except for subscriptions that we recorded as churn in a previous quarter based on the customers' earlier

indication to us of their intention to cancel that subscription.

We then determine the MRR related to customers who canceled or downgraded their subscription or notified us of that intention during the applicable quarter (“Applicable Quarter MRR Churn”) and divide the Applicable Quarter MRR Churn by the applicable quarter Entry MRR to arrive at the MRR churn rate for Online customers.

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Innovation and Expansion of Our Platform

We continue to invest resources to enhance the capabilities of Zoom Workplace and Zoom Business Services.

For example, we have introduced a number of new products and enhancements, including Zoom AI Companion, Zoom Docs, and ongoing enhancements for Zoom Phone, Meetings, Zoom Rooms, Sessions, Webinars, Events, and Contact Center.

We also deliver Zoom Phone calling plans in more than 45 countries and territories as of January 31, 2025.

We recently announced several upcoming products, including Zoom Tasks, a custom AI Companion add-on, Zoom Workplace for Frontline Workers, and Zoom Workplace for Clinicians.

The custom AI Companion add-on is designed to handle complex tasks across our platform by integrating data from multiple sources, including third-party apps.

Zoom Workplace for Frontline Workers is an AI-powered mobile solution aimed at enhancing on-shift communications, task management, and insights for frontline employees and their managers.

Zoom Workplace for Clinicians is designed to automate clinical workflows, leveraging healthcare AI to streamline clinical notes, reduce documentation overhead, and improve doctor-patient interactions.

These products are expected to be generally available in the first half of 2025.

Third-party developers are also a key component of our strategy for platform innovation to make it easier for customers and developers to extend our product portfolio with new functionalities.

We continue to invest and enhance the capabilities of Zoom Workplace and Zoom Business Services, including ongoing investments in AI, with a focus on expanding agentic AI skills, agents, and models.

During fiscal year 2026, we launched several new products and enhancements across Zoom Workplace and Zoom Business Services.

These included Zoom Tasks, which helps users manage and complete tasks;

Zoom Workplace for Frontline Workers, an AI-first mobile solution to improve on-shift communication and task management;

Zoom Workplace for Clinicians, which automates clinical workflows and reduces documentation overhead;

and a next-generation Zoom Virtual Agent, which uses agentic AI to autonomously handle customer support issues across chat and voice channels.

These offerings expand our agentic AI capabilities across collaboration, customer support, recruiting, and industry-specific workflows through new integrations and platform enhancements.

We also acquired BrightHire, Inc.

to strengthen recruiting and candidate engagement capabilities.

At Zoomtopia 2025, our annual user conference held in September, we announced several strategic platform innovations, including AI Companion 3.0, which we launched in December 2025 for all paid Zoom Workplace users at no additional cost.

AI Companion 3.0 introduces more proactive assistance with tasks, such as meeting prioritization, agenda creation, and “catch me up” summaries, along with unified, context-aware search across internal and external data sources, enhanced report generation and research tools, and an expanded workspace designed to improve productivity.

We also enhanced the Custom AI Companion add-on, enabling users to create and deploy custom AI assistants with broader context and integration across applications.

The add-on provides low-code tools, templates, and libraries to help organizations build tailored AI workflows.

In addition, Zoom Business Services announced updates to Zoom Virtual Agent, featuring new use cases and branded voice customization to support more consistent customer interactions.

Zoom is an open platform, and third-party developers are a key component of our strategy for platform innovation to make it easier for customers and developers to extend our product portfolio with new functionalities.

We believe that as more developers and other third parties use our platform to integrate major third-party applications, we will become the ubiquitous platform for communications and collaboration.

We will need to expend additional resources to continue introducing new products, features, and functionality, and supporting the efforts of third parties to enhance the value of our platform with their own applications.

An E2EE option is available to free and paid Zoom customers globally who host meetings with up to 1,000 participants as well as on Zoom Phone for one-on-one calls on the same Zoom account.

Zoom’s E2EE uses the same 256-bit AES-GCM encryption to encrypt real-time media in meetings during transit that supports standard Zoom Meetings, but with Zoom’s E2EE, the feature is designed so that the device of the meeting host, or originating caller in the case of Zoom Phone, as opposed to Zoom’s servers, generates encryption keys and uses public key cryptography to distribute these keys to the other meeting participants or call recipient.

