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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 July 31, 2025
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 Communications, Inc.
(Exact name of registrant as specified in its Charter)
___________________________________________________________________
Delaware 61-1648780
(State or other jurisdiction
of incorporation or organization) (I.R.S. Employer
Identification No.)

55 Almaden Boulevard , 6 th 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 class Trading Symbol(s) Name of each exchange on which registered
Class A Common Stock, $0.001 par value per share ZM The 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 Securities Exchange Act of 1934 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 filer ☒ Accelerated filer ☐
Non-accelerated filer ☐ Smaller 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 August 8, 2025, the number of shares of the registrant’s Class A common stock outstanding was 266,453,609 and the number of shares of the registrant’s Class B common stock outstanding was 32,835,755 .

Table of Contents

Zoom Communications, Inc.
Quarterly Report on Form 10-Q
For the Quarterly Period Ended July 31, 2025
TABLE OF CONTENTS
Page
Special Note Regarding Forward-Looking Statements
3

Summary Risk Factors
4

PART I – Financial Information
6

Item 1.
Financial Statements (Unaudited)
6

Condensed Consolidated Balance Sheets as of July 31, 2025 and January 31, 2025
6

Condensed Consolidated Statements of Operations for the Three and Six Months Ended July 31, 2025 and 2024
7

Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended July 31, 2025 and 2024
8

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended July 31, 2025 and 2024
9

Condensed Consolidated Statements of Cash Flows for the Six Months Ended July 31, 2025 and 2024
11

Notes to Condensed Consolidated Financial Statements
12

Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
24

Item 3.
Quantitative and Qualitative Disclosures About Market Risk
36

Item 4.
Controls and Procedures
37

PART II – Other Information
38

Item 1.
Legal Proceedings
38

Item 1A
Risk Factors
38

Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
73

Item 3.
Defaults Upon Senior Securities
74

Item 4.
Mine Safety Disclosures
74

Item 5.
Other Information
74

Item 6.
Exhibits
75

Signatures
76

Unless the context suggests otherwise, references in this Quarterly Report on Form 10-Q to “Zoom,” the “Company,” “we,” “us” and “our” refer to Zoom Communications, Inc. and, where appropriate, its subsidiaries.

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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 rollout 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 communications and collaboration platform and evolving AI capabilities; our product strategy; our efforts to enhance the security and privacy of our platform; our ability to operate our business and effectively manage our scale under evolving macroeconomic conditions, such as geopolitical conflicts, tariffs and trade tensions, inflationary pressures, interest rate fluctuations, and foreign currency exchange rate volatility; our ability to become the ubiquitous platform for communications and collaboration; our ability to attract new customers and retain existing customers; our ability to successfully expand in 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.

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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, retain and upsell additional products and new product categories to existing customers, and upgrade free users to one of our paid offerings. Any decline in new customers, renewals, or upgrades would harm our business.
• Our revenue growth rate has fluctuated in prior periods, and may continue to decline in future periods.
• Interruptions, delays, or outages in service from our co-located data centers or cloud hosting services and a variety of other factors, would impair, and in the past have impaired, 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. Many of our actual and potential competitors benefit from competitive advantages over us, such as greater name recognition; longer operating histories; more varied products and services; larger marketing budgets; more established marketing, customer and partner relationships; more third-party integrations; greater accessibility across devices and applications; greater access to larger user bases; major distribution agreements with hardware manufacturers and resellers; and greater financial, technical, and other resources. In addition, as we introduce new products and services to our platform, and with the introduction of new technologies and market entrants, we expect competition to intensify in the future.
• Our business may be significantly affected by changes in the economy, including any resulting effect on consumer or business spending.
• As we increase sales to large organizations, our sales cycles have and could continue to 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 incurred net losses in the past and there are no assurances we will be able to maintain or increase profitability in the future.
• We may not be able to respond to rapid technological changes, extend our platform or develop new features.
• Our security measures, and those of the third parties with whom we work, 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 users curtailing or ceasing their use of our products, us 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 laws and regulations, industry standards, policies, and contractual obligations relating to privacy, data protection, information security laws, and other matters could harm, and has in the past harmed, 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 respond to requests from law enforcement in connection 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.

4

Table of Contents

• A number of our products, including Zoom Phone, are 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. Failure to comply with such laws, rules, and regulations could harm our business and expose us to liability.
• We use generative artificial intelligence (“AI”) in our products and services, which may result in operational challenges, legal liability, reputational concerns, competitive risks and regulatory concerns that could adversely affect our business and results of operations.
• 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.

5

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PART I—Financial Information

Item 1.    FINANCIAL STATEMENTS

ZOOM COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)

As of
July 31,
2025 January 31,
2025
Assets (unaudited)
Current assets:
Cash and cash equivalents $ 1,198,576   $ 1,349,380  
Marketable securities 6,580,073   6,442,329  
Accounts receivable, net of allowances of $ 22,901 and $ 22,078 as of July 31, 2025 and January 31, 2025, respectively
516,799   495,228  
Deferred contract acquisition costs, current 177,498   188,358  
Prepaid expenses and other current assets 190,260   200,679  
Total current assets 8,663,206   8,675,974  
Deferred contract acquisition costs, noncurrent 124,313   123,464  
Property and equipment, net 301,457   330,475  
Operating lease right-of-use assets 46,831   55,900  
Strategic investments 647,908   591,481  
Goodwill 307,295   307,295  
Deferred tax assets 804,772   749,759  
Other assets, noncurrent 148,281   154,073  
Total assets $ 11,044,063   $ 10,988,421  
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 11,619   $ 8,345  
Accrued expenses and other current liabilities 471,017   558,562  
Deferred revenue, current 1,465,044   1,336,387  
Total current liabilities 1,947,680   1,903,294  
Deferred revenue, noncurrent 14,233   17,274  
Operating lease liabilities, noncurrent 32,015   37,406  
Other liabilities, noncurrent 100,058   95,363  
Total liabilities 2,093,986   2,053,337  
Commitments and contingencies (Note 6)

Stockholders’ equity:

Common stock, $ 0.001 par value per share, 2,000,000,000 Class A shares authorized as of July 31, 2025 and January 31, 2025; 267,284,079 and 263,113,866 shares issued and outstanding as of July 31, 2025 and January 31, 2025, respectively; 300,000,000 Class B shares authorized as of July 31, 2025 and January 31, 2025; 32,836,005 and 42,626,998 shares issued and outstanding as of July 31, 2025 and January 31, 2025, respectively
299   305  
Additional paid-in capital 4,537,542   5,130,271  
Accumulated other comprehensive (loss) income
( 477 ) 4,990  
Retained earnings 4,412,713   3,799,518  
Total stockholders’ equity 8,950,077   8,935,084  
Total liabilities and stockholders’ equity $ 11,044,063   $ 10,988,421  
    
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

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

Three Months Ended July 31, Six Months Ended July 31,
2025 2024 2025 2024
Revenue $ 1,217,227   $ 1,162,520   $ 2,391,942   $ 2,303,754  
Cost of revenue 273,165   285,089   551,567   558,391  
Gross profit 944,062   877,431   1,840,375   1,745,363  
Operating expenses:
Research and development 206,447   206,756   411,863   412,314  
Sales and marketing 338,995   358,770   685,965   706,778  
General and administrative 76,885   109,535   179,220   220,879  
Total operating expenses 622,327   675,061   1,277,048   1,339,971  
Income from operations 321,735   202,370   563,327   405,392  
Gains on strategic investments, net 45,056   3,107   31,437   20,461  
Other income, net 81,371   87,412   169,163   159,000  

Income before provision for income taxes 448,162   292,889   763,927   584,853  
Provision for income taxes 89,570   73,874   150,732   149,530  
Net income 358,592   219,015   613,195   435,323  

Net income per share:    
Basic $ 1.19   $ 0.71   $ 2.02   $ 1.41  
Diluted $ 1.16   $ 0.70   $ 1.97   $ 1.38  
Weighted-average shares used in computing net income per share:
Basic 301,779,114   309,137,807   303,354,835   308,921,610  
Diluted 308,224,372   314,027,192   310,515,069   314,696,351  

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

7

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

  Three Months Ended July 31, Six Months Ended July 31,
  2025 2024 2025 2024
Net income $ 358,592   $ 219,015   $ 613,195   $ 435,323  
Other comprehensive (loss) income:
Unrealized (loss) gain on available-for-sale marketable securities, net of income tax benefit (expense) of $ 4,804 and $( 6,038 ) for the three months ended July 31, 2025 and 2024, respectively, and $ 1,681 and $( 346 ) for the six months ended July 31, 2025 and 2024, respectively
( 15,622 ) 19,681   ( 5,467 ) 1,128  
Comprehensive income $ 342,970   $ 238,696   $ 607,728   $ 436,451  

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

8

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

Three Months Ended July 31, 2025
Common Stock Additional
Paid-In
Capital Accumulated
Other
Comprehensive
Income (Loss)
Retained Earnings Total
Stockholders’
Equity
Shares Amount
Balance as of April 30, 2025 303,379,326   $ 302   $ 4,832,800   $ 15,145   $ 4,054,121   $ 8,902,368  
Issuance of common stock upon exercise of stock options 116,150   —  421   —  —  421  
Issuance of common stock upon release of restricted stock units 2,561,963   3   ( 3 ) —  —  —  
Shares withheld related to net share settlement of equity awards
( 700,970 ) ( 1 ) ( 55,303 ) —  —  ( 55,304 )
Issuance of common stock for employee stock purchase plan 714,513   1   36,057   —  —  36,058  
Repurchase of common stock, including excise taxes ( 5,950,898 ) ( 6 ) ( 465,891 ) —  —  ( 465,897 )
Stock-based compensation expense —  —  189,461   —  —  189,461  
Other comprehensive income —  —  —  ( 15,622 ) —  ( 15,622 )
Net income —  —  —  —  358,592   358,592  
Balance as of July 31, 2025 300,120,084   $ 299   $ 4,537,542   $ ( 477 ) $ 4,412,713   $ 8,950,077  

Three Months Ended July 31, 2024
Common Stock Additional
Paid-In
Capital Accumulated Other Comprehensive (Loss) Income
Retained Earnings Total
Stockholders’
Equity
Shares Amount
Balance as of April 30, 2024 309,268,684   $ 309   $ 5,310,417   $ ( 17,490 ) $ 3,005,588   $ 8,298,824  
Issuance of common stock upon exercise of stock options 112,363   —  839   —  —  839  
Issuance of common stock upon release of restricted stock units 2,777,616   3   ( 3 ) —  —  —  
Issuance of common stock for employee stock purchase plan 666,051   1   34,262   —  —  34,263  
Repurchase of common stock, including excise taxes ( 4,829,090 ) ( 5 ) ( 287,640 ) —  —  ( 287,645 )
Stock-based compensation expense —  —  240,270   —  —  240,270  
Other comprehensive income —  —  —  19,681   —  19,681  
Net income —  —  —  —  219,015   219,015  
Balance as of July 31, 2024 307,995,624   $ 308   $ 5,298,145   $ 2,191   $ 3,224,603   $ 8,525,247  

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

9

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

Six Months Ended July 31, 2025
Common Stock Additional
Paid-In
Capital Accumulated
Other
Comprehensive
Income (Loss)
Retained Earnings Total
Stockholders’ Equity
Shares Amount
Balance as of January 31, 2025 305,740,864   $ 305   $ 5,130,271   $ 4,990   $ 3,799,518   $ 8,935,084  
Issuance of common stock upon exercise of stock options 471,770   —  1,375   —  —  1,375  
Issuance of common stock upon release of restricted stock units 6,578,596   7   ( 7 ) —  —  —  
Shares withheld related to net share settlement of equity awards ( 1,872,841 ) ( 2 ) ( 137,455 ) —  —  ( 137,457 )
Issuance of common stock for employee stock purchase plan 714,513   1   36,057   —  —  36,058  
Repurchase of common stock, including excise taxes ( 11,512,818 ) ( 12 ) ( 885,791 ) —  —  ( 885,803 )
Stock-based compensation expense —  —  393,092   —  —  393,092  
Other comprehensive income —  —  —  ( 5,467 ) —  ( 5,467 )
Net income —  —  —  —  613,195   613,195  
Balance as of July 31, 2025 300,120,084   $ 299   $ 4,537,542   $ ( 477 ) $ 4,412,713   $ 8,950,077  

