01—Abstract
Summary
Summary of the 10-K filed March 20, 2020. Cited figures are marked; the original filing is the authoritative source.
Zoom Video Communications, Inc. reported revenue of $622.7 milliona for the fiscal year ended January 31, 2020, up from $330.5 million the prior year, an increase of 88% as stated in the filing.
Net income was $25.3 millionb, compared with $7.6 million in fiscal 2019, and the company generated net cash from operating activities of $151.9 million and free cash flow (non-GAAP) of $113.8 million. Income from operations was $12.7 million, and gross margin was 81%. The company's trailing 12-month net dollar expansion rate for customers with more than 10 employees was greater than 130% as of January 31, 2020 and 2019.
Customers with more than 10 employees rose to approximately 81,900 from 50,800 a year earlier, and customers contributing more than $100,000c of trailing 12-month revenue increased to 641 from 344. Remaining performance obligations totaled $604.1 million, with 62% expected to be recognized over the next 12 months. Investors should note the dual-class structure: Class B shares carry 10 votes per share and held 92.6% of voting power as of January 31, 2020, with Eric S.
Yuan and affiliates controlling approximately 27.5% of voting power. The company completed its IPO in April 2019 at $36.00d per share, with aggregate net proceeds of $447.9 million. The filing also discloses COVID-19 as a risk to data center capacity and demand, and records sales and other tax liabilities of $37.7 million.
02—Key points
Key Highlights
- Revenue of $622.7 million for fiscal 2020, up 88% from $330.5 million in fiscal 2019.
- Net income of $25.3 million in fiscal 2020, compared with $7.6 million in fiscal 2019; income from operations was $12.7 million.
- Net cash provided by operating activities of $151.9 million and free cash flow of $113.8 million for fiscal 2020.
- Customers with more than 10 employees grew to approximately 81,900 from 50,800; customers contributing over $100,000 of trailing 12-month revenue rose to 641 from 344.
- Trailing 12-month net dollar expansion rate for customers with more than 10 employees was greater than 130% as of January 31, 2020 and 2019.
- Cash, cash equivalents, and marketable securities totaled $855.2 million as of January 31, 2020, following the April 2019 IPO with aggregate net proceeds of $447.9 million.
- Class B common stock holders held 92.6% of voting power, giving the founder and CEO significant control; the company is not eligible for certain major indices due to its dual-class structure.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, Zoom Communications kept $0.04.
- Revenue$622.7M100.0%
- Cost of revenue−$115.4M18.5%
- Gross profit$507.3M81.5%
- Operating costs−$494.6M79.4%
- Operating income$12.7M2.0%
- Interest, other & tax$12.6M2.0%
- Net income$25.3M4.1%
Where FY2020 revenue went
$622.7M- Other operating costs: $427.5M, 69% of revenue
- Cost of revenue: $115.4M, 19% of revenue
- Operating income: $12.7M, 2.0% of revenue
- R&D: $67.1M, 11% of revenue
Kept 2.0% as operating incomeOperating income $12.7M · 2.0%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2020filed March 20, 2020Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $622.66M$330.52M | +88.4% |
| Cost of Revenue | $115.40M$61.00M | +89.2% |
| Gross Profit | $507.26M$269.52M | +88.2% |
| R&D Expenses | $67.08M$33.01M | +103.2% |
| Operating Expenses | $494.57M$263.35M | +87.8% |
| Operating Income | $12.70M$6.17M | +105.9% |
| Net Income | $25.30M$7.58M | +233.7% |
| EPS (Basic) | $0.09— | — |
| EPS (Diluted) | $0.09— | — |
| Shares Outstanding (Basic) | 233.64M84.48M | +176.6% |
| Shares Outstanding (Diluted) | 254.30M116.01M | +119.2% |
05—Questions
Frequently Asked Questions
How fast did Zoom's revenue grow in fiscal 2020?
Revenue was $622.7 million for the fiscal year ended January 31, 2020, compared with $330.5 million in fiscal 2019, an increase of $292.1 million, or 88%. The filing attributes about 63% of the increase to existing customers and about 37% to new customers.
Is Zoom profitable?
Yes. The company reported net income of $25.3 million for fiscal 2020 and $7.6 million for fiscal 2019. Income from operations was $12.7 million in fiscal 2020, compared with $6.2 million in fiscal 2019. The filing notes that the company has incurred net losses in the past and may do so again.
What does the dual-class share structure mean for investors?
Class B common stock carries 10 votes per share versus one vote for Class A. As of January 31, 2020, Class B holders held 92.6% of voting power, and the founder, President and CEO Eric S. Yuan with affiliates held about 27.5% of voting power while owning about 16.5% of capital stock. This limits the influence of Class A holders over corporate matters.
What were the main uses of the IPO proceeds and how liquid is the company?
The company completed its IPO in April 2019, with aggregate net proceeds of $447.9 million after underwriting discounts and commissions, plus $100.0 million from a concurrent private placement to Salesforce Ventures LLC. The filing states there was no material change in the planned use of proceeds. As of January 31, 2020, cash, cash equivalents, and marketable securities totaled $855.2 million, which the company believes is sufficient for at least the next 12 months.
What risks does the filing highlight regarding COVID-19 and tax liabilities?
The filing says COVID-19 increased usage and could strain data center capacity, possibly causing service delays, and that its effects on business are uncertain. Separately, the company recorded sales and other tax liabilities of $37.7 million as of January 31, 2020, and notes that it may face claims in jurisdictions where it has not historically collected tax.
06—Continue