Additionally, Zoom’s post-quantum E2EE is now globally available for Zoom Workplace, specifically for Zoom Meetings and Zoom Phone, with support for Zoom Rooms coming soon.

We believe that the launch of the new security enhancement makes Zoom the first UCaaS company to offer a post-quantum E2EE solution for video conferencing.

International Opportunity

Our platform addresses the communications and collaboration needs of users worldwide, and we see international expansion as a major opportunity.

Our revenue from the rest of the world (APAC and EMEA) represented 28.2%, 28.7%, and 30.5% of our total revenue for the fiscal years ended January 31, 2025, 2024, and 2023, respectively.

Our platform addresses the communications and collaboration needs of users worldwide, and international expansion remains a meaningful component of our long-term growth strategy.

Our revenue outside of the Americas (APAC and EMEA) represented 27.9%, 28.2%, and 28.7% of our total revenue for the fiscal years ended January 31, 2026, 2025, and 2024, respectively.

We use strategic partners and resellers to sell in certain international markets where we have limited or no direct sales presence.

While we believe global demand for our platform will continue to increase as international market awareness of Zoom grows, our ability to conduct our operations internationally will require considerable management attention and resources and is subject to the particular challenges of supporting a rapidly growing business in an environment of multiple languages, cultures, customs, legal and regulatory systems, alternative dispute systems, and commercial markets.

Key Business Metrics

We review the following key business metrics to measure our performance, identify trends, formulate financial projections, and make strategic decisions.

Number of Enterprise Customers

As Zoom continues to expand and evolve, we have seen an increasing overlap between our Enterprise and Online customer categories.

Over time, customers with lower MRR are expected to move from Enterprise to Online as we optimize our sales strategies.

While these moves do not have a material impact on other key business metrics, the number of customers between these two groups has become less meaningful as a key business metric.

Therefore, beginning in the first quarter of fiscal year 2026, we will no longer report the number of Enterprise customers as a key business metric.

However, we will

continue to provide this metric in the appendix of our investor deck through the end of fiscal year 2026, which will be accessible on our investor relations website (investors.zoom.us).

Instead of using Enterprise customer count as an indicator of our performance, we believe that revenue from Enterprise customers and the number of customers contributing more than $100,000 in trailing 12 month revenue are better indicators of our ability to grow and scale with larger organizations.

These metrics better reflect our progress in attracting and retaining high-value customers and scaling our business over time.

As of January 31, 2025, 2024, and 2023, we had approximately 192,600, 220,400, and 213,000 Enterprise customers, respectively.

During the three months ended April 30, 2024, in order to enhance customer experience and improve efficiency, we transitioned approximately 26,800 Enterprise customers with lower MRR away from working with direct sales teams, resellers, or strategic partners.

These customers are now considered Online customers and no longer included in our Enterprise customer total as of January 31, 2025.

The impact of this transition did not have a material impact on the percentage of revenue from Enterprise and Online customers, net dollar expansion rate, or Online average monthly churn.

Customers Contributing More Than $100,000 of Trailing 12 Months Revenue

We focus on growing the number of customers who contribute more than $100,000 of trailing 12 months revenue as it is a measure of our ability to scale with our customers and attract larger organizations to Zoom.

Revenue from these customers represented 31.0%, 29.2%, and 27.1% of total revenue for the fiscal years ended January 31, 2025, 2024, and 2023, respectively.

As of January 31, 2025, 2024, and 2023, we had 4,088, 3,810, and 3,471 customers, respectively, that contributed more than $100,000 of trailing 12 months revenue, demonstrating our penetration of larger organizations, including enterprises.

These customers are a subset of Enterprise customers.

Non-GAAP Financial Measures

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Components of Results of Operations

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

We derive our revenue from subscription agreements with customers for access to our AI-first, open work platform.

Our customers generally do not have the ability to take possession of our software.

We also provide services, which include professional services, consulting services, and online event hosting, which are generally considered

distinct from the access to our unified communications and collaboration platform.

We also provide services, which include professional services, consulting services, and online event hosting, which are generally considered distinct from the access to our AI-first, open work platform.

The amount of revenue recognized reflects the consideration that we expect to receive in exchange for these services over the contract term, which can include a free period discount.

