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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________________________________
FORM 10-Q
___________________________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM                 TO
Commission File Number 001-38865
___________________________________________________________________
Zoom Video Communications, Inc.
(Exact name of registrant as specified in its Charter)
___________________________________________________________________
Delaware61-1648780
(State or other jurisdiction
of incorporation or organization)
(I.R.S. Employer
Identification No.)
55 Almaden Boulevard, 6th Floor
San Jose, California 95113
(Address of principal executive offices and Zip Code)
(888) 799-9666
(Registrant’s telephone number, including area code)
___________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.001 par value per shareZMThe Nasdaq Global Select Market
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No ☐ 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No   ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  ☒
As of May 21, 2021, the number of shares of the registrant’s Class A common stock outstanding was 236,782,193 and the number of shares of the registrant’s Class B common stock outstanding was 57,863,584.



Table of Contents
Zoom Video Communications, Inc.
Quarterly Report on Form 10-Q
For the Quarterly Period Ended April 30, 2021
TABLE OF CONTENTS
Page



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Table of Contents
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations or financial condition; business strategy and plans; and objectives of management for future operations, including our statements regarding the benefits and timing of the roll out of new technology, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about: our future financial performance, including our revenue, cost of revenue, gross profit, margins, and operating expenses; trends in our key business metrics; the sufficiency of our cash and cash equivalents, investments, and cash provided by sales of our products and services to meet our liquidity needs; market trends; our market position and opportunity; our growth strategy and business aspirations for our video-first unified communications platform; our product strategy; our efforts to enhance the security and privacy of our platform; the potential impacts of the COVID-19 pandemic and related public health measures on our business, the business of our customers, suppliers and channel partners, and the economy; our ability to become the ubiquitous platform for communications; our ability to attract new customers and retain existing customers; our ability to successfully expand into our existing markets and into new markets; our ability to effectively manage our growth and future expenses; and the impact of recent accounting pronouncements on our unaudited condensed consolidated financial statements.
You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that such information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments.
You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the Securities and Exchange Commission as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance, and events and circumstances may be materially different from what we expect.



3

Table of Contents

SUMMARY RISK FACTORS
Investing in our Class A common stock involves numerous risks, including the risks described in “Part II—Other Information, Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q. Below are some of these risks, any one of which could materially adversely affect our business, financial condition, results of operations, and prospects.
Our business depends on our ability to attract new customers and hosts, retain and upsell additional products to existing customers, and upgrade free hosts to our paid offerings. Any decline in new customers and hosts, renewals, or upgrades would harm our business.
Beginning in the fiscal quarter ended April 30, 2020, we faced unprecedented usage of our video-first communications platform largely due to the COVID-19 pandemic. We expect our user growth rate to slow or decline once the impact of the COVID-19 pandemic tapers, particularly as a vaccine becomes widely available, and users return to work or school or are otherwise no longer subject to shelter-in-place mandates.
Interruptions, delays, or outages in service from our co-located data centers and a variety of other factors, including increased usage stemming from the COVID-19 pandemic, would impair the delivery of our services, require us to issue credits or pay penalties, and harm our business.
We operate in competitive markets, and we must continue to compete effectively.
We may not be able to sustain our revenue growth rate in the future, and we expect our revenue growth rate to generally decline in future periods.
Failures in internet infrastructure or interference with broadband access could cause current or potential users to believe that our systems are unreliable, possibly leading our customers and hosts to switch to our competitors, or to cancel their subscriptions to our platform.
As we increase sales to large organizations, our sales cycles could lengthen, and we could experience greater deployment challenges.
We generate revenue from sales of subscriptions to our platform, and any decline in demand for our platform or for communications and collaboration technologies in general would harm our business.
We have experienced net losses in the past, and we expect to increase our expenses in the future, which could prevent us from maintaining profitability.
We may not be able to respond to rapid technological changes, extend our platform or develop new features.
Our security measures have been compromised in the past and may be compromised in the future. If our security measures are compromised in the future or if our information technology fails, this could harm our reputation, expose us to significant fines and liability, impair our sales, and harm our business. In addition, our products and services may be perceived as not being secure. This perception may result in customers and hosts curtailing or ceasing their use of our products, our incurring significant liabilities, and our business being harmed.
We have a limited operating history at the current scale of our business, which makes it difficult to evaluate our prospects and future results of operations.
The actual or perceived failure by us, our customers, partners, or vendors to comply with stringent and evolving privacy, data protection, and information security laws, regulations, standards, policies, and contractual obligations could harm our reputation and business or subject us to significant fines and liability.
If we were to lose the services of our Chief Executive Officer or other members of our senior management team, we may not be able to execute our business strategy.
We have significant and expanding operations outside the United States, which may subject us to increased business, regulatory and economic risks that could harm our business.
We may be subject to, or assist law enforcement with enforcement of, a variety of U.S. and international laws that could result in claims, increase the cost of operations, or otherwise harm our business due to changes in the laws, changes in the interpretations of the laws, greater enforcement of the laws, or investigations into compliance with the laws.



