01—Abstract
Summary
Summary of the 10-K filed March 4, 2024. Cited figures are marked; the original filing is the authoritative source.
Zoom Video Communications, Inc. reported revenue of $4,527.2 milliona for the fiscal year ended January 31, 2024, up from $4,393.0 million in fiscal 2023 and $4,099.9 million in fiscal 2022, with revenue growth of 3.1% year over year.
Income from operations was $525.3 millionb, compared with $245.4 million in fiscal 2023, and net income was $637.5 million, compared with $103.7 million the prior year. Net cash provided by operating activities was $1,598.8 million, and free cash flow (a non-GAAP measure) was $1,471.9 million. Gross margin rose to 76.2% from 74.9%, while sales and marketing expense fell 9.2% to $1,541.3 million, partly reflecting lower stock-based compensation.
Management cites macroeconomic