Cost of Revenue

Cost of revenue primarily consists of costs related to hosting our unified communications and collaboration platform and providing general operating support services to our customers.

Cost of revenue primarily consists of costs related to hosting our AI-first, open work platform and providing general operating support services to our customers.

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

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General and Administrative

General and administrative expenses primarily consist of personnel-related expenses associated with our finance and legal organizations;

General and administrative expenses primarily consist of personnel-related expenses associated with our finance, legal, and other organizations;

professional fees for external legal, accounting, and other consulting services;

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and allocated overhead.

Gains (Losses) on Strategic Investments, Net

Gains (losses) on strategic investments, net consist primarily of remeasurement gains or losses on our equity investments.

Gains on Strategic Investments, Net

Gains on strategic investments, net consist primarily of remeasurement gains or losses on our equity investments.

Other Income, Net

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Income from operations 1,123,633 813,295 525,279

Gains (losses) on strategic investments, net

Gains on strategic investments, net

969,822 177,142 109,770

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Income from operations 23.1 % 17.4 % 11.6 %

Gains (losses) on strategic investments, net

Gains on strategic investments, net

19.9 % 3.8 % 2.4 %

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Revenue for the fiscal year ended January 31, 2026 increased by $203.3 million, or 4.4%, compared to the fiscal year ended January 31, 2025.

The increase in revenue was due to a 5.2% increase in revenue from subscription services provided to Enterprise customers, of which 63.5% and 36.5% were from existing and new customers, respectively.

Revenue from Online customers remained flat year over year.

The increase primarily reflects higher product expansion and usage among existing Enterprise customers and continued growth of our customer base.

Revenue from Enterprise subscription services grew 6.5% year over year, with 68.4% of the increase attributable to existing customers and 31.6% to new customers.

Revenue from Online customers increased by 1.2%.

Cost of Revenue

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Gross margin 77.0 % 75.8 %

Cost of revenue for the fiscal year ended January 31, 2025, increased by $51.8 million, or 4.8%, compared to the fiscal year ended January 31, 2024.

The increase was primarily due to a $67.5 million increase in hosting and infrastructure costs, partially offset by a $17.4 million decrease in stock-based compensation and a $7.1 million decrease in restructuring costs as a result of the prior year restructuring plan.

The increase in hosting costs was due to the increased use of AI functionality along with investments to upgrade our data center backbone.

Gross margin decreased to 75.8% for the fiscal year ended January 31, 2025 from 76.2% for the fiscal year ended January 31, 2024.

The decrease in gross margin was mainly due to increased costs associated with the use of AI functionality along with the investments to upgrade our data center backbone.

Cost of revenue for the fiscal year ended January 31, 2026, decreased by $10.6 million, or 0.9%, compared to the fiscal year ended January 31, 2025.

The decline primarily reflects a $28.3 million reduction in stock-based compensation, partially offset by $18.2 million in asset impairments.

The decrease in stock-based compensation resulted from changes to our equity program.

Gross margin increased to 77.0% for the fiscal year ended January 31, 2026 from 75.8% for the fiscal year ended January 31, 2025.

The increase in gross margin was driven by the decrease in stock-based compensation as well as other operational efficiencies.

Operating Expenses

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Research and development $ 844,875 $ 852,415 $ (7,540) (0.9) %

Research and development expense for the fiscal year ended January 31, 2025, increased by $49.2 million, or 6.1%, compared to the fiscal year ended January 31, 2024.

The increase was driven by our continued investments in AI-first innovation, which consisted of a $39.4 million increase in payroll taxes and benefits partially offset by $19.6 million decrease in restructuring costs as a r esult of the prior year restructuring plan.

The remaining increase is due to costs from AI-related software and facilities used in development.

Research and development expense for the fiscal year ended January 31, 2026, decreased by $7.5 million, or 0.9%, compared to the fiscal year ended January 31, 2025.

The decrease primarily reflects a $46.6 million reduction in stock-based compensation resulting from changes to our equity programs, largely offset by continued investment in AI innovation.

The offsetting increase was driven by an additional $33.4 million of personnel-related expenses from higher headcount and costs associated with AI-focused software and facilities.