Six Months Ended July 31, 2024
Common Stock Additional
Paid-In
Capital Accumulated Other Comprehensive Income
Retained Earnings Total
Stockholders’
Equity
Shares Amount
Balance as of January 31, 2024 307,558,353   $ 307   $ 5,228,756   $ 1,063   $ 2,789,280   $ 8,019,406  
Issuance of common stock upon exercise of stock options 221,827   —  1,855   —  —  1,855  
Issuance of common stock upon release of restricted stock units 6,778,788   7   ( 7 ) —  —  —  
Issuance of common stock for employee stock purchase plan 666,051   1   34,262   —  —  34,263  
Repurchase of common stock, including excise taxes ( 7,229,395 ) ( 7 ) ( 437,686 ) —  —  ( 437,693 )
Stock-based compensation expense —  —  470,965   —  —  470,965  
Other comprehensive income —  —  —  1,128   —  1,128  
Net income —  —  —  —  435,323   435,323  
Balance as of July 31, 2024 307,995,624   $ 308   $ 5,298,145   $ 2,191   $ 3,224,603   $ 8,525,247  

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

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ZOOM COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended July 31,
2025 2024
Cash flows from operating activities:
Net income $ 613,195   $ 435,323  
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense 390,268   467,375  
Amortization of deferred contract acquisition costs 139,563   139,813  
Depreciation and amortization 67,479   55,751  
Deferred income taxes ( 53,271 ) ( 57,866 )
Gains on strategic investments, net ( 31,437 ) ( 20,461 )
Provision for accounts receivable allowances 10,120   12,518  
Unrealized foreign exchange (gains) losses ( 8,539 ) 7,229  
Non-cash operating lease cost 12,494   11,957  

Amortization of discount/premium on marketable securities ( 21,635 ) ( 35,840 )
Other 3,812   ( 1,225 )
Changes in operating assets and liabilities:
Accounts receivable ( 23,608 ) 7,637  
Prepaid expenses and other assets 3,160   61,035  
Deferred contract acquisition costs ( 129,552 ) ( 110,719 )
Accounts payable 4,794   267  
Accrued expenses and other liabilities ( 81,985 ) ( 53,967 )
Deferred revenue 125,015   133,629  
Operating lease liabilities, net ( 14,672 ) ( 14,931 )
Net cash provided by operating activities 1,005,201   1,037,525  
Cash flows from investing activities:
Purchases of marketable securities ( 2,227,043 ) ( 2,181,315 )
Maturities of marketable securities 2,088,081   1,644,169  
Sales of marketable securities 12,525   —  
Purchases of property and equipment ( 33,876 ) ( 102,742 )
Purchases of strategic investments ( 27,495 ) ( 13,500 )
Proceeds from strategic investments 2,505   4,654  

Purchases of intangible assets ( 500 ) —  
Net cash used in investing activities ( 185,803 ) ( 648,734 )
Cash flows from financing activities:
Proceeds from exercise of stock options 1,375   1,855  
Proceeds from issuance of common stock for employee stock purchase plan 36,057   34,263  
Proceeds from employee equity transactions (remitted) to be remitted to employees and tax authorities, net ( 2,083 ) 2,859  
Cash paid for repurchases of common stock, including excise taxes ( 883,284 ) ( 437,693 )
Taxes paid related to net share settlement of equity awards ( 137,457 ) —  

Net cash used in financing activities ( 985,392 ) ( 398,716 )
Effect of exchange rate changes on cash, cash equivalents, and restricted cash 13,276   ( 6,146 )
Net decrease in cash, cash equivalents, and restricted cash ( 152,718 ) ( 16,071 )
Cash, cash equivalents, and restricted cash – beginning of period 1,361,417   1,565,380  
Cash, cash equivalents, and restricted cash – end of period $ 1,208,699   $ 1,549,309  

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 $ 1,198,576   $ 1,539,457  
Restricted cash, current included in prepaid expenses and other current assets 10,123   9,852  

Total cash, cash equivalents, and restricted cash $ 1,208,699   $ 1,549,309  

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

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ZOOM COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1. Summary of Business and Significant Accounting Policies
Description of Business
Zoom provides an AI-first open work platform for human connection. Our platform is designed to enable seamless communication and collaboration through a suite of products that includes Zoom Workplace (including Zoom Meetings and Zoom Phone), Zoom Business Services (including Zoom Contact Center), Employee Experience (including Workvivo), and more, all with AI at its core to improve productivity, collaboration, and business outcomes. 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 2026, for example, refer to the fiscal year ending January 31, 2026.
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 Communications, Inc., its subsidiaries, and variable interest entities 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, 2025 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 fairly present 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, 2025, filed with the SEC on February 28, 2025.
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, stock-based compensation expense, 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 materially differ from those estimates.
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, 2025, filed with the SEC on February 28, 2025. There have been no significant changes to these policies during the six months ended July 31, 2025.
Recent Accounting Pronouncements Not Yet Adopted
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which aims to improve the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 and early adoption is permitted. We are currently evaluating the impact of the adoption of this ASU on our consolidated financial statements.

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In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which aims to improve financial reporting by requiring additional disclosure about specific expense categories in the notes to financial statements at interim and annual reporting periods. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the impact of the adoption of this ASU on our consolidated financial statements.
In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”), which introduces a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025 and interim periods within those annual reporting periods. Early adoption is permitted. We are currently evaluating the impact of the adoption of this ASU on our consolidated financial statements.

2.     Revenue Recognition
Disaggregation of Revenue
The following table summarizes revenue by region based on the billing address of customers:
Three Months Ended July 31, Six Months Ended July 31,
2025 2024 2025 2024
Amount Percentage of
Revenue Amount Percentage of
Revenue Amount Percentage of
Revenue Amount Percentage of
Revenue

(in thousands, except percentages)
Americas $ 873,974   71.8   % $ 835,728   71.9   % $ 1,721,670   72.0   % $ 1,654,411   71.8   %
Asia Pacific (“APAC”)
148,337   12.2   142,315   12.2   290,108   12.1   280,629   12.2  
Europe, Middle East, and Africa (“EMEA”)
194,916   16.0   184,477   15.9   380,164   15.9   368,714   16.0  
Total $ 1,217,227   100.0   % $ 1,162,520   100.0   % $ 2,391,942   100.0   % $ 2,303,754   100.0   %

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 was $ 85.2 million and $ 118.5  million as of July 31, 2025 and January 31, 2025, respectively, and the amount of unbilled accounts receivable included within other assets, noncurrent was de minimis as of both July 31, 2025 and January 31, 2025.
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. Revenue recognized from amounts included in deferred revenue at the beginning of each period totaled $ 644.9 million and $ 609.4 million for the three months ended July 31, 2025 and 2024, respectively, and $ 1,015.2 million and $ 955.4 million for the six months ended July 31, 2025 and 2024, 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 July 31, 2025, the aggregate amount of the transaction price allocated to our remaining performance obligations was $ 3,976.1 million, which consists of both billed consideration in the amount of $ 1,479.3 million and unbilled consideration in the amount of $ 2,496.8 million that we expect to recognize as revenue. We expect to recognize 61 % of our remaining performance obligations as revenue over the next 12 months and the remainder thereafter.

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3.     Investments
Marketable Securities
As of July 31, 2025 and January 31, 2025, our marketable securities consisted of the following:

As of July 31, 2025
Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Estimated
Fair
Value

(in thousands)

U.S. government agency securities $ 4,790,509   $ 4,278   $ ( 5,400 ) $ 4,789,387  
Agency bonds 992,384   436   ( 1,242 ) 991,578  
Corporate and other debt securities 730,062   1,122   ( 453 ) 730,731  
Treasury bills 65,443   —   ( 29 ) 65,414  
Commercial paper 2,963   —   —   2,963  
Marketable securities $ 6,581,361   $ 5,836   $ ( 7,124 ) $ 6,580,073  

As of January 31, 2025
Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Estimated
Fair
Value

(in thousands)

U.S. government agency securities $ 4,412,730   $ 8,449   $ ( 5,249 ) $ 4,415,930  
Agency bonds 1,173,518   1,609   ( 643 ) 1,174,484  
Corporate and other debt securities 719,145   2,069   ( 419 ) 720,795  
Treasury bills 110,237   43   ( 1 ) 110,279  
Commercial paper 20,841   —   —   20,841  
Marketable securities $ 6,436,471   $ 12,170   $ ( 6,312 ) $ 6,442,329  

Unrealized losses for securities that have been in an unrealized loss position for less than 12 months were $ 7.1 million and $ 6.2 million as of July 31, 2025 and January 31, 2025, respectively. Unrealized losses for securities that have been in an unrealized loss position for 12 months or longer were de minimis as of both July 31, 2025 and January 31, 2025. We review the individual securities that have unrealized losses on a regular basis to evaluate whether 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 (loss) for the three and six months ended July 31, 2025 and 2024.
The following table presents the contractual maturities of our marketable securities as of July 31, 2025 and January 31, 2025:

As of
July 31, 2025 January 31, 2025

(in thousands)
Less than one year $ 3,486,800   $ 3,534,014  
Due in one to five years 3,093,273   2,908,315  
Total $ 6,580,073   $ 6,442,329  

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Strategic Investments
Strategic investments by type and measurement category as of July 31, 2025 were as follows:

Measurement Category
Fair Value Measurement Alternative Equity Method Total

(in thousands)
Equity securities $ 82,755   $ 433,954   $ 127,253   $ 643,962  
Debt securities 3,946   —  —  3,946  
Strategic investments $ 86,701   $ 433,954   $ 127,253   $ 647,908  

Strategic investments by type and measurement category as of January 31, 2025 were as follows:

Measurement Category
Fair Value Measurement Alternative Equity Method Total

(in thousands)
Equity securities $ 35,280   $ 452,160   $ 99,591   $ 587,031  
Debt securities 4,450   —  —  4,450  
Strategic investments $ 39,730   $ 452,160   $ 99,591   $ 591,481  

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 level within the fair value hierarchy of the key valuation inputs utilized to determine such fair value:

As of July 31, 2025
Fair Value Level 1 Level 2 Level 3

(in thousands)
Financial Assets:
Money market funds $ 693,125   $ 693,125   $ —   $ —  
Treasury bills 59,220   —   59,220   —  

Cash equivalents 752,345   693,125   59,220   —  
U.S. government agency securities 4,789,387   —   4,789,387   —  
Agency bonds 991,578   —   991,578   —  
Corporate and other debt securities 730,731   —   730,731   —  
Treasury bills 65,414   —   65,414   —  
Commercial paper 2,963   —   2,963   —  
Marketable securities 6,580,073   —   6,580,073   —  

Publicly held equity securities included in strategic investments 82,755   82,755   —   —  
Privately held debt securities included in strategic investments 3,946   —   —   3,946  
Total financial assets $ 7,419,119   $ 775,880   $ 6,639,293   $ 3,946  

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As of January 31, 2025
Fair Value Level 1 Level 2 Level 3

(in thousands)
Financial Assets:
Money market funds $ 825,044   $ 825,044   $ —   $ —  
Treasury bills 17,965   —   17,965   —  
Agency bonds 23,992   —   23,992   —  