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Zoom Phone is subject to U.S. federal and international regulation, and other products we may introduce in the future may also be subject to U.S. federal, state, or international laws, rules, and regulations. Any failure to comply with such laws, rules, and regulations could harm our business and expose us to liability.
The dual class structure of our common stock as contained in our amended and restated certificate of incorporation has the effect of concentrating voting control with those stockholders who held our stock prior to our initial public offering, including our executive officers, employees, and directors and their affiliates, limiting your ability to influence corporate matters.
If we are unable to adequately address these and other risks we face, our business may be harmed.


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PART I—Financial Information
Item 1.    FINANCIAL STATEMENTS
ZOOM VIDEO COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)
As of
April 30,
2021
January 31,
2021
Assets
Current assets:
Cash and cash equivalents$1,557,270 $2,240,303 
Marketable securities3,132,309 2,004,410 
Accounts receivable, net of allowances of $33,664 and $36,844 as of April 30, 2021 and January 31, 2021, respectively
366,346 294,703 
Deferred contract acquisition costs, current148,645 136,630 
Prepaid expenses and other current assets136,326 116,819 
Total current assets5,340,896 4,792,865 
Deferred contract acquisition costs, noncurrent155,295 157,262 
Property and equipment, net192,410 149,924 
Operating lease right-of-use assets93,780 97,649 
Goodwill24,340 24,340 
Other assets, noncurrent81,890 75,953 
Total assets$5,888,611 $5,297,993 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$8,324 $8,664 
Accrued expenses and other current liabilities450,678 393,018 
Deferred revenue, current1,069,334 858,284 
Total current liabilities1,528,336 1,259,966 
Deferred revenue, noncurrent25,089 25,211 
Operating lease liabilities, noncurrent86,433 90,415 
Other liabilities, noncurrent56,020 61,634 
Total liabilities1,695,878 1,437,226 
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred stock, $0.001 par value per share, 200,000,000 shares authorized as of April 30, 2021 and January 31, 2021; zero shares issued and outstanding as of April 30, 2021 and January 31, 2021
  
Common stock, $0.001 par value per share, 2,000,000,000 Class A shares authorized as of April 30, 2021 and January 31, 2021; 236,487,446 and 215,737,924 shares issued and outstanding as of April 30, 2021 and January 31, 2021, respectively; 300,000,000 Class B shares authorized as of April 30, 2021 and January 31, 2021; 58,024,499 and 77,811,299 shares issued and outstanding as of April 30, 2021 and January 31, 2021, respectively
293 292 
Additional paid-in capital3,292,241 3,187,168 
Accumulated other comprehensive income200 839 
Retained earnings899,999 672,468 
Total stockholders’ equity4,192,733 3,860,767 
Total liabilities and stockholders’ equity$5,888,611 $5,297,993 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


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ZOOM VIDEO COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)

Three Months Ended April 30,
20212020
Revenue$956,237 $328,167 
Cost of revenue264,994 103,707 
Gross profit691,243 224,460 
Operating expenses:
Research and development65,175 26,389 
Sales and marketing245,667 121,556 
General and administrative154,089 53,130 
Total operating expenses464,931 201,075 
Income from operations226,312 23,385 
Interest income and other, net2,619 5,790 
Income before provision for income taxes228,931 29,175 
Provision for income taxes1,400 2,100 
Net income227,531 27,075 
Undistributed earnings attributable to participating securities(148)(39)
Net income attributable to common stockholders$227,383 $27,036 
Net income per share attributable to common stockholders:  
Basic$0.77 $0.10 
Diluted$0.74 $0.09 
Weighted-average shares used in computing net income per share attributable to common stockholders:
Basic293,794,778 279,891,111 
Diluted305,412,419 295,184,958 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


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ZOOM VIDEO COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)

 Three Months Ended April 30,
 20212020
Net income$227,531 $27,075 
Other comprehensive (loss) income:
Unrealized (loss) gain on available-for-sale marketable securities, net of tax(639)1,078 
Comprehensive income$226,892 $28,153 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