Sales and Marketing

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Sales and marketing expense for the fiscal year ended January 31, 2026, decreased by $39.1 million, or 2.7%, compared to the fiscal year ended January 31, 2025.

The decrease in sales and marketing expense was primarily due to a $53.5 million

decrease in stock-based compensation expense, a $32.9 million decrease in restructuring costs as a result of the prior year restructuring plan, and a $29.2 million decrease in marketing spend.

The decrease was primarily driven by a $64.7 million decrease in stock-based

compensation resulting from changes in our equity programs, partially offset by continued investments supporting customer acquisition, retention, and expansion initiatives.

General and Administrative

Year Ended January 31,

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General and administrative expense for the fiscal year ended January 31, 2026, decreased by $49.8 million, or 11.2%, compared to the fiscal year ended January 31, 2025.

The decrease in general and administrative expense was primarily due to a $39.4 million decrease in stock-based compensation expense, a $37.8 million decrease in litigation settlements, a $15.2 million decrease in bad debt expense, a $13.3 million decrease in restructuring costs as a result of the prior year restructuring plan;

and a $5.4 million decrease in legal expenses.

Gains (Losses) on Strategic Investments, Net

The decrease primarily reflects a $36.0 million change related to an SEC investigation accrual recorded in the prior year and reversed in the current year, along with a $31.0 million reduction in stock-based compensation resulting from changes in our equity programs.

These decreases were partially offset by a $20.9 million expense for the charitable donation of shares contributed to a donor advised fund.

Gains on Strategic Investments, Net

Year Ended January 31,

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(in thousands, except percentages)

Gains (losses) on strategic investments, net $ 177,142 $ 109,770 $ 67,372 61.4 %

Gains on strategic investments, net, of $177.1 million and $109.8 million for the fiscal years ended January 31, 2025 and 2024, respectively, was primarily driven by unrealized gains from valuation changes on our publicly and privately held securities.

Gains on strategic investments, net

$ 969,822 $ 177,142 $ 792,680 NM

Gains on strategic investments, net, were $969.8 million and $177.1 million for the fiscal years ended January 31, 2026 and 2025, respectively, which were both primarily driven by changes in the fair value of our privately held securities.

Other Income, Net

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Other income, net for the fiscal year ended January 31, 2026 increased by $3.7 million, or 1.1%, compared to the fiscal year ended January 31, 2025.

The increase was mainly driven by an increase of $130.5 million in investment yield from cash and marketable securities.

The increase was mainly driven by a $23.8 million favorable impact from changes in foreign currency exchange rates, largely offset by a $23.4 million decrease in interest income from cash and marketable securities.

Provision for Income Taxes

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Provision for income taxes for the fiscal year ended January 31, 2026 increased by $216.8 million, or 71.0%, compared to the fiscal year ended January 31, 2025.

The change in income taxes was primarily due to an increase in income before taxes, increases in non-deductible compensation and other permanent items, and a reduction in tax shortfalls on stock-based compensation for the fiscal year ended January 31, 2025.

The change in income taxes was primarily due to an increase in income before taxes partially offset by a decrease in tax shortfalls and an increase in tax benefits on stock-based compensation for the fiscal year ended January 31, 2026.

See Part II, Item 8, Note 11 “Income Taxes” to the consolidated financial statements in this Annual Report for further information.

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government agency securities, and treasury bills.

We have financed our operations primarily through income from operations and sales of equity securities.

Cash from operations could also be affected by various risks and uncertainties, including, but not limited to, macroeconomic factors, such as geopolitical conflicts, tariffs and trade tensions, inflationary pressures, interest rate fluctuations, and the fluctuations in foreign currency exchange rates.

These factors and other risks detailed in the section titled “Risk Factors” could impact the timing of cash collections from our customers.

We finance our operations primarily through income from operations.

Cash from operations may also be affected by various risks and uncertainties, including, but not limited to, macroeconomic factors, such as geopolitical conflicts, tariffs and trade tensions, inflationary pressures, interest rate fluctuations, and the fluctuations in foreign currency exchange rates.

These factors and other risks detailed in Part I, Item 1A, “Risk Factors” of this Annual Report on Form 10-K could impact the timing of cash collections from our customers.

However, based on our current business plan and revenue prospects, we believe our existing cash, cash equivalents, and marketable securities, together with net cash provided by operations, will be sufficient to meet our needs for at least the next 12 months and allow us to capitalize on growth opportunities.