Cash equivalents 867,001   825,044   41,957   —  
U.S. government agency securities 4,415,930   —   4,415,930   —  
Agency bonds 1,174,484   —   1,174,484   —  
Corporate and other debt securities 720,795   —   720,795   —  
Treasury bills 110,279   —   110,279   —  
Commercial paper 20,841   —   20,841   —  
Marketable securities 6,442,329   —   6,442,329   —  

Publicly held equity securities included in strategic investments 35,280   35,280   —   —  
Privately held debt securities included in strategic investments 4,450   —   —   4,450  
Total financial assets $ 7,349,060   $ 860,324   $ 6,484,286   $ 4,450  

We classify our highly liquid money market funds and publicly held equity securities as 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 as 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 our privately held debt securities 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.     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:

As of
July 31, 2025 January 31, 2025

(in thousands)
Accounts receivable, gross $ 539,700   $ 517,306  
Less: allowance for credit losses ( 17,987 ) ( 17,262 )
Less: allowance for returns ( 4,914 ) ( 4,816 )
Accounts receivable, net $ 516,799   $ 495,228  

Below is a rollforward of our allowance for credit losses for the six months ended July 31, 2025 and 2024:

2025 2024
 (in thousands)
Balance as of January 31 $ 17,262   $ 25,916  
Provision for credit losses 9,637   13,052  
Write-offs ( 8,912 ) ( 19,980 )
Balance as of July 31
$ 17,987   $ 18,988  

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Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following:

As of
July 31, 2025 January 31, 2025

(in thousands)
Prepaid expenses $ 162,562   $ 166,924  

Restricted cash
10,123   12,037  
Other 17,575   21,718  
Prepaid expenses and other current assets $ 190,260   $ 200,679  

Property and Equipment, Net
Property and equipment consisted of the following:

As of
July 31, 2025 January 31, 2025

(in thousands)
Servers $ 423,793   $ 427,664  
Software 144,924   123,259  
Computer and office equipment 44,489   47,021  
Leasehold improvements 57,169   54,885  
Furniture and fixtures 5,681   5,767  
Property and equipment, gross 676,056   658,596  
Less: accumulated depreciation and amortization ( 374,599 ) ( 328,121 )
Property and equipment, net $ 301,457   $ 330,475  

Depreciation and amortization expense was $ 28.9 million and $ 25.7 million for the three months ended July 31, 2025 and 2024, respectively, and $ 60.9 million and $ 49.0 million for the six months ended July 31, 2025 and 2024, respectively.
Other Assets, Noncurrent
Other assets, noncurrent consisted of the following:

As of
July 31, 2025 January 31, 2025

(in thousands)
Accounts receivable, noncurrent $ 13,160   $ 19,266  

Intangible assets subject to amortization, net 27,367   33,410  
Indefinite-lived intangible assets 25,239   25,239  
Prepaid expenses, noncurrent 47,456   52,156  
Income tax receivable, noncurrent
21,680   12,230  
Other 13,379   11,772  
Other assets, noncurrent $ 148,281   $ 154,073  

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Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following:

As of
July 31, 2025 January 31, 2025

(in thousands)

Accrued expenses $ 171,850   $ 200,416  
Accrued compensation and benefits 135,851   193,110  
Income tax liabilities 21,080   18,815  
Sales and other non-income tax liabilities 39,622   41,755  
Customer deposit liabilities 55,220   47,312  
Operating lease liabilities, current 22,243   27,026  

Other 25,151   30,128  
Accrued expenses and other current liabilities $ 471,017   $ 558,562  

Other Liabilities, Noncurrent
Other liabilities, noncurrent consisted of the following:

As of
July 31, 2025 January 31, 2025

(in thousands)
Sales and other non-income tax liabilities $ 41,130   $ 41,517  

Long-term income tax liabilities
54,104   49,449  
Other 4,824   4,397  
Other liabilities, noncurrent $ 100,058   $ 95,363  

6.     Commitments and Contingencies
Non-cancelable Purchase Obligations
During the three and six months ended July 31, 2025, there have been no material changes to our non-cancelable purchase obligations from those disclosed in Note 9. “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, 2025 filed with the SEC on February 28, 2025.

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Legal Proceedings
In June 2020, we received a grand jury subpoena from the Department of Justice’s U.S. Attorney’s Office for 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 responding to law enforcement requests from the Chinese government. 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 all of these investigations and have conducted our own thorough internal investigation. These investigations are ongoing, and a negative outcome in any or all of these matters could cause us to incur substantial fines, penalties, or other financial exposure, as well as reputational harm. During the fiscal year ended January 31, 2025, we recorded an $ 18.0  million accrual with respect to a tentative settlement offer for the SEC matter. On July 30, 2025, the SEC informed us that their investigation has concluded and they do not intend to recommend an enforcement action. As a result, during the three months ended July 31, 2025, we reversed the $ 18.0  million previously accrued. The EDNY and NDCA investigations are ongoing, and a negative outcome in any or all of these matters could cause us to incur substantial fines, penalties, or other financial exposure, as well as reputational harm. We do not know when the EDNY and NDCA matters 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 are unable to predict the ultimate outcome of these matters and are unable to reasonably estimate any range of possible loss for these matters.
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 against certain of our officers and directors. The lawsuits asserted state and federal claims and were based on the same alleged misstatements as the shareholder class action complaint. The lawsuits accused our board of directors of failing to exercise reasonable and prudent supervision over our management, policies, practices, and internal controls. The plaintiffs sought unspecified monetary damages on behalf of us as well as governance reforms. On September 25, 2020, the derivative cases were consolidated. On October 27, 2021, a third substantially identical lawsuit was filed in the same court against the same defendants, seeking unspecified monetary damages and governance reforms. On November 17, 2021, all three derivative lawsuits were consolidated. The consolidated case was stayed pending resolution of the motion to dismiss the securities class action. On April 11, 2023, the court entered a stipulated order that required defendants to answer, move, or otherwise respond to the operative complaint by June 12, 2023. On June 12, 2023, defendants filed a motion to dismiss the consolidated case. On August 11, 2023, the plaintiff in the consolidated case filed an amended complaint. On October 18, 2023, defendants filed their motion to dismiss the amended complaint. On December 22, 2023, plaintiff filed her opposition to the motion to dismiss, and on January 26, 2024, defendants filed their reply in support of the motion to dismiss. On April 1, 2024, the parties notified the court that the parties were engaged in good-faith, material settlement discussions, and requested that the court stay any proceedings and rulings in connection with the pending motion to dismiss while the parties attempted to reach a proposed resolution of this action. On April 2, 2024, the Court stayed the case. On January 14, 2025, the parties executed a Stipulation of Settlement (“Stipulation”) to resolve this matter. Under the terms of the Stipulation, in exchange for the release and dismissal with prejudice of all claims against all defendants in the matter, Zoom agreed to enact certain corporate governance reforms and to pay plaintiff’s counsel a fee of up to $ 1.35  million. On January 16, 2025, the plaintiff filed a motion for preliminary approval of the settlement. On February 6, 2025, the court held a hearing on the motion for preliminary approval of the settlement. On April 16, 2025, the court preliminarily approved the settlement. On June 24, 2025, the plaintiff filed a motion for final approval of the settlement. On July 31, 2025, the court approved the settlement and awarded plaintiff’s counsel $ 1.35  million in fees. We accrued the $ 1.35  million fee and recorded it as a general and administrative expense in our consolidated statement of operations for the year ended January 31, 2025.
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 ours. 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 filed an opposition to our motion to dismiss on July 9, 2021. Our reply in support of the motion to dismiss was filed on August 9, 2021. On February 16, 2022, the court granted in part, and denied in part, our motion to dismiss. On March 14, 2022, we moved for reconsideration of the court’s ruling on the motion to dismiss. On March 22, 2022, the court ordered plaintiff to respond to our motion, which plaintiff did on March 29, 2022. On April 22, 2022, we answered the complaint. On March 8, 2023, the court denied our motion for reconsideration. On April 6, 2023, the

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court entered a scheduling order. On July 17, 2023, the parties entered into a stipulation and agreement of settlement (the “Stipulation”) to resolve this matter. Under the terms of the stipulation, in exchange for the release and dismissal with prejudice of all claims against all defendants in the matter, we have agreed to pay and/or cause our insurance carriers to pay a total of $ 150.0  million. On July 25, 2023, the court entered an order staying further proceedings in the matter pending the filing of a motion for preliminary approval of the settlement. On October 17, 2023, lead plaintiff filed a motion for preliminary approval of the settlement. On May 28, 2025, the court preliminarily approved the settlement. On July 18, 2025, lead plaintiff filed a motion for final approval of the settlement. The Stipulation and settlement remain subject to final approval by the court. As a result of the settlement, we made net payments of $ 60.0  million ($ 150.0  million for the settlement net of $ 90.0  million covered by insurance) during the year ended January 31, 2024, of which $ 7.5  million had been accrued during the year ended January 31, 2023 and $ 52.5  million was recorded as a general and administrative expense in our consolidated statement of operations for the year ended January 31, 2024.
In addition, from time to time, we are involved in various other legal proceedings arising from the normal course of business activities. 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.

7.     Stockholders’ Equity and Equity Incentive Plans
Common Stock
Our amended and restated certificate of incorporation authorizes 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.
Stock Repurchase Program
In February 2024, our Board of Directors authorized a stock repurchase program of up to $ 1.5  billion of our Class A common stock. In November 2024, our Board of Directors authorized the repurchase of an additional $ 1.2  billion of our outstanding Class A common stock. Repurchases of our Class A common stock may be effected from time to time, either on the open market (including preset trading plans), in privately negotiated transactions, and other transactions in accordance with applicable securities laws. The program does not obligate us to repurchase any specific number of shares and may be discontinued at any time.
During the three and six months ended July 31, 2025, we repurchased and subsequently retired 5,950,898 and 11,512,818 shares of our Class A common stock, respectively, for an aggregate amount of $ 463.4 million and $ 881.4 million, respectively. As of July 31, 2025, $ 724.7  million of the repurchase authorization remained available.
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, 2025 2,394,918    $ 9.02 2.6 $ 187,284  
Exercised ( 471,770 )  $ 2.91 $ 36,642  
Canceled/forfeited/expired ( 4,488 )  $ 94.87
Outstanding and exercisable as of July 31, 2025
1,918,660    $ 10.33 2.5 $ 124,000  

As of July 31, 2025, all options have vested and there is no unrecognized stock-based compensation expense remaining.
Restricted Stock Units
A summary of RSU activity under our equity incentive plan and related information is as follows:

RSUs
RSUs Weighted-
Average
Grant Date Fair Value Per Share
Unvested as of January 31, 2025 23,870,513   $ 73.48  
Granted 5,161,763   $ 75.12  

Vested ( 6,578,596 ) $ 76.26  
Canceled/forfeited ( 1,792,221 ) $ 72.42  
Unvested as of July 31, 2025 20,661,459   $ 73.14  

As of July 31, 2025, unrecognized stock-based compensation expense related to RSUs was $ 1,367.5 million, which is expected to be recognized over a weighted-average period of 2.7 years.
For the six months ended July 31, 2025, we granted 665.9  thousand RSUs that contain both service and performance vesting criteria. The ultimate number of shares eligible to vest pursuant to these RSUs range from 0 % to 100 % of the target number of shares depending on achievement of the performance metrics. The number of RSUs with service and performance vesting conditions included in the granted amount in the table above reflects the shares that would be eligible to vest at 100 % of the target amount.
2019 Employee Stock Purchase Plan
In April 2019, we adopted the 2019 ESPP. As of July 31, 2025, unrecognized stock-based compensation expense related to the ESPP was $ 24.8 million, which is expected to be recognized over a weighted-average period of 1.2 years.