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ZOOM VIDEO COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share data)
(unaudited)

Three Months Ended April 30, 2021
Common StockAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income
Retained EarningsTotal
Stockholders’
Equity
SharesAmount
Balance as of January 31, 2021293,549,223 $292 $3,187,168 $839 $672,468 $3,860,767 
Issuance of common stock upon exercise of stock options751,686 1 3,475 — — 3,476 
Issuance of common stock upon release of restricted stock units211,036 — — — — — 
Stock-based compensation expense— — 101,598 — — 101,598 
Other comprehensive loss— — — (639)— (639)
Net income— — — — 227,531 227,531 
Balance as of April 30, 2021294,511,945 $293 $3,292,241 $200 $899,999 $4,192,733 

Three Months Ended April 30, 2020
Common StockAdditional
Paid-In
Capital
Accumulated Other Comprehensive IncomeRetained EarningsTotal
Stockholders’
Equity
SharesAmount
Balance as of January 31, 2020278,731,143 $277 $832,705 $809 $152 $833,943 
Issuance of common stock upon exercise of stock options3,232,991 3 9,722 — — 9,725 
Issuance of common stock upon release of restricted stock units27,877 — — — — — 
Charitable donation of common stock— — 1,000 — — 1,000 
Stock-based compensation expense— — 28,810 — — 28,810 
Other comprehensive income— — — 1,078 — 1,078 
Net income— — — — 27,075 27,075 
Balance as of April 30, 2020281,992,011 $280 $872,237 $1,887 $27,227 $901,631 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


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ZOOM VIDEO COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended April 30,
20212020
Cash flows from operating activities:
Net income$227,531 $27,075 
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense98,969 28,777 
Amortization of deferred contract acquisition costs37,766 16,287 
Depreciation and amortization10,663 5,339 
Provision for accounts receivable allowances4,055 3,868 
Non-cash operating lease cost4,274 2,248 
Charitable donation of common stock 1,000 
Other5,866 (1,421)
Changes in operating assets and liabilities:
Accounts receivable(75,665)(142,501)
Prepaid expenses and other assets(29,975)(49,080)
Deferred contract acquisition costs(47,813)(124,854)
Accounts payable1,592 1,756 
Accrued expenses and other liabilities88,656 167,322 
Deferred revenue210,896 322,862 
Operating lease liabilities, net(3,513)287 
Net cash provided by operating activities533,302 258,965 
Cash flows from investing activities:
Purchases of marketable securities(1,425,451)(207,546)
Maturities of marketable securities291,047 137,014 
Sales of marketable securities 26,613 
Purchases of property and equipment(79,074)(7,272)
Purchase of equity investment (8,000)
Purchase of convertible promissory note(6,500)(5,000)
Purchase of intangible assets (162)
Other 1,319 
Net cash used in investing activities(1,219,978)(63,034)
Cash flows from financing activities:
Proceeds from employee equity transactions (remitted) to be remitted to employees and tax authorities, net(9,984)218,540 
Proceeds from exercise of stock options3,368 9,586 
Other337  
Net cash (used in) provided by financing activities(6,279)228,126 
Net (decrease) increase in cash, cash equivalents, and restricted cash(692,955)424,057 
Cash, cash equivalents, and restricted cash – beginning of period2,293,116 334,082 
Cash, cash equivalents, and restricted cash – end of period$1,600,161 $758,139 
Reconciliation of cash, cash equivalents, and restricted cash within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows above:
Cash and cash equivalents$1,557,270 $488,653 
Restricted cash, current included in prepaid expenses and other current assets40,648 267,191 
Restricted cash, noncurrent included in other assets, noncurrent2,243 2,295 
Total cash, cash equivalents, and restricted cash$1,600,161 $758,139 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


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ZOOM VIDEO COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1.Summary of Business and Significant Accounting Policies
Description of Business
Zoom Video Communications, Inc. and its subsidiaries (collectively, “Zoom,” the “Company,” “we,” “us,” or “our”) provide a video-first unified communications platform that delivers happiness and fundamentally changes how people interact. We connect people through frictionless and secure video, phone, chat, and content sharing and enable face-to-face video experiences for thousands of people in a single meeting across disparate devices and locations. We were incorporated in the state of Delaware in April 2011, and are headquartered in San Jose, California.
Fiscal Year
Our fiscal year ends on January 31. References to fiscal year 2022, for example, refer to the fiscal year ending January 31, 2022.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and applicable regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting, and include the accounts of Zoom Video 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.
The condensed consolidated balance sheet as of January 31, 2021 included herein was derived from the audited financial statements as of that date, but does not include all disclosures, including certain notes required by GAAP on an annual reporting basis. The unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the balance sheets, statements of operations, statements of comprehensive income, statements of stockholders’ equity, and statements of cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year or any future period. 
The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended January 31, 2021, filed with the SEC on March 18, 2021.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant items subject to such estimates and assumptions include, but are not limited to, the estimated expected benefit period for deferred contract acquisition costs, the useful lives of long-lived assets, the incremental borrowing rate for operating leases, stock-based compensation expense, sales and other tax liabilities, the fair value of marketable securities, acquired intangible assets and goodwill, the valuation of deferred income tax assets and uncertain tax positions, and accruals and contingencies. Actual results could differ from those estimates.
The COVID-19 pandemic has created, and may continue to create, significant uncertainty in macroeconomic conditions, and the extent of its impact on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak and the impact on our customers and our sales cycles. During the three months ended April 30, 2021 and 2020, our estimates and assumptions required increased judgment and carried a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, our estimates may change materially in future periods.
Summary of Significant Accounting Policies
Our significant accounting policies are discussed in Note 1. “Summary of Business and Significant Accounting Policies” in the notes to consolidated financial statements included in our Annual Report on Form 10-K for the year ended January 31, 2021, filed with the SEC on March 18, 2021. There have been no significant changes to these policies during the three months ended April 30, 2021.


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2.    Revenue Recognition
Disaggregation of Revenue
The following table summarizes revenue by region based on the billing address of customers:
Three Months Ended April 30,
20212020
AmountPercentage of
Revenue
AmountPercentage of
Revenue
(in thousands, except percentages)
Americas$635,784 66 %$245,633 75 %
Asia Pacific (“APAC”)
123,763 13 31,278 9 
Europe, Middle East, and Africa (“EMEA”)
196,690 21 51,256 16 
Total$956,237 100 %$328,167 100 %
Contract Balances
We receive payments from customers based on a billing schedule as established in our customer contracts. Accounts receivable are recorded when we contractually have the right to consideration. In some arrangements, a right to consideration for our performance under the customer contract may occur before invoicing to the customer, resulting in an unbilled accounts receivable. The amount of unbilled accounts receivable included within accounts receivable, net of allowances in the condensed consolidated balance sheets was $28.8 million and $24.6 million as of April 30, 2021 and January 31, 2021, respectively.
Contract liabilities consist of deferred revenue. Revenue is deferred when we have the right to invoice in advance of performance under a customer contract. The current portion of deferred revenue balances is recognized over the next 12 months. The amount of revenue recognized during the three months ended April 30, 2021 and 2020 that was included in deferred revenue at the beginning of each period was $419.1 million and $98.0 million, respectively.
Remaining Performance Obligations
The terms of our subscription agreements are monthly, annual, and multiyear, and we may bill for the full term in advance or on an annual, quarterly, or monthly basis, depending on the billing terms with customers. As of April 30, 2021, the aggregate amount of the transaction price allocated to our remaining performance obligations was $2,073.4 million, which consisted of both billed consideration in the amount of $1,094.4 million and unbilled consideration in the amount of $979.0 million that we expect to recognize as revenue. We expect to recognize 72% of our remaining performance obligations as revenue over the next 12 months and the remainder thereafter.
3.    Marketable Securities
As of April 30, 2021 and January 31, 2021, our marketable securities consisted of the following: 
As of April 30, 2021
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
(in thousands)
Commercial paper$57,707 $ $ $57,707 
Agency bonds515,261 44 (148)515,157 
Corporate and other debt securities469,972 563 (107)470,428 
U.S. government agency securities1,876,688 124 (292)1,876,520 
Treasury bills212,484 13  212,497 
Marketable securities$3,132,112 $744 $(547)$3,132,309 



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As of January 31, 2021
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
(in thousands)
Commercial paper$26,222 $ $ $26,222 
Agency bonds461,335 79 (49)461,365 
Corporate and other debt securities465,207 1,113 (64)466,256 
U.S. government agency securities834,894 28 (257)834,665 
Treasury bills215,902 6 (6)215,902 
Marketable securities$2,003,560 $1,226 $(376)$2,004,410 
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. We evaluate, among other factors, whether we have the intention to sell any of these marketable securities and whether it is more likely than not that we will be required to sell any of them before recovery of the amortized cost basis. 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 period. There were no material realized gains or losses from available-for-sale securities that were reclassified out of accumulated other comprehensive income for the three months ended April 30, 2021 and 2020.
The following table presents the contractual maturities of our marketable securities as of April 30, 2021 and January 31, 2021:
As of
April 30, 2021January 31, 2021
(in thousands)
Less than one year$1,597,693 $1,017,048 
Due in one to five years1,534,616 987,362 
Total$3,132,309 $2,004,410 

4.    Fair Value Measurements
The following tables present information about our financial instruments that are measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value:
As of April 30, 2021
Fair ValueLevel 1Level 2Level 3
(in thousands)
Financial Assets:
Money market funds$631,128 $631,128 $ $ 
Treasury bills172,565  172,565  
Cash equivalents803,693 631,128 172,565  
Commercial paper57,707  57,707  
Agency bonds515,157  515,157  
Corporate and other debt securities470,428  470,428  
U.S. government agency securities1,876,520  1,876,520  
Treasury bills212,497  212,497  
Marketable securities3,132,309  3,132,309  
Certificate of deposit included in prepaid expenses and other current assets100  100  
Certificates of deposit included in other assets, noncurrent2,243  2,243  
Convertible notes included in other assets, noncurrent11,682   11,682 
Total financial assets$3,950,027 $631,128 $3,307,217 $11,682 



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As of January 31, 2021
Fair ValueLevel 1Level 2Level 3
(in thousands)
Financial Assets:
Money market funds$958,357 $958,357 $ $ 
Treasury bills618,498  618,498  
Cash equivalents1,576,855 958,357 618,498  
Commercial paper26,222  26,222  
Agency bonds461,365  461,365  
Corporate and other debt securities466,256  466,256  
U.S. government agency securities834,665  834,665  
Treasury bills215,902  215,902  
Marketable securities2,004,410  2,004,410  
Certificate of deposit included in prepaid expenses and other current assets100  100  
Certificates of deposit included in other assets, noncurrent2,238  2,238  
Convertible note included in other assets, noncurrent5,130   5,130 
Total financial assets$3,588,733 $958,357 $2,625,246 $5,130 
We classify our highly liquid money market funds within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. We classify our commercial paper, agency bonds, corporate and other debt securities, U.S. government agency securities, treasury bills, and certificates of deposit within Level 2 because they are valued using inputs other than quoted prices that are directly or indirectly observable in the market, including readily available pricing sources for the identical underlying security, which may not be actively traded. We classify the convertible notes as Level 3 due to the lack of relevant observable market data over fair value inputs, such as the probability weighting of the various scenarios that can impact settlement of the arrangement.
5.    Business Combinations
On May 7, 2020, we acquired 100% of the issued and outstanding share capital of Keybase, Inc. (“Keybase”), a secure messaging and file-sharing company, for purchase consideration of $42.9 million in cash. The acquisition helps us strengthen the security of our video communications platform by providing end-to-end encryption (“E2EE”) expertise. The acquisition has been accounted for as a business combination.
In allocating the purchase consideration, $24.3 million was attributed to goodwill, $3.3 million to intangible assets, and $15.3 million to other net assets acquired primarily consisting of cash and cash equivalents of $16.4 million. 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. Acquired intangible assets consisted of developed technology with an estimated useful life of five years. The developed technology had a remaining useful life of 4.0 years as of April 30, 2021, and is amortized using the straight-line method over its estimated useful life.
Not included in the purchase consideration, we also entered into holdback agreements with certain employees for $20.0 million in cash payments, which are subject to such employees’ continued service with us. The holdback amount of $20.0 million will be treated as compensation for research and development over the required service period ranging from one year to three years.
Transaction costs incurred in connection with the acquisition were immaterial. The results of operations of Keybase have been included in our condensed consolidated financial statements from the date of the acquisition. Pro forma and historical results of operations of Keybase have not been presented, as the results do not have a material effect on any of the periods presented in our condensed consolidated statements of operations.
6.    Balance Sheet Components
Accounts Receivable, Net
Accounts receivable are recorded for invoiced amounts and amounts for which revenue has been recognized, but not invoiced, net of allowances. Our short-term accounts receivable consist of the following:


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As of
April 30, 2021January 31, 2021
(in thousands)
Accounts receivable, gross$400,010 $331,547 
Less: Allowance for credit losses(18,000)(20,500)
Less: Allowance for returns(15,664)(16,344)
Accounts receivable, net$366,346 $294,703 
Below is a rollforward of our allowance for credit losses for the three months ended April 30, 2021 and 2020:
20212020
 (in thousands)
Balance as of January 31$20,500 $5,150 
Provision for credit losses1,028 3,771 
Write-offs(3,528)(621)
Balance as of April 30$18,000 $8,300 
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following:
As of
April 30, 2021January 31, 2021
(in thousands)
Prepaid expenses$73,992 $60,702 
Restricted cash from international employee stock sales40,548 50,475 
Other receivables19,265 4,107 
Other2,521 1,535 
Prepaid expenses and other current assets$136,326 $116,819 
Property and Equipment, Net
Property and equipment consisted of the following:
As of
April 30, 2021January 31, 2021
(in thousands)
Computer and office equipment$178,923 $137,445 
Software42,493 36,216 
Leasehold improvements24,223 23,593 
Furniture and fixtures 4,562 4,625 
Property and equipment, gross250,201 201,879 
Less: accumulated depreciation and amortization(57,791)(51,955)
Property and equipment, net$192,410 $149,924 
Depreciation and amortization expense was $10.5 million and $5.3 million for the three months ended April 30, 2021 and 2020, respectively.


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Other Assets, Noncurrent
Other assets, noncurrent consisted of the following:
As of
April 30, 2021January 31, 2021
(in thousands)
Accounts receivable, noncurrent$26,981 $28,008 
Equity investment13,538 13,538 
Prepaid expenses, noncurrent12,568 12,386 
Convertible notes11,682 5,130 
Indefinite-lived intangible assets8,002 8,002 
Intangible assets subject to amortization, net2,653 2,814 
Other6,466 6,075 
Other assets, noncurrent$81,890 $75,953 
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following:
As of
April 30, 2021January 31, 2021
(in thousands)
Accrued expenses$215,466 $157,167 
Accrued compensation and benefits117,348 118,640 
Proceeds from employee equity transactions to be remitted to employees and tax authorities44,190 54,174 
Sales and other tax liabilities37,321 27,453 
Operating lease liabilities, current16,476 15,601 
Customer deposit liabilities13,046 13,050 
Other6,831 6,933 
Accrued expenses and other current liabilities$450,678 $393,018 
Other Liabilities, Noncurrent
Other liabilities, noncurrent consisted of the following:
As of
April 30, 2021January 31, 2021
(in thousands)
Sales and other tax liabilities$52,457 $58,133 
Other3,563 3,501 
Other liabilities, noncurrent$56,020 $61,634 

7.    Commitments and Contingencies
Non-cancelable Purchase Obligations
During the three months ended April 30, 2021, there have been no material changes to our non-cancelable purchase obligations from those disclosed in Note 8. “Commitments and Contingencies” in the notes to consolidated financial statements included in our Annual Report on Form 10-K for the year ended January 31, 2021, filed with the SEC on March 18, 2021.


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Other Contingencies
In June 2020, we received a grand jury subpoena from the Department of Justice’s U.S. Attorney’s Office for the Eastern District of New York (“EDNY”), which requested information regarding our interactions with foreign governments and foreign political parties, including the Chinese government, as well as information regarding storage of and access to user data, the development and implementation of Zoom’s privacy policies, and the actions we took relating to the Tiananmen commemorations on Zoom. In July 2020, we received subpoenas from the Department of Justice’s U.S. Attorney’s Office for the Northern District of California (“NDCA”) and the SEC. Both subpoenas seek documents and information relating to various security, data protection and privacy matters, including our encryption, and our statements relating thereto, as well as calculation of usage metrics and related public statements. In addition, the NDCA subpoena seeks information relating to any contacts between our employees and representatives of the Chinese government, and any attempted or successful influence by any foreign government in our policies, procedures, practices, and actions as they relate to users in the United States. We have since received additional subpoenas from EDNY and NDCA seeking related information. We are fully cooperating with 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 material fines, penalties, or other financial exposure.
Legal Proceedings
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. The plaintiffs are purported stockholders of the Company. The complaints allege, among other things, that we violated Sections 10(b) and 20(a) of the Exchange Act, and Rule 10b-5 by making false and misleading statements and omissions of material fact about our data privacy and security measures. The complaints seek unspecified damages, interest, fees, and costs. On May 18, 2020, the actions were consolidated. On November 4, 2020, the court appointed a lead plaintiff. On December 23, 2020, the lead plaintiff filed a consolidated complaint. We filed a motion to dismiss the consolidated complaint on May 20, 2021. Plaintiff’s opposition to our motion to dismiss is due on July 9, 2021 and our reply in support of the motion to dismiss is due August 9, 2021. A hearing on the motion to dismiss is scheduled for August 26, 2021.
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. The first complaint names as defendants nine of our officers and directors, and the second complaint names eight of our officers and directors. The lawsuits assert state and federal claims and are based on the same alleged misstatements as the shareholder class action complaint. The lawsuits accuse our board of directors of failing to exercise reasonable and prudent supervision over our management, policies, practices, and internal controls. The plaintiffs seek unspecified monetary damages on behalf of us as well as governance reforms. On September 25, 2020, the derivative cases were consolidated. The consolidated case is stayed pending resolution of a forthcoming motion to dismiss the securities class action.
We believe these lawsuits are without merit, and we are vigorously defending ourselves against them. 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 have been 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”). We have also been sued under the DC private attorney general statute on behalf of members of the general public. 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. The U.S. 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 April 7, 2021, the parties reported to the court that they had reached agreement on certain material terms of a settlement, and that they intended to complete negotiations, finalize the details of a settlement, formally memorialize the settlement, and present the settlement to the Court for approval as expeditiously as possible. Plaintiffs filed a second amended complaint on May 12, 2021. Pending finalization of the settlement, Plaintiffs’ motion for class certification is due June 25, 2021. Accordingly, we


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recorded an aggregate legal settlement charge of $66.9 million net of amounts estimated to be covered by insurance as a general and administrative expense in our condensed consolidated statement of operations for the three months ended April 30, 2021.
In September 2019, the Federal Trade Commission (“FTC”) issued a Civil Investigative Demand to us requiring us to produce certain documents and materials and to answer certain interrogatories relating to our privacy and security representations and practices. Since then, we have fully cooperated with the investigation. In October 2020, we reached a proposed settlement agreement with the FTC staff to resolve the FTC’s allegations that certain of our statements and practices about our security constituted deceptive and unfair acts or practices in violation of the FTC Act. On November 10, 2020, the FTC Commissioners voted to approve the settlement and, on November 13, 2020, the FTC published the settlement in the Federal Register for a 30-day public comment period, which ended on December 13, 2020. On January 19, 2021, the FTC voted to finalize the settlement. Under the terms of the settlement, we neither admit nor deny the FTC’s allegations, and the FTC does not impose any fine or penalty upon us. We are required to implement certain injunctive provisions, including, among other things, refraining from making any misrepresentations regarding the privacy and security of our services or how we collect, maintain, use, delete, disclose, allow access to, and protect user information. It also requires us to implement a detailed information security program and obtain third-party security assessments periodically.
We do not expect the settlement to have a material impact on our financial results. We will cooperate with the FTC’s requirements and work to ensure compliance. Any failure to comply with the settlement may increase the possibility of additional adverse consequences, including litigation, additional regulatory actions, injunctions, or monetary penalties, or require further changes to our business practices, significant management time, or the diversion of significant operational resources, all of which could result in a material loss or otherwise harm our business.
In addition, from time to time, we are involved in various other legal proceedings arising from the normal course of business activities. We are not presently a party to any other such litigation the outcome of which, we believe, if determined adversely to us, would individually, or taken together, have a material adverse effect on our business, operating results, cash flows, or financial condition. Defending such proceedings is costly and can impose a significant burden on management and employees. We may receive unfavorable preliminary or interim rulings in the course of litigation, and there can be no assurances that favorable final outcomes will be obtained.
8.    Stockholders’ Equity and Equity Incentive Plans
Common Stock
In connection with our initial public offering (“IPO”) in April 2019, our amended and restated certificate of incorporation became effective, which authorized the issuance of 2,000,000,000 shares of Class A common stock, $0.001 par value per share, and 300,000,000 shares of Class B common stock, $0.001 par value per share. Class A and Class B common stock are referred to as common stock throughout the notes to the condensed consolidated financial statements, unless otherwise noted.
Equity Incentive Plans
We have two equity incentive plans: the 2011 Global Share Plan (“2011 Plan”) and the 2019 Equity Incentive Plan (“2019 Plan”). All shares that remain available for future grants are under the 2019 Plan.


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Stock Options
A summary of stock option activity under our equity incentive plan and related information is as follows:
 Stock Options
Outstanding
Stock
Options
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
(in thousands, except share, life, and per share data)
Balance as of January 31, 20219,239,504 $7.17 7.0$3,371,457 
Granted $ 
Exercised(751,686)$4.48 
Canceled/forfeited/expired(66,838)$5.05 
Balance as of April 30, 20218,420,980 $7.43 6.8$2,628,512 
Vested and exercisable as of April 30, 20214,853,741 $4.39 6.4$1,529,787 
As of April 30, 2021, unrecognized stock-based compensation expense related to outstanding unvested stock options was $39.6 million, which is expected to be recognized over a weighted-average period of 1.3 years.
Restricted Stock Units
A summary of RSU activity under our equity incentive plan and related information is as follows:
RSUs
Unvested
RSUs
Weighted-
Average
Grant Date Fair Value Per Share
Unvested as of January 31, 20214,510,730 $194.57 
Granted361,404 $334.88 
Vested(211,036)$103.91 
Canceled/forfeited(40,793)$260.68 
Unvested as of April 30, 20214,620,305 $209.10 
As of April 30, 2021, unrecognized stock-based compensation expense related to outstanding unvested RSUs was $772.9 million, which is expected to be recognized over a weighted-average period of 2.5 years.
2019 Employee Stock Purchase Plan
In April 2019, we adopted the 2019 Employee Stock Purchase Plan (“ESPP”). As of April 30, 2021, unrecognized stock-based compensation expense related to the ESPP was $10.2 million, which is expected to be recognized over a weighted-average period of 0.1 years.
Stock-Based Compensation
The stock-based compensation expense by line item in the accompanying condensed consolidated statements of operations is summarized as follows:
Three Months Ended April 30,
20212020
(in thousands)
Cost of revenue$14,066 $3,249 
Research and development20,819 5,224 
Sales and marketing51,812 17,123 
General and administrative12,272 3,181 
Total stock-based compensation expense$98,969 $28,777 



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9.    Income Taxes
Our tax provision for interim periods is determined using an estimated annual effective tax rate, adjusted for discrete items arising in the applicable quarter. In each quarter, we update the estimated annual effective tax rate and make a year-to-date adjustment to the provision. The estimated annual effective tax rate is subject to significant volatility due to several factors, including our ability to accurately predict the proportion of our pretax income in multiple jurisdictions and certain book-tax differences.
The following table provides details of the provision for income taxes:

Three Months Ended April 30,
20212020
(in thousands, except percentages)
Income before provision for income taxes$228,931 $29,175 
Provision for income taxes1,400 2,100 
Effective tax rate0.6 %7.2 %
The provision for income taxes was $1.4 million and $2.1 million for the three months ended April 30, 2021 and 2020, respectively. The provision for income taxes for the three months ended April 30, 2021 consisted primarily of federal, state, and foreign income taxes. For the three months ended April 30, 2021 and 2020, the provision for income taxes differed from the U.S. federal statutory rate primarily due to stock-based compensation and the valuation allowance on the U.S. and the U.K. deferred tax assets.
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. Based on the available objective evidence during the three months ended April 30, 2021, we believe it is more likely than not that the tax benefits of the U.S. and the U.K. losses incurred may not be realized. Accordingly, we recorded a full valuation allowance against the tax benefits of the U.S. and the U.K. losses incurred. We intend to maintain the full valuation allowance on the U.S. and the U.K. net deferred tax assets until sufficient positive evidence exists to support a reversal of, or decrease in, the valuation allowance.
In our valuation allowance evaluation, we give more weight to evidence that can be objectively verified than to evidence that cannot be objectively verified. Our consideration of the evidence requires management to make a number of significant judgements, estimates, and assumptions about highly complex and inherently uncertain matters. Given our current earnings and anticipated future earnings, we believe that there is a reasonable possibility that in the foreseeable future, sufficient positive evidence may become available that results in a conclusion that a portion of the valuation allowance will no longer be needed. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability (pretax income adjusted for permanent differences) that we are able to actually achieve.
During the three months ended April 30, 2021, there were no material changes to the total amount of unrecognized tax benefits and we do not expect any significant changes in the next 12 months.
On March 11, 2021, the American Rescue Plan Act of 2021 (“American Rescue Plan Act”) was passed and amended portions of relevant tax laws. The American Rescue Plan Act did not have a significant impact on the provision for income taxes for the three months ended April 30, 2021.


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10.    Net Income Per Share Attributable to Common Stockholders
The following table sets forth the computation of basic and diluted net income per share attributable to common stockholders for the periods presented:
Three Months Ended April 30,
20212020
Class AClass BClass AClass B
Numerator:(in thousands, except share and per share data)
Net income$177,405 $50,126 $14,007 $13,068 
Less: Undistributed earnings attributable to participating securities (148) (39)
Net income attributable to common stockholders, basic$177,405 $49,978 $14,007 $13,029 
Reallocation of net income attributable to common stockholders(4,308)4,308 (591)591 
Net income attributable to common stockholders, diluted$