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We may choose or be required to seek additional equity or debt financing.

In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all.

In the event that additional financing is required from outside sources, we may not be able to enter into debt agreements on terms acceptable to us or at all.

If we are unable to raise additional capital when desired, our business, results of operations, and financial condition would be materially and adversely affected.

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Operating Activities

Our largest source of operating cash is cash collections from our customers for subscriptions to our platform.

Our largest source of operating cash is cash collections from our customers for subscriptions to our AI-first, open work platform.

Our primary uses of cash from operating activities are for employee-related expenditures, costs related to hosting our platform, and marketing expenses.

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Net cash provided by operating activities was $1,989.0 million for the fiscal year ended January 31, 2026, compared to $1,945.3 million for the fiscal year ended January 31, 2025.

The increase in operating cash flow was mainly driven by higher net income year over year.

The increase in operating cash flow was mainly due to higher collections driven by revenue growth.

Investing Activities

Net cash used in investing activities of $1,106.0 million for the fiscal year ended January 31, 2025 was due to net purchases of marketable securities of $964.3 million, purchases of property and equipment of $136.6 million, and purchases of strategic investments of $18.5 million, partially offset by proceeds from strategic investments of $13.4 million.

Net cash used in investing activities of $1,183.7 million for the fiscal year ended January 31, 2024 was due to net purchases of marketable securities of $951.4 million, cash paid for acquisition, net of cash acquired, of $204.9 million, purchases of property and equipment of $127.0 million, and purchases of strategic investments of $70.5 million, partially offset by proceeds from strategic investments of $170.1 million.

Net cash used in investing activities of $278.9 million for the fiscal year ended January 31, 2026 was primarily due to cash paid for acquisitions, net of cash acquired, of $119.8 million, net purchases of marketable securities of $75.8 million, purchases of property and equipment of $65.0 million, and purchases of strategic investments of $98.2 million, partially offset by proceeds from the sale of strategic investments of $80.4 million.

Financing Activities

Net cash used in financing activities of $1,028.1 million for the fiscal year ended January 31, 2025 was due to cash paid for repurchases of common stock of $1,093.9 million, partially offset by proceeds from issuance of common stock pursuant to our employee stock purchase plan (“ESPP”) of $54.0 million, proceeds from employee equity transactions to be remitted to employees and tax authorities, net, of $7.2 million, and proceeds from the exercise of stock options of $4.6 million.

Net cash provided by financing activities of $60.2 million for the fiscal year ended January 31, 2023 was due to proceeds from issuance of common stock pursuant to our employee stock purchase plan (“ESPP”) of $54.1 million and proceeds from the exercise of stock options of $10.2 million, partially offset by proceeds from employee equity transactions remitted to employees and tax authorities, net, of $4.1 million.

Net cash used in financing activities of $1,805.4 million for the fiscal year ended January 31, 2026 was primarily due to cash paid for repurchases of common stock of $1,620.7 million and taxes paid related to net share settlement of equity awards of $247.8 million, partially offset by proceeds from issuance of common stock pursuant to our employee stock purchase plan (“ESPP”) of $61.2 million and proceeds from the exercise of stock options of $2.5 million.

Net cash used in financing activities of $1,028.1 million for the fiscal year ended January 31, 2025 was due to cash paid for repurchases of common stock of $1,093.9 million, partially offset by proceeds from issuance of common stock pursuant to our ESPP of $54.0 million, proceeds from employee equity transactions to be remitted to employees and tax authorities, net, of $7.2 million, and proceeds from the exercise of stock options of $4.6 million.

For a discussion of the fiscal year ended January 31, 2024, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended January 31, 2025.

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In November 2024, our Board of Directors authorized the repurchase of an additional $1.2 billion of our outstanding Class A common stock.

In November 2025, our Board of Directors authorized the repurchase of an additional $1.0 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 pre-set trading plans), in privately negotiated transactions, and other transactions in accordance with applicable securities laws.

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During the fiscal year ended January 31, 2026, we repurchased and subsequently retired 20,385,361 shares of our Class A common stock for an aggregate amount of $1.6 billion.

As of January 31, 2026, $1.0 billion of the repurchase

authorization remained available.