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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 July 31, Six Months Ended July 31,
2025 2024 2025 2024

(in thousands)
Cost of revenue $ 24,222   $ 31,299   $ 51,649   $ 62,874  
Research and development 70,476   81,597   143,412   164,166  
Sales and marketing 63,094   84,225   131,527   161,459  
General and administrative 30,907   40,829   63,680   78,876  
Total stock-based compensation expense $ 188,699   $ 237,950   $ 390,268   $ 467,375  
Benefit from income taxes ( 35,067 ) ( 43,742 ) ( 73,228 ) ( 87,216 )
Total stock-based compensation expense recorded to net income $ 153,632   $ 194,208   $ 317,040   $ 380,159  

8.     Income Taxes
We compute our provision for income taxes by applying the estimated annual effective tax rate to year-to-date ordinary income and adjust the provision for discrete tax items recorded in the period. In each quarter, we update the estimated annual effective tax rate and make a year-to-date adjustment to the provision.
The following table provides details of the provision for income taxes:

Three Months Ended July 31, Six Months Ended July 31,
2025 2024 2025 2024

(in thousands, except percentages)
Income before provision for income taxes $ 448,162   $ 292,889   $ 763,927   $ 584,853  
Provision for income taxes 89,570   73,874   150,732   149,530  
Effective tax rate 20.0   % 25.2   % 19.7   % 25.6   %

The year-over-year change in effective tax rate for the three and six months ended July 31, 2025 was primarily driven by changes in income before taxes and changes in tax shortfalls and tax benefits related to stock-based compensation. For both the three and six months ended July 31, 2025 and July 31, 2024, the effective tax rate differed from the U.S. federal statutory rate due primarily to the foreign-derived intangible income deduction, tax benefits related to stock-based compensation, and research credits offset by tax shortfalls on stock-based compensation, state income taxes, and other compensation-related permanent differences.

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9.     Net Income Per Share
The following table sets forth the computation of basic and diluted net income per share for the periods presented:

Three Months Ended July 31, Six Months Ended July 31,
2025 2024 2025 2024
Class A Class B Class A Class B Class A Class B Class A Class B
(in thousands, except share and per share data)
Numerator:

Net income, basic $ 316,729   $ 41,863   $ 186,687   $ 32,328   $ 534,869   $ 78,326   $ 370,754   $ 64,569  
Reallocation of net income ( 1,123 ) 1,123   ( 1,425 ) 1,425   ( 1,740 ) 1,740   ( 2,718 ) 2,718  
Net income, diluted $ 315,606   $ 42,986   $ 185,262   $ 33,753   $ 533,129   $ 80,066   $ 368,036   $ 67,287  
Denominator:
Weighted-average shares used in computing net income per share, basic 266,548,290   35,230,824   263,506,853   45,630,954   264,605,839   38,748,996   263,100,802   45,820,808  
Weighted-average shares used in computing net income per share, diluted 271,276,534   36,947,838   265,631,026   48,396,166   269,970,487   40,544,582   266,054,570   48,641,781  
Net income per share, basic $ 1.19   $ 1.19   $ 0.71   $ 0.71   $ 2.02   $ 2.02   $ 1.41   $ 1.41  
Net income per share, diluted $ 1.16   $ 1.16   $ 0.70   $ 0.70   $ 1.97   $ 1.97   $ 1.38   $ 1.38  

The potential shares of common stock that were excluded from the computation of diluted net income per share for the periods presented, because including them would have been anti-dilutive, are as follows:

Three Months Ended July 31, Six Months Ended July 31,
2025 2024 2025 2024
Class A Class B Class A Class B Class A Class B Class A Class B
Unvested RSUs 1,390,763   —   14,850,761   —   1,826,669   —   12,596,651   —  
Purchase rights committed under the ESPP 381,788   —   2,436,546   —   296,776   —   1,738,415   —  
Outstanding stock options 87,993   —   96,890   —   89,815   —   99,622   —  
Total 1,860,544   —   17,384,197   —   2,213,260   —   14,434,688   —  

The table above does not include 405,156 shares of issued Class A common stock held by us as of July 31, 2025 and 2024 that are reserved for the sole purpose of being transferred to nonprofit organizations.

10.     Segment information
Our CEO is the Chief Operating Decision Maker (“CODM”) of the Company. The Company manages the business activities on a consolidated basis and all information provided to and reviewed by our CODM is compiled at the consolidated entity level. Therefore, we have only one operating and reportable segment. The description of the types of products and services from which the reportable segment derives its revenue is the same as those described in the Summary of Business and Significant Accounting Policies.
The measure of segment profit or loss that our CODM uses to allocate resources and assess performance is our consolidated net income. The CODM uses net income to monitor results and to decide whether to reinvest profits. Our CODM does not assess segment performance or make decisions using asset or liability information.
The following table summarizes the significant segment expenses regularly provided to the CODM as well as other segment items:

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Three Months Ended July 31, Six Months Ended July 31,
2025 2024 2025 2024

(in thousands)
Revenue $ 1,217,227   $ 1,162,520   $ 2,391,942   $ 2,303,754  

Adjusted cost of revenue (1)
245,413   249,315   490,044   485,453  
Adjusted research and development (1)
133,797   120,650   260,876   237,370  
Adjusted sales and marketing (1)
271,648   271,199   543,447   535,781  
Adjusted general and administrative (1)
63,143   65,814   127,023   133,011  
Stock-based compensation expense 188,699   237,950   390,268   467,375  
Interest income ( 81,159 ) ( 88,260 ) ( 162,940 ) ( 166,248 )
Other segment items (2)
( 52,476 ) 12,963   ( 20,703 ) 26,159  
Provision for income taxes 89,570   73,874   150,732   149,530  
Segment net income 358,592   219,015   613,195   435,323  
Adjustments and reconciling items
—   —   —   —  
Consolidated net income $ 358,592   $ 219,015   $ 613,195   $ 435,323  

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

11.     Subsequent Events
We have evaluated subsequent events from the balance sheet date through August 22, 2025, the date at which the condensed consolidated financial statements were available to be issued.
Subsequent to July 31, 2025, we recognized an unrealized gain of approximately $ 400.0 million on our strategic investments related to an equity investment in a private company. The unrealized gain reflects an increase in the fair value measurement of our investment following an observable transaction in August 2025.

Item 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. 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 Quarterly Report on Form 10-Q.

Overview
Zoom Workplace with AI Companion is an AI-first open work platform for human connection. Our platform is designed to enable seamless communication and collaboration through a suite of products that includes Zoom Workplace (including Zoom Meetings and Zoom Phone), Zoom Business Services (including Zoom Contact Center), Employee Experience (including Workvivo), and more, all with AI at its core 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 supports businesses by providing a secure, scalable solution for communication and collaboration. Together with Zoom Business Services, which include Zoom Contact Center, Zoom Revenue Accelerator, and Zoom Events that empower sales, marketing, and customer experience teams, Zoom is helping businesses foster stronger customer and employee relationships.
AI is core to Zoom’s product innovation. Over the past year, Zoom continued to invest in AI, expanding its agentic AI skills, agents, and models, and focused 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,

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Anthropic, and Meta), as well as Small Language Models (“SLMs”), 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-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 30 co-located data centers globally and robust encryption options. We are committed to delivering high-quality, real-time video, even in low-bandwidth conditions, while safeguarding our customers' data.
Revenue is driven by subscriptions to Zoom Workplace and Zoom Business Services. 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.
Our revenue was $1,217.2 million and $1,162.5 million for the three months ended July 31, 2025 and 2024, respectively, representing period-over-period growth of 4.7%. We had net income of $358.6 million and $219.0 million for the three months ended July 31, 2025 and 2024, respectively. Our revenue was $2,391.9 million and $2,303.8 million for the six months ended July 31, 2025 and 2024, respectively, representing period-over-period growth of 3.8%. We had net income of $613.2 million and $435.3 million for the six months ended July 31, 2025 and 2024, respectively. Net cash provided by operating activities was $1,005.2 million and $1,037.5 million for the six months ended July 31, 2025 and 2024, respectively.
Macroeconomic Conditions and Other Factors
The macroeconomic environment, including geopolitical conflicts, tariffs and escalating trade tensions, inflationary pressures, interest rate fluctuations, and the global market and foreign currency exchange rate volatility, continues to create uncertainty in demand for subscriptions to our open work 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 three and six months ended July 31, 2025, compared to the three and six months ended July 31, 2024, we experienced continued growth in total revenue and revenue from Enterprise customers. However, several factors, in addition to the macroeconomic environment, 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.
In recent months, intensifying trade tensions and global market volatility have impacted the macroeconomic environment, and 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 in 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 Low-Taxed Income (GILTI) and the Foreign-Derived Intangible Income (FDII) deduction. The impacts of OBBBA on our financial statements for the three months ended July 31, 2025 were not material; however, 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 II—Other Information, Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q 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. Our operating results and growth prospects will depend, in part, on our ability to attract new customers. While we believe there is a significant market opportunity that our platform addresses, it is difficult to predict customer adoption rates or the future growth rate and size of the market for our platform. 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.

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Expansion of Zoom Across Existing Enterprise Customers
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 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 in our net dollar expansion metric, 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. We define Enterprise customers as distinct business units who have been engaged by either our direct sales team, resellers, or strategic partners. Revenue from Enterprise customers represented 60.0% and 58.7% of total revenue for the three months ended July 31, 2025 and 2024, respectively, and 60.0% and 58.5% of total revenue for the six months ended July 31, 2025 and 2024, respectively. Our net dollar expansion rate includes the increase in user adoption within our Enterprise customers, as our subscription revenue is primarily driven by the number of paid licenses within a customer and the purchase of additional products, and compares our subscription revenue from the same set of Enterprise customers across comparable periods. We calculate net dollar expansion rate as of a period end by starting with the annual recurring revenue (“ARR”) from all Enterprise customers as of 12 months prior (“Prior Period ARR”). We define ARR as the annualized revenue run rate of subscription agreements from all customers at a point in time. We calculate ARR by taking the monthly recurring revenue (“MRR”) and multiplying it by 12. MRR is defined as the recurring revenue run-rate of subscription agreements from all Enterprise customers for the last month of the period, including revenue from monthly subscribers who have not provided any indication that they intend to cancel their subscriptions. We then calculate the ARR from these Enterprise customers as of the current period end (“Current Period ARR”), which includes any upsells, contractions, and attrition. We divide the Current Period ARR by the Prior Period ARR to arrive at the net dollar expansion rate. For the trailing 12 months calculation, we take an average of the net dollar expansion rate over the trailing 12 months. Our net dollar expansion rate may fluctuate as a result of a number of factors, including the level of penetration within our customer base, expansion of products and features, and our ability to retain our Enterprise customers. Our trailing 12-month net dollar expansion rate for Enterprise customers was 98% as of both July 31, 2025 and 2024.

Retention of Online 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-sized 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. Revenue from Online customers represented 40.0% and 41.3% of total revenue for the three months ended July 31, 2025 and 2024, respectively, and 40.0% and 41.5% of total revenue for the six months ended July 31, 2025 and 2024, respectively. Our ability to retain these Online customers will have an impact on our future revenue. The online monthly average churn for our Online customers was 2.9% per month for both the three months ended July 31, 2025 and 2024, and 2.9% and 3.1% per month for the six months ended July 31, 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. As of July 31, 2025 and 2024, the percentage of total Online MRR from Online customers with a continuous term of service of at least 16 months was 74.9% and 74.4%, respectively.
We calculate the 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. We then divide that amount by three to calculate the Online average monthly churn for the applicable quarter.
Innovation and Expansion of Our Platform
We continue to invest in enhancing the capabilities of Zoom Workplace and Zoom Business Services. This includes ongoing investments in AI, with a focus on expanding agentic AI skills, agents, and models. Recent product innovations and

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enhancements include Zoom AI Companion, Zoom Docs, Zoom Tasks and continued enhancements for Phone, Meetings, Zoom Rooms, Sessions, Webinars, Events, Workvivo, Contact Center, and more. We also deliver Zoom Phone calling plans in more than 45 countries and territories as of July 31, 2025.
We recently launched several products and enhancements, including new agentic AI offerings that drive productivity and collaboration, new app integrations for the Custom AI Companion add-on, a next-generation Zoom Virtual Agent that enhances customer support experiences, innovations in Zoom Spaces to improve collaboration, and updates to real-time media streams for better communication. The next-generation Zoom Virtual Agent is an AI-driven solution that uses agentic AI to autonomously resolve customer support issues across chat and voice channels. It features advanced reasoning, integrates with Zoom Contact Center and other leading platforms, and helps reduce escalations while improving efficiency and satisfaction.
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.
We offer end-to-end encryption (“E2EE”) for meetings with up to 1,000 participants, as well as for one-on-one Zoom Phone calls within the same account. With E2EE, encryption keys are generated and managed on users’ devices rather than on Zoom’s servers, providing an added layer of privacy. In addition, we introduced post-quantum E2EE in May 2024 for Zoom Workplace. We believe this makes Zoom the first unified communications as a service (“UCaaS”) provider to offer a post-quantum E2EE solution for video conferencing.
International Opportunity
Our platform addresses the communications and collaboration needs of users worldwide, and while our international revenue has stabilized in recent quarters, we continue to view international expansion as a meaningful long-term opportunity. Our revenue from the rest of the world (APAC and EMEA) represented 28.2% and 28.1% of our total revenue for the three months ended July 31, 2025 and 2024, respectively, and 28.0% and 28.2% of our total revenue for the six months ended July 31, 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 Metric
We review the following key business metric to measure our performance, identify trends, formulate financial projections, and make strategic decisions.
Customers Contributing More Than $100,000 of Trailing 12 Months Revenue
We focus on growing the number of customers that 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 32.2% and 30.5% of total revenue for the three months ended July 31, 2025 and 2024, respectively, and 32.2% and 30.4% of total revenue for the six months ended July 31, 2025 and 2024, respectively. As of July 31, 2025 and 2024, we had 4,274 and 3,933 customers, respectively, that contributed more than $100,000 of trailing 12 months revenue, demonstrating our increasing penetration of larger organizations, including enterprises. These customers are a subset of Enterprise customers.

Non-GAAP Financial Measure
In addition to our results determined in accordance with GAAP, free cash flow (“FCF”) is a non-GAAP financial measure that we believe is useful in evaluating our liquidity.
Free Cash Flow
We define FCF as GAAP net cash provided by operating activities less purchases of property and equipment. We believe that FCF is a useful indicator of liquidity that provides information to management and investors about the amount of cash generated from our operations that, after investments in property and equipment, can be used for future growth or other corporate purposes. FCF is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of other GAAP financial measures, such as net cash provided

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by operating activities. It is important to note that other companies, including companies in our industry, may not use this metric, may calculate this metric differently, or may use other financial measures to evaluate their liquidity, all of which could reduce the usefulness of this non-GAAP metric as a comparative measure.
The following table presents a summary of our cash flows for the periods presented and a reconciliation of FCF to net cash provided by operating activities, the most directly comparable financial measure calculated in accordance with GAAP:

Six Months Ended July 31,
2025 2024

(in thousands)
Net cash provided by operating activities $ 1,005,201  $ 1,037,525 

Less: purchases of property and equipment (33,876) (102,742)
Free cash flow (non-GAAP) $ 971,325  $ 934,783 

Net cash used in investing activities $ (185,803) $ (648,734)
Net cash used in financing activities $ (985,392) $ (398,716)

Components of Results of Operations
Revenue
We derive our revenue from subscription agreements with customers for access to our unified communications and collaboration 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. 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. 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.
Operating Expenses
Research and Development
Research and development expenses primarily consist of personnel-related expenses directly associated with our research and development organization, depreciation of equipment used in research and development, and allocated overhead. Research and development costs are expensed as incurred.
Sales and Marketing
Sales and marketing expenses primarily consist of personnel-related expenses directly associated with our sales and marketing organization. Other sales and marketing expenses include advertising and promotional events to promote our brand, such as awareness programs, digital programs, public relations, tradeshows, and our user conference, Zoomtopia, and allocated overhead. Sales and marketing expenses also include credit card processing fees related to sales and amortization of deferred contract acquisition costs.
General and Administrative
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; expected credit losses; insurance; certain indirect taxes; litigation settlements; corporate security and regulatory expenses; and allocated overhead.
Gains on Strategic Investments, Net
Gains on strategic investments, net consist primarily of remeasurement gains or losses on our equity investments.

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Other Income, Net
Other income, net consists primarily of interest income and net accretion on our marketable securities and effect of changes in foreign currency exchange rates.
Provision for Income Taxes
Provision for income taxes consists primarily of income taxes related to federal, state, and foreign jurisdictions where we conduct business.

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Results of Operations
The following tables set forth selected condensed consolidated statements of operations data and such data as a percentage of revenue for each of the periods indicated:

Three Months Ended July 31, Six Months Ended July 31,
2025 2024 2025 2024

(in thousands)
Revenue $ 1,217,227  $ 1,162,520  $ 2,391,942  $ 2,303,754 
Cost of revenue (1)
273,165  285,089  551,567  558,391 
Gross profit 944,062  877,431  1,840,375  1,745,363 
Operating expenses:
Research and development (1)
206,447  206,756  411,863  412,314 
Sales and marketing (1)
338,995  358,770  685,965  706,778 
General and administrative (1)
76,885  109,535  179,220  220,879 
Total operating expenses 622,327  675,061  1,277,048  1,339,971 
Income from operations 321,735  202,370  563,327  405,392 
Gains on strategic investments, net 45,056  3,107  31,437  20,461 
Other income, net 81,371  87,412  169,163  159,000 
Income before provision for income taxes 448,162  292,889  763,927  584,853 
Provision for income taxes 89,570  73,874  150,732  149,530 
Net income $ 358,592  $ 219,015  $ 613,195  $ 435,323 

(1) Includes stock-based compensation expense as follows:

Cost of revenue $ 24,222  $ 31,299  $ 51,649  $ 62,874 
Research and development 70,476  81,597  143,412  164,166 
Sales and marketing 63,094  84,225  131,527  161,459 
General and administrative 30,907  40,829  63,680  78,876 
Total stock-based compensation expense $ 188,699  $ 237,950  $ 390,268  $ 467,375 

Three Months Ended July 31, Six Months Ended July 31,
2025 2024 2025 2024

(as a percentage of revenue)
Revenue 100.0  % 100.0  % 100.0  % 100.0  %
Cost of revenue 22.4  24.5  23.1  24.2 
Gross profit 77.6  75.5  76.9  75.8 
Operating expenses:
Research and development 17.0  17.8  17.2  17.9 
Sales and marketing 27.8  30.9  28.7  30.7 
General and administrative 6.4  9.4  7.4  9.6 
Total operating expenses 51.2  58.1  53.3  58.2 
Income from operations 26.4  17.4  23.6  17.6 
Gains on strategic investments, net 3.7  0.3  1.3  0.9 
Other income, net 6.7  7.5  7.1  6.9 
Income before provision for income taxes 36.9  25.2  31.9  25.4 
Provision for income taxes 7.4  6.4  6.3  6.5 
Net income 29.5  % 18.8  % 25.6  % 18.9  %

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Comparison of the Three Months Ended July 31, 2025 and 2024
Revenue
Three Months Ended July 31,
2025 2024 % Change

(in thousands)  
Revenue $ 1,217,227  $ 1,162,520  4.7  %

Revenue for the three months ended July 31, 2025 increased by $54.7 million, or 4.7%, compared to the three months ended July 31, 2024. The increase was driven by 7.0% growth in revenue from Enterprise customers, of which 57.4% and 42.6% was from new and existing customers, respectively, and by a 1.4% increase in revenue from Online customers.
Cost of Revenue
Three Months Ended July 31,
2025 2024 % Change

(in thousands)
Cost of revenue $ 273,165  $ 285,089  (4.2) %
Gross profit 944,062  877,431  7.6  %
Gross margin 77.6  % 75.5  %

Cost of revenue for the three months ended July 31, 2025 decreased by $11.9 million, or 4.2%, compared to the three months ended July 31, 2024. The decline was mainly due to a $7.1 million reduction in stock-based compensation as well as lower hosting costs. The reduction in SBC is due to changes in our equity program, while the decrease in hosting costs was due to cloud optimizations and operational efficiencies.
Gross margin grew to 77.6% for the three months ended July 31, 2025, from 75.5% for the three months ended July 31, 2024. The increase in gross margin was mainly due to a decrease in stock-based compensation and hosting costs.
Operating Expenses
Research and Development
Three Months Ended July 31,
2025 2024 % Change

(in thousands)  
Research and development $ 206,447  $ 206,756  (0.1) %

Research and development expense for the three months ended July 31, 2025 decreased by $0.3 million, or 0.1%, compared to the three months ended July 31, 2024. A $11.1 million decrease in stock-based compensation was largely offset by continued investment in AI-innovation, including a $6.3 million increase in personnel-related expenses as a result of higher headcount.

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Sales and Marketing
Three Months Ended July 31,
2025 2024 % Change

(in thousands)
Sales and marketing $ 338,995  $ 358,770  (5.5) %

Sales and marketing expense for the three months ended July 31, 2025 decreased by $19.8 million, or 5.5%, compared to the three months ended July 31, 2024. The decrease was primarily driven by lower stock-based compensation of $21.1 million .
General and Administrative
Three Months Ended July 31,
2025 2024 % Change

(in thousands)
General and administrative $ 76,885  $ 109,535  (29.8) %

General and administrative expense for the three months ended July 31, 2025 decreased by $32.7 million, or 29.8%, compared to the three months ended July 31, 2024. The favorable variance was primarily driven by the reversal of a previous accrual of $18.0 million related to an SEC investigation and a $16.6 million decrease in personnel-related expenses, including a $9.9 million decrease in stock-based compe nsation.
Gains on Strategic Investments, Net

Three Months Ended July 31,
2025 2024 % Change

(in thousands)  
Gains on strategic investments, net $ 45,056  $ 3,107  1,350.1  %

Gains on strategic investments, net for the three months ended July 31, 2025 and July 31, 2024 were primarily driven by changes in the fair value of our publicly and privately held securities.
Other Income, Net
Three Months Ended July 31,
2025 2024 % Change

(in thousands)  
Other income, net $ 81,371  $ 87,412  (6.9) %

Other income, net for the three months ended July 31, 2025 decreased by $6.0 million, or 6.9%, compared to the three months ended July 31, 2024. The decrease was primarily due to lower investment yields from cash and marketable securities.

Provision for Income Taxes
Three Months Ended July 31,
2025 2024 % Change

(in thousands)  
Provision for income taxes $ 89,570  $ 73,874  21.2  %

Provision for income taxes for the three months ended July 31, 2025 increased by $15.7 million, or 21.2%, compared to the three months ended July 31, 2024. The year-over-year change was primarily due to an increase in income before taxes partially offset by a decrease in tax shortfalls and increase in tax benefits related to stock-based compensation.

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Comparison of the Six Months Ended July 31, 2025 and 2024
Revenue
Six Months Ended July 31,
2025 2024 % Change

(in thousands)  
Revenue $ 2,391,942  $ 2,303,754  3.8  %

Revenue for the six months ended July 31, 2025 increased by $88.2 million, or 3.8%, compared to the six months ended July 31, 2024. The increase in revenue was due to a 6.4% growth in revenue from Enterprise customers, of which 53.6% and 46.4% was from new and existing customers, respectively. Revenue from Online customers remained flat year over year.
Cost of Revenue
Six Months Ended July 31,
2025 2024 % Change

(in thousands)
Cost of revenue $ 551,567  $ 558,391  (1.2) %
Gross profit $ 1,840,375  $ 1,745,363  5.4  %
Gross margin 76.9  % 75.8  %

Cost of revenue for the six months ended July 31, 2025 decreased by $6.8 million, or 1.2%, compared to the six months ended July 31, 2024. The decrease was primarily due to a lower personnel related expenses of $9.8 million , including an $11.2 million decline in stock-based compensation, due to changes in our equity program.
Gross margin increased to 76.9% for the six months ended July 31, 2025 from 75.8% for the six months ended July 31, 2024, mainly due to a decrease in stock-based compensation.
Operating Expenses
Research and Development
Six Months Ended July 31,
2025 2024 % Change

(in thousands)  
Research and development $ 411,863  $ 412,314  (0.1) %

Research and development expense for the six months ended July 31, 2025 decreased by $0.5 million, or 0.1%, compared to the six months ended July 31, 2024. A $20.8 million decrease in stock-based compensation was largely offset by continued investments in AI-innovation, including a $10.0 million increase in personnel related expenses from higher headcount, along with additional costs associated with AI-related software and facilities.
Sales and Marketing

Six Months Ended July 31,
2025 2024 % Change

(in thousands)
Sales and marketing $ 685,965  $ 706,778  (2.9) %

Sales and marketing expense for the six months ended July 31, 2025 decreased by $20.8 million, or 2.9%, compared to the six months ended July 31, 2024. The decrease in sales and marketing expense was primarily due to lower personnel-related

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expenses, including a $29.9 million decrease in stock-based compensation, partially offset by costs to support our customer engagement and growth initiatives.
General and Administrative
Six Months Ended July 31,
2025 2024 % Change

(in thousands)
General and administrative $ 179,220  $ 220,879  (18.9) %

General and administrative expense for the six months ended July 31, 2025 decreased by $41.7 million, or 18.9%, compared to the six months ended July 31, 2024. The reduction was primarily driven by the reversal of a previous accrual of $18.0 million related to an SEC investigation and a $23.9 million decrease in personnel-related expenses, including a $15.2 million reduction in stock-based compensation.
Gains on Strategic Investments, Net

Six Months Ended July 31,
2025 2024 % Change

(in thousands)  
Gains on strategic investments, net $ 31,437  $ 20,461  53.6  %

Gains on strategic investments, net for the six months ended July 31, 2025 and July 31, 2024 were primarily driven by changes in the fair value of our publicly and privately held securities.
Other Income, Net
Six Months Ended July 31,
2025 2024 % Change

(in thousands)  
Other income, net $ 169,163  $ 159,000  6.4  %

Other income, net for the six months ended July 31, 2025 increased by $10.2 million, or 6.4%, compared to the six months ended July 31, 2024. The increase was primarily due to a $13.0 million increase from changes in foreign currency exchange rates, partially offset by a $3.3 million decrease in investment yields from cash and marketable securities.
Provision for Income Taxes

Six Months Ended July 31,
2025 2024 % Change

(in thousands)  
Provision for income taxes $ 150,732  $ 149,530  0.8  %

Provision for income taxes for the six months ended July 31, 2025 increased by $1.2 million, or 0.8%, compared to the six months ended July 31, 2024. The year-over-year change was due primarily to an increase in income before taxes offset by a decrease in tax shortfalls and increase in tax benefits related to stock-based compensation.

Liquidity and Capital Resources
As of July 31, 2025, our principal sources of liquidity were cash, cash equivalents, and marketable securities of $7.8 billion, which were held for working capital purposes and for investment in growth opportunities. Our marketable securities generally consist of high-grade commercial paper, corporate bonds, agency bonds, corporate and other debt securities, U.S. 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

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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. 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. We believe we will meet longer-term expected future cash requirements and obligations through a combination of cash flows from operating activities and available cash balances. Our future capital requirements will depend on many factors, including our revenue growth rate, subscription renewal activity, billing frequency, the timing and extent of spending to support further sales and marketing and research and development efforts, as well as expenses associated with our international expansion, and the timing and extent of additional capital expenditures to invest in existing and new office spaces as well as data center infrastructure. We may, in the future, enter into arrangements to acquire or invest in complementary businesses, services, and technologies, including intellectual property rights. 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. If we are unable to raise additional capital when desired, our business, results of operations, and financial condition would be materially and adversely affected.
There have been no material changes to our material cash requirements from known contractual and other obligations from those disclosed in our Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report on Form 10-K for the year ended January 31, 2025, filed with the SEC on February 28, 2025.

Cash Flows
The following table summarizes our cash flows for the periods presented:

Six Months Ended July 31,
2025 2024

(in thousands)
Net cash provided by operating activities $ 1,005,201  $ 1,037,525 
Net cash used in investing activities $ (185,803) $ (648,734)
Net cash used in financing activities $ (985,392) $ (398,716)

Operating Activities
Our largest source of operating cash is cash collections from our customers for subscriptions to our platform. Our primary uses of cash from operating activities are for employee-related expenditures, costs related to hosting our platform, and marketing expenses. Net cash provided by operating activities is impacted by our net income adjusted for certain non-cash items, such as stock-based compensation expense, depreciation and amortization expenses, as well as the effect of changes in operating assets and liabilities.
Net cash provided by operating activities was $1,005.2 million for the six months ended July 31, 2025, compared to $1,037.5 million for the six months ended July 31, 2024. Despite higher net income year over year, net cash provided by operating activities remained relatively flat mainly due to payment timing differences in various working capital accounts.
Investing Activities
Net cash used in investing activities of $185.8 million for the six months ended July 31, 2025 was driven by net purchases of marketable securities of $126.4 million, purchases of property and equipment of $33.9 million, and purchases of strategic investments of $27.5 million.
Net cash used in investing activities of $648.7 million for the six months ended July 31, 2024 was primarily due to net purchases of marketable securities of $537.1 million, purchases of property and equipment of $102.7 million, and purchases of strategic investments of $13.5 million.
Financing Activities
Net cash used in financing activities of $985.4 million for the six months ended July 31, 2025 was primarily due to cash paid for repurchases of common stock, including excise taxes, of $883.3 million and taxes paid related to net share settlement

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of equity awards of $137.5 million, partially offset by proceeds from the issuance of common stock under our ESPP of $36.1 million.
Net cash used in financing activities of $398.7 million for the six months ended July 31, 2024 was primarily due to cash paid for repurchases of common stock of $437.7 million, partially offset by proceeds from the issuance of common stock under our ESPP of $34.3 million.
Stock Repurchase Program
In February 2024, our Board of Directors authorized a stock repurchase program of up to $1.5 billion of our Class A common stock. In November 2024, our Board of Directors authorized the repurchase of an additional $1.2 billion of our outstanding Class A common stock. Repurchases of our Class A common stock may be effected, from time to time, either on the open market (including pre-set trading plans), in privately negotiated transactions, and other transactions in accordance with applicable securities laws.
The timing and the amount of any repurchased Class A common stock will be determined by our management based on its evaluation of market conditions and other factors. The repurchase program will be funded using our working capital. Any repurchased shares of Class A common stock will be retired. The repurchase program does not obligate us to acquire any particular amount of Class A common stock, and the repurchase program may be suspended or discontinued at any time at our discretion.
During the three and six months ended July 31, 2025, we repurchased and subsequently retired 5,950,898 and 11,512,818 shares of our Class A common stock, respectively, for an aggregate amount of $463.4 million and $881.4 million, respectively.

Critical Accounting Estimates
Critical accounting estimates are those accounting estimates that require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. These estimates are developed based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Critical accounting estimates are accounting estimates where the nature of the estimates is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and the impact of the estimates on financial condition or operating performance is material.
There have been no material changes to our critical accounting estimates as compared to the critical accounting estimates described in our Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report on Form 10-K for the year ended January 31, 2025, filed with the SEC on February 28, 2025.

Item 3.    QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign Currency and Exchange Risk
The majority of our cash generated from revenue is denominated in U.S. 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 the United States, China, Europe, and Australia. 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 six months ended July 31, 2025 and 2024, 19.6% and 19.3% of our revenue, respectively, and 17.5% and 15.1% of our expenses, respectively, were denominated in currencies other than the U.S. dollar. The effect of a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have had a material impact on our historical condensed consolidated financial statements for the three and six months ended July 31, 2025 and 2024. As the impact of foreign currency exchange rates has not been material to our historical operating results, we have not entered into derivative or hedging transactions, but we may do so in the future if our exposure to foreign currency becomes more significant.
Interest Rate Risk
We had cash and cash equivalents of $1,198.6 million and marketable securities of $6,580.1 million as of July 31, 2025. Cash and cash equivalents consist of bank deposits, money market funds, and high-grade commercial paper, and agency bonds. Our marketable securities generally consist of high-grade commercial paper, agency bonds, corporate and other debt securities, U.S. government agency securities, and treasury bills. The cash and cash equivalents and marketable securities are held for working capital purposes. Such interest-earning instruments carry a degree of interest rate risk. The primary objective of our investment activities is to preserve principal while maximizing income without significantly increasing risk. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. Due to the short-term nature of our investments, we have not been exposed to, nor do we anticipate

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being exposed to, material risks due to changes in interest rates. A hypothetical 10% change in interest rates during any of the periods presented would not have had a material impact on our historical condensed consolidated financial statements for the three and six months ended July 31, 2025 and 2024.

Item 4.    CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our principal executive officer and principal financial officer have concluded that as of July 31, 2025 , our disclosure controls and procedures were effective at a reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(d) and 15d-15(d) under the Exchange Act) that occurred during the quarter ended July 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Disclosure Controls and Procedures
Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Due to inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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PART II—Other Information

Item 1.    LEGAL PROCEEDINGS
Information with respect to this item may be found in Note 6 - “Commitments and Contingencies” in the accompanying notes to the condensed consolidated financial statements included in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q, under “Legal Proceedings,” which is incorporated herein by reference.

Item 1A.    RISK FACTORS
Investing in our securities involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this Quarterly Report on Form 10-Q, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our condensed consolidated financial statements and related notes, before making a decision to invest in our securities. The risks and uncertainties described below may not be the only ones we face. If any of the risks actually occur, our business could be materially and adversely affected. In that event, the market price of our Class A common stock could decline, and you could lose part or all of your investment.
Risks Related to Our Business and Our Industry
Our business depends on our ability to attract new customers, retain and upsell additional products and new product categories to existing customers, and upgrade free users to our paid offerings. Any decline in new customers, renewals, or upgrades would harm our business.
Our business depends upon our ability to attract new customers and maintain and expand our relationships with our existing customers, including upselling additional products and new product categories to our existing customers and upgrading users from a free plan to one of our paid offerings.
Our business is subscription based, and customers are not obligated to, and may choose not to, renew their subscriptions after their existing subscriptions expire. Customers may also terminate or reduce the size of their existing subscriptions. As a result, we cannot provide assurance that customers will renew their subscriptions utilizing the same tier of plan, upgrade to a higher-priced tier, or purchase additional products, if they renew at all. Renewals of subscriptions to our platform may decline or fluctuate because of several factors, such as dissatisfaction with our products and support, a customer no longer having a need for our products, or a belief that a competitor’s product is better, more secure, or less expensive than our products and platform. For example, during the COVID-19 pandemic, we saw a significant increase in usage and subscriptions. As a result, our customer base shifted largely from businesses and enterprises to a mix of businesses, enterprises, and consumers. Following the pandemic, some of our customers reduced or discontinued their use of our platform, and additional customers may do so in the future. Additionally, this shift in mix has resulted and may continue to result in higher non-renewal rates than we have experienced in the past. Renewals are also impacted by reductions in customer information technology spending budgets or a decision by the customer to consolidate their spending budgets on one of our competitor’s platforms, both of which are more likely to occur during periods of high inflation or recessionary or uncertain economic environments. We must continually add new customers and licenses to grow our business and to replace customers and licenses who choose not to continue to use our platform. Finally, any decrease in user satisfaction with our products or support would harm our brand, word-of-mouth referrals, and ability to grow.
We encourage customers to purchase additional products and encourage users of our free offering to upgrade to one of our paid offerings by recommending additional features and through in-product prompts and notifications. However, free users may never upgrade to one of our paid offerings. We also seek to expand within organizations by adding new licenses, having workplaces purchase additional products, or expanding the use of our platform into other teams and departments within an organization. If we fail to upsell our customers or upgrade free users to one of our paid offerings or expand the number of licenses within organizations, our business would be harmed.
Our revenue growth rate has fluctuated in prior periods, and may continue to decline in future periods.
Our revenue growth has fluctuated in prior periods. You should not rely on the revenue growth of any prior quarterly or annual period as an indication of our future performance. There are no assurances we will be able to sustain our revenue growth in future periods, and our revenue growth rate may continue to remain flat or decline in future periods. Many factors have and may contribute to declines in our growth rate, including higher market penetration, increased competition, macroeconomic conditions, such as inflation, recessionary or uncertain economic environments, fluctuating foreign currency exchange rates, slowing demand for our platform, a lower than anticipated capitalization on growth opportunities, and the maturation of our

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business, among others. Our growth rate could adversely affect investors’ perceptions of our business and the trading price of our Class A common stock could be adversely affected.
Interruptions, delays, or outages in service from our co-located data centers or cloud hosting services and a variety of other factors, would impair, and in the past have impaired, the delivery of our services, require us to issue credits or pay penalties, and harm our business.
We currently serve our users from various co-located data centers located throughout the world. We also utilize cloud hosting services such as Amazon Web Services and Oracle Cloud for the hosting of certain critical aspects of our business and Microsoft Azure for limited customer-specified managed services. As part of our distributed meeting architecture, we establish private links between data centers that automatically transfer data between various data centers. Damage to, or failure of, these data centers has in the past resulted in and could in the future result in interruptions or delays in our services. In addition, we have experienced, and may in the future experience, other interruptions and delays in our services caused by a variety of other factors, including, but not limited to, infrastructure changes, vendor (including cloud hosting) issues, human or software errors, viruses, security attacks, ransomware or cyber extortion, fraud, general internet availability issues, spikes in usage, local administrative actions, changes to legal or permitting requirements, and denial of service issues. In some instances, we may not be able to identify the cause or causes of these problems within an acceptable period of time. For example, we have experienced partial outages in our services that impacted a subset of our users for a limited number of hours. Additionally, in connection with the addition of new data centers, expansion or consolidation of our existing data center facilities, or other reasons, we may move or transfer our data and our users’ metadata to other data centers, not including our China data center. Despite precautions that we take during this process, any unsuccessful data transfers may impair or cause disruptions in the delivery of our service, and we may incur significant costs in connection with any such move or transfer. Interruptions, delays, or outages in our services would reduce our revenue; may require us to issue credits or pay penalties; may subject us to claims and litigation; and may cause customers to terminate their subscriptions and adversely affect our ability to attract new customers. Our ability to attract and retain customers and licenses depends on our ability to provide customers and users with a highly reliable platform and even minor interruptions or delays in our services could harm our business.
Additionally, if our data centers or cloud hosting services are unable to keep up with our increasing needs for capacity, customers may experience delays or interruptions in service as we seek to obtain additional capacity, which could result in the loss of customers who use our unified communications and collaboration platform because of its reliability and performance. We plan to continue our practice of opening new co-located data centers throughout the world to meet increased demand, but we may be unable to bring additional data centers online in a timely manner, including as a result of current shortages for certain parts, such as servers.
We do not control, or in some cases have limited control over, the operation of the co-located data center facilities and cloud hosting services we use, and they are vulnerable to damage or interruption from human error; intentional bad acts; earthquakes; floods; fires; hurricanes; war; terrorist attacks; power losses; hardware failures; systems failures; telecommunications failures; disease; and other public health related measures, any of which could disrupt our service. In the event of significant physical damage to one of these data centers or disruption of the cloud hosting services we use, it may take a significant period of time to achieve full resumption of our services and our disaster recovery planning may not account for all eventualities. Despite precautions taken at these data center facilities, the occurrence of a natural disaster, an act of terrorism, or other act of malfeasance, a decision to close the facilities without adequate notice or other unanticipated problems at the facilities would harm our business.
We operate in competitive markets, and we must continue to compete effectively.
The market for communication and collaboration technologies platforms is competitive and rapidly changing and includes companies ranging from new market entrants to hyperscalers that provide technologies to improve communication and collaboration technologies platforms either as bundled solutions or standalone products. Given the range of companies in this space, maintaining an open and robust marketplace with fair competition is important. Certain features of our current platform compete in the communication and collaboration technologies market with products offered by:

• bundled productivity suite providers with communication offerings, including Microsoft 365 (with Teams) and Google Workspace (with Meet);
• legacy web-based meeting providers, including Cisco Webex and GoTo;
• UCaaS and legacy PBX providers, including Avaya, RingCentral, and 8x8; and
• consumer-facing platforms that can support small- or medium-sized businesses, including Amazon, Apple, and Facebook.

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Other large established companies may also make investments in video communications tools. In addition, as we introduce new products and services into our platform, and with the introduction of new technologies and market entrants, including AI, we expect competition to continue to intensify.
In February 2022, we launched Zoom Contact Center, an omnichannel contact center solution that is optimized for video, which competes against companies that offer similar services, such as Five9, Genesys, and NICE inContact, and new competitors that may enter that market in the future. As we continue to build out our platform, we may face increased competition from companies that offer similar services and new competitors that may enter that market in the future. During the COVID-19 pandemic, we saw a significant increase in usage and subscriptions from smaller customers, many of whom are consumers or small and medium-sized businesses. With respect to these smaller customers, we face competition from more consumer-oriented platforms, most of which have more experience with the consumer market than we do. Further, many of our actual and potential competitors benefit from competitive advantages over us, such as greater name recognition; longer operating histories; more varied products and services; larger marketing budgets; more established marketing, customers and partner relationships; more third-party integrations; greater accessibility across devices and applications; greater access to larger user bases; major distribution agreements with hardware manufacturers and resellers; and greater financial, technical, and other resources. Some of our competitors may make acquisitions or strategic investments or enter into strategic relationships to offer a broader range of products and services than we do, which may prevent us from using such third parties' technology or offering such products or services. These combinations may make it more difficult for us to compete effectively. We expect these trends to continue as competitors attempt to strengthen or maintain their market positions.
Demand for our platform is also price sensitive. Many factors, including our marketing, user acquisition, and technology costs, and our current and future competitors’ pricing and marketing strategies, can significantly affect our pricing strategies. Certain competitors offer, or may in the future offer, lower-priced or free products, or services that compete with our platform, or may bundle and offer a broader range of products and services than we do. Similarly, certain competitors may use marketing strategies that enable them to acquire customers at a lower cost than we can. Furthermore, third parties could build products similar to ours that rely on open source software. Even if such products do not include all the features and functionality that our platform provides, we could face pricing pressure from these third parties to the extent that users find such alternative products to be sufficient to meet their needs. In some cases, we have been forced to engage in price-cutting initiatives or other discounts to attract and retain customers in response to competitive pressures, and may have to do so in the future. We, on occasion, offer customers a free period of time at the beginning of the subscription term that can result in deferred billings or long-term accounts receivable and increase the risk of loss on uncollected accounts receivable.
Our results have fluctuated and may in the future fluctuate significantly and may not fully reflect the underlying performance of our business.
Our results of operations have fluctuated and may in the future fluctuate significantly, and period-to-period comparisons of our results of operations may not be meaningful. Accordingly, the results of any one quarter should not be relied upon as an indication of future performance. Our results of operations may fluctuate as a result of a variety of factors, many of which are outside of our control, and as a result, may not fully reflect the underlying performance of our business. For example, during fiscal year 2021, we experienced rapid growth in usage of our unified communications and collaboration platform largely due to the COVID-19 pandemic, a significant portion of which was attributable to free Basic accounts, which do not generate any revenue. To meet this increased demand, we have incurred and expect to continue to incur significant costs associated with upgrading our infrastructure and expanding our capacity. Fluctuations in our results may negatively impact the value of our securities. Factors that may cause fluctuations in our results of operations include, without limitation, those listed below:
• our ability to retain and upgrade customers to higher-priced plans;
• our ability to attract new customers and upgrade free users to one of our paid offerings;
• our ability to hire and retain employees, in particular those responsible for the selling or marketing of our platform;
• our ability to hire, develop, and retain talented sales personnel who are able to achieve desired productivity levels in a reasonable period of time and provide sales leadership in areas in which we are expanding our sales and marketing efforts;
• changes in the way we organize and compensate our sales teams;
• the timing of expenses and recognition of revenue;
• our ability to increase sales to large organizations;
• the length of our sales cycles and linearity of our bookings, especially with respect to sales to large enterprises and highly regulated industries, including financial services and U.S. federal and state and foreign governmental agencies;

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• the amount and timing of operating expenses related to the maintenance and expansion of our business, operations, and infrastructure, as well as international expansion and entry into operating leases, and the hiring and retention of personnel who can build, manage, and maintain our expanded business operations and infrastructure;
• timing and effectiveness of new sales and marketing initiatives;
• changes in our pricing policies or those of our competitors;
• our ability to hire and retain experienced research and development personnel to design new products, features, and functionality that meet our privacy and security standards;
• the timing and success of new products, features, and functionality by us or our competitors;
• interruptions or delays in our service, network outages, or actual, alleged, or perceived privacy violations or issues or security vulnerabilities, incidents, or breaches;
• lawsuits, regulatory actions or investigations, legislator scrutiny, or negative publicity arising from actual, alleged, or perceived privacy violations or issues or security vulnerabilities, incidents, or breaches;
• changes in the competitive dynamics of our industry, including consolidation among competitors;
• changes in laws and regulations that impact our business;
• any large indemnification payments to our users or other third parties;
• the timing of expenses related to any future acquisitions; and
• general economic and market conditions.
Our business may be significantly affected by changes in the economy, including any resulting effect on consumer or business spending.
Our business may be significantly affected by changes in the economy, such as high inflation and the responses by central banking authorities to control such inflation, recessionary or uncertain environments, fluctuations in the foreign currency exchange rates and geopolitical tensions and military conflicts, including the ongoing conflicts between Russia and Ukraine and in the Middle East, and tariffs, the threat of new or increased tariffs and trade tensions, including the United States' ongoing trade disputes with China and other countries. While some customers may view a subscription to our platform as a cost-saving purchase, decreasing the need for business travel, others may view a subscription to our platform as a discretionary purchase, and our customers may reduce their information technology spending on our platform during an economic downturn or during times of economic uncertainty. Given current economic conditions, including inflation, we have experienced and may continue to experience a loss of users and customers, as well as a reduction in demand for our platform, especially if the effects of the current economic environment have a prolonged impact on various industries that our unified communications and collaboration platform addresses. In addition to the foregoing, adverse developments that affect financial institutions, transactional counterparties or other third parties, such as bank failures, or concerns or speculation about any similar events or risks, could lead to market-wide liquidity problems, which in turn may cause third parties, including customers, to become unable to meet their obligations under various types of financial arrangements as well as general disruptions or instability in the financial markets. Moreover, we have lost and may continue to lose customers as a result of such customers ceasing to do business, and we have experienced and may continue to experience a material increase in longer payment cycles and greater difficulty in collecting accounts receivable from certain customers. These issues may continue in the future if current economic conditions continue or worsen.
As we increase sales to large organizations, our sales cycles have and could continue to lengthen, and we could experience greater deployment challenges.
We invest significant resources into sales to large organizations. Large organizations typically undertake a significant evaluation and negotiation process due to their leverage, size, organizational structure, and approval requirements, all of which have and may continue to lengthen our sales cycle. We have also faced and may in the future face unexpected deployment challenges with large organizations or more complicated deployment of some or all aspects of our platform. Large organizations may demand additional features, support services and pricing concessions, or require additional security management or control features. We may spend substantial time, effort, and money on sales efforts to large organizations without any assurance that our efforts will produce any sales or that these customers will deploy our platform widely enough across their organization to justify our substantial up-front investment. As a result, we anticipate increased sales to large organizations will lead to higher up-front sales costs and greater unpredictability in our business, results of operations, and financial condition.

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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 generate, and expect to continue to generate, revenue from the sale of subscriptions to our platform. As a result, widespread acceptance and use of communications and collaboration technologies in general, and our platform in particular, is critical to our future growth and success. If the communications and collaboration technologies market fails to grow, or grows more slowly than we currently anticipate, demand for our platform could be negatively affected.
Changes in user preferences for communications and collaboration technologies may have a disproportionately greater impact on us than if we offered multiple platforms or disparate products. Demand for communications and collaboration technologies in general, and our platform in particular, is affected by a number of factors, many of which are beyond our control. Some of these potential factors include:
• general awareness of the communications and collaboration technologies category;
• availability of products and services that compete with ours;
• new modes of communications and collaboration that may be developed in the future;
• a reduction in customer information technology spending budgets, or a consolidation of spending budgets on our competitors' platforms, especially during periods of inflation or recessionary or uncertain economic environments;
• ease of adoption and use;
• features and platform experience;
• reliability of our platform, including frequency of outages;
• performance;
• brand;
• user support; and
• pricing.
The communications and collaboration technologies market is subject to rapidly changing user demand and trends in preferences. If we fail to successfully predict and address these changes and trends, meet user demands, or achieve more widespread market acceptance of our platform, our business would be harmed.
We have incurred net losses in the past, and there are no assurances we will be able to maintain or increase profitability in the future.
We have incurred net losses in the past and could incur net losses in the future. We intend to continue to expend significant funds on our sales and marketing efforts to attract new customers, expand the number of licenses and services used by our customers and develop and enhance our products. We also intend to continue investing in general corporate purposes, including operations, hiring additional personnel, including through acquisitions of other businesses, upgrading our infrastructure, addressing security and privacy issues, and expanding into new geographies and markets. To the extent we are successful in increasing our customer base, we may also incur increased losses because, other than sales commissions, the costs associated with acquiring customers are generally incurred up front, while the subscription revenue is generally recognized ratably over the subscription term, which can be monthly, annual, or on a multiyear basis. Our efforts to grow our business may be costlier than we expect, and we may not be able to increase our revenue enough to offset our higher operating expenses, which may result in decreased profitability. We may incur significant losses in the future for a number of reasons, including as a result of the other risks described herein, and unforeseen expenses, difficulties, complications, delays, and other unknown events. While free users continue to be a meaningful portion of the user base, we have directed marketing programs focused on converting free users to paid subscriptions. Some of these users have upgraded to a paid plan but the remainder have not and may never do so. If we are unable to increase or sustain our profitability, the value of our business and Class A common stock may significantly decrease. Furthermore, it is difficult to predict the size and growth rate of our market, customer demand for our platform, customer adoption and renewal of our platform, the entry of competitive products and services, or the success of existing competitive products and services. As a result, we may not be able to increase or maintain profitability in future periods. If we fail to grow our revenue sufficiently to keep pace with our investments and other expenses, our business would be harmed.
The experience of our users depends upon the interoperability of our platform across devices, operating systems, and third-party applications that we do not control, and if we are not able to maintain and expand our relationships with third parties to integrate our platform with their solutions, our business may be harmed.

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One of the most important features of our platform is its broad interoperability with a range of diverse devices, operating systems, and third-party applications. Our platform is accessible from the web and from devices running Windows, Mac OS, iOS, Android, and Linux. We also have integrations with Atlassian, Dropbox, Google, Microsoft, Salesforce, Slack, and a variety of other productivity, collaboration, data management, and security vendors. We are dependent on the accessibility of our platform across these and other third-party operating systems and applications that we do not control, and some of these third parties can make it more difficult for our platform to interoperate with their systems in favor of competitive platforms. For example, given the broad adoption of Microsoft Office and other productivity software, it is important that we are able to integrate with this software. Several of our competitors own, develop, operate, or distribute operating systems, app stores, co-located data center services, and other software, and also have material business relationships with companies that own, develop, operate, or distribute operating systems, applications markets, co-located data center services, and other software that our platform requires in order to operate. Moreover, some of these competitors have inherent advantages developing products and services that more tightly integrate with their software and hardware platforms or those of their business partners.
Third-party services and products are constantly evolving, and we may not be able to modify our platform to assure its compatibility with that of other third parties following development changes. In addition, some of our competitors may be able to disrupt the operations or compatibility of our platform with their products or services, or exert strong business influence on our ability to, and terms on which we, operate and distribute our platform. For example, we currently offer products that directly compete with several large technology companies that we rely on to ensure the interoperability of our platform with their products or services. As our respective products evolve, we expect this level of competition to increase. Should any of our competitors modify their products or standards in a manner that degrades the functionality of our platform or gives preferential treatment to competitive products or services, whether to enhance their competitive position or for any other reason, the interoperability of our platform with these products could decrease and our business could be harmed.
In addition, we provide, develop, and create applications for our platform partners that integrate our platform with our partners’ various offerings. For example, our Zoom Workplace product integrates with tools offered by companies, such as Atlassian and Dropbox, to help teams get more done together. If we are not able to continue and expand on existing and new relationships to integrate our platform with our partners’ solutions, or there are quality issues with our products or service interruptions of our products that integrate with our partners’ solutions, our business will be harmed.
We are subject to requirements imposed by app stores such as those operated by Apple and Google, who may change their technical requirements or policies in a manner that adversely impacts the way in which we or our partners collect, use and share data from users. For example, Apple recently began requiring mobile applications using its iOS mobile operating system to obtain a user’s permission to track them or access their device’s advertising identifier for certain purposes. The long-term impact of these and any other privacy and regulatory changes remains uncertain. If we do not comply with applicable requirements imposed by app stores, we could lose access to the app store and users, and our business would be harmed.
We may not be able to respond to rapid technological changes, extend our platform, or develop new features.
The communications and collaboration technologies market is characterized by rapid technological change and frequent new product and service introductions. Our ability to grow our customer base and increase our revenue will depend heavily on our ability to enhance and improve our platform; introduce new features and products; and interoperate across an increasing range of devices, operating systems, and third-party applications. Our customers may require features and capabilities that our current platform does not have. In particular, advancements in technology such as AI and machine learning are changing the way people work, and businesses that are slow to adopt these new technologies may face a competitive disadvantage. We invest significantly in research and development, and our goal is to focus our spending on measures that improve quality and ease of adoption, enhance privacy and security, and create organic demand for our platform. There is no assurance that new additions or other future enhancements to our platform or new product experiences, features, or capabilities will be compelling to our customers or gain market acceptance, or that they will perform as expected. If our research and development investments do not accurately anticipate demand or if we fail to develop our platform in a manner that satisfies customer preferences and requirements in a timely and cost-effective manner, we may fail to retain our existing customers or increase demand for our platform.
The introduction of new products and services by competitors or the development of entirely new technologies to replace existing offerings, such as AI-powered communication and collaboration tools, could make our platform obsolete or adversely affect our business, results of operations, and financial condition. We may experience difficulties with software development, design, or marketing that could delay or prevent our development, introduction, or implementation of new product experiences, features, or capabilities. We have in the past experienced delays in our internally planned release dates of new features and capabilities and there can be no assurance that new product experiences, features, or capabilities will be released according to schedule. Any delays could result in adverse publicity, loss of revenue or market acceptance, or claims by users brought against us, all of which could harm our business. Moreover, new productivity features to our platform may require substantial investment, and we have no assurance that such investments will be successful. If customers and users do not widely adopt our

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new product experiences, features, and capabilities, or they do not perform as expected, we may not be able to realize a return on our investment. If we are unable to develop, license, or acquire new features and capabilities to our platform on a timely and cost-effective basis, or if such enhancements do not achieve market acceptance, our business would be harmed.
We use generative AI including in our products and services, which may result in operational challenges, legal liability, reputational concerns, competitive risks and regulatory concerns that could adversely affect our business and results of operations.
We use generative AI processes and algorithms, including by deploying generative AI features in our products and services, which may result in adverse effects to our operations, legal liability, reputation and competitive risks. The use of generative and agentic AI at scale is relatively new, and may lead to challenges, concerns and risks that are significant or that we may not be able to predict. For example, AI algorithms use machine learning (“ML”) and predictive analytics which may be insufficient, biased, inaccurate or of poor quality, which could result in customer rejection or skepticism of our products, adversely impact the rights of individuals, affect our reputation or brand, and negatively affect our financial results. Additionally, we rely on third parties for certain AI features of our products and if such third parties do not provide us those features (or do not do so on acceptable terms), experience interruptions, or cease operating, we may need to work with another provider, which may take time or may not be possible, and could result in the disruption of certain of our products or services, affect our reputation or brand, and negatively affect our financial results. We could also face claims from third parties claiming infringement of their intellectual property or other proprietary rights with respect to materials used or created by generative or agentic AI tools or features that we believed to be available for use and not subject to such rights. The investment required to bring AI features to market and the costs associated with providing these features to our customers may be significant, and we may be unable to recover these costs if customers and users do not widely adopt these features. We currently offer our AI features at no additional cost, as we believe they will ultimately enhance user satisfaction, improve customer retention, and drive revenue. If such benefits are not realized, the associated investment costs could further negatively impact our margins. Further, use of generative AI tools by our employees or others could result in disclosure of confidential or sensitive company and customer data, reputational harm, and legal liability.
The failure to effectively develop and expand our marketing and sales capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our platform.
Our ability to increase our customer base and achieve broader market acceptance of our products and services will depend to a significant extent on our ability to expand our marketing and sales operations. We plan to continue expanding our sales and marketing capabilities, including through strategic partners, both domestically and internationally. If we are unable to expand our sales and marketing operations, our future revenue growth and business could be adversely impacted.
Identifying and recruiting qualified sales representatives and training them is time consuming and resource intensive, and they may not be fully trained and productive for a significant amount of time. We also plan to dedicate significant resources to sales and marketing programs, including internet and other online advertising. All of these efforts will require us to invest significant financial and other resources, as the cost to acquire customers through these efforts is high. Our business will be harmed if our efforts do not generate a correspondingly significant increase in revenue.
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 to switch to our competitors, or to cancel their subscriptions to our platform.
Unlike traditional communications and collaboration technologies, our services depend on our users’ high-speed broadband access to the internet, usually provided through a cable or digital subscriber line connection. Increasing numbers of users and increasing bandwidth requirements may degrade the performance of our platform due to capacity constraints and other internet infrastructure limitations. As our number of users has grown and their usage of communications capacity has increased, we have been required to make additional investments in network capacity to maintain adequate data transmission speeds, the availability of which may be limited, or the cost of which may be on terms unacceptable to us. If adequate capacity does not continue to be available to us to support our user base in the future, our network may be unable to achieve or maintain sufficiently high data transmission capacity, reliability, or performance. In addition, if internet service providers and other third parties providing internet services have outages or deteriorations in their quality of service, our users will not have access to our platform or may experience a decrease in the quality of our platform. Furthermore, as the rate of adoption of new technologies increases, the networks our platform relies on may not be able to sufficiently adapt to the increased demand for these services, including ours. Frequent or persistent interruptions could cause current or potential users to believe that our systems or platform are unreliable, leading them to switch to our competitors or to avoid our platform, which could permanently harm our business.
In addition, users who access our platform through mobile devices, such as smartphones and tablets, must have a high-speed connection, such as 3G, 4G, 5G, LTE, satellite, or Wi-Fi, to use our services and applications. Currently, this access is provided by companies that have significant and increasing market power in the broadband and internet access marketplace,

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