Critical Accounting Estimates

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We determine whether costs should be deferred based on our sales compensation plans and if the commissions are incremental and would not have occurred absent the customer contract.

Sales commissions paid upon the initial acquisition of a customer contract are amortized over an estimated period of benefit of three years, which is typically greater than the contractual terms of the customer contracts.

Sales commissions paid upon the initial acquisition of a customer contract were historically amortized over an estimated period of benefit of three years.

Significant judgment is required in arriving at this estimated period of benefit.

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Amortization is recognized on a straight-line basis commensurate with the pattern of revenue recognition.

We periodically review these deferred contract acquisition costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit.

At the end of fiscal 2026, we completed a re-assessment of the estimated period of benefit for deferred contract acquisition costs and determined that we should increase the amortization period from three years to five years.

The impact of the change in the accounting estimate is reflected in the consolidated balance sheet as of January 31, 2026, and is accounted for prospectively from that date.

The change in amortization period did not impact sales and marketing expenses for the fiscal year ended January 31, 2026.

The change in estimate will impact future periods, with an estimated reduction in sales and marketing expenses in the range of $90.0 million to $95.0 million for the fiscal year ending January 31, 2027.

Business Combinations and Valuation of Goodwill and Intangible Assets

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When determining the fair value of assets acquired and liabilities assumed, we make estimates and assumptions, especially with respect to intangible assets.

Our estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

Significant judgment is required, including assumptions about future cash flows, discount rates, and customer attrition.

Our estimates of fair value are

based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

During the measurement period, not to exceed one year from the date of acquisition, we may record adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill if new information is obtained related to facts and circumstances that existed as of the acquisition date.

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Goodwill amounts are not amortized, but rather tested for impairment at least annually, in the fourth quarter of each fiscal year, or more often if circumstances indicate that the carrying value may not be recoverable.

Indicators of potential impairment may include adverse market or economic conditions or deterioration in operating performance.

As of January 31, 2026, no impairment of goodwill has been identified.

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We routinely evaluate the estimated remaining useful lives of our finite-lived intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization.

We also consider potential changes in market or competitive conditions that could affect recoverability.

Indefinite-lived intangible assets are recorded at fair value and are not amortized.

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In determining the estimated fair value of our strategic investments in privately held companies, we utilize the most recent data available, as adjusted to reflect the specific rights and preferences of those securities we hold.

We assess our privately held debt and equity securities strategic investment portfolio quarterly for indicators for impairment.

We assess our privately held debt and equity securities strategic investment portfolio quarterly for indicators of impairment.

Our impairment analysis encompasses a qualitative assessment that evaluates key factors including but not limited to the investee’s financial metrics, market acceptance of the product or technology, and the rate at which the investee is using its cash.

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As a result, our investment value in a specific company may move by more or less than any change in the value of that overall company.

An immediate decrease of 10% in enterprise value of our largest privately held equity securities held as of January 31, 2025 would not have had a material impact on the value of our investment portfolio.

We use the asset and liability method of accounting for income taxes.

Under this method, income tax expense is recognized based on the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our consolidated financial statements or tax returns.

We make assumptions, judgments and estimates to determine the current income tax provision (benefit), deferred tax asset and liabilities and valuation allowance recorded against a deferred tax asset.

We make assumptions, judgments and estimates to determine the current income tax provision (benefit), deferred tax assets and liabilities and valuation allowance recorded against a deferred tax asset.

The assumptions, judgments and estimates relative to the current income tax provision (benefit) take into account current tax laws, their interpretation and possible results of foreign and domestic tax audits.

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The majority of our cash generated from revenue is denominated in U.S.

dollars, with a portion of our revenue from amounts denominated in foreign currencies.

dollars, with a portion in amounts denominated in foreign currencies.

Our expenses are generally denominated in the currencies of the jurisdictions in which we conduct our operations, which are primarily in Australia, China, Europe and the United States.

Our results of current

and future operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates.

Our results of current and future operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates.

For the fiscal year ending January 31, 2026, 2025, and 2024, 19.7%, 19.3%, and 19.3% of our revenue, respectively, and 21.7%, 16.4%, and 13.7% of our expenses, respectively, were denominated in currencies other than the U.S.

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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 7. Management’s Discussion and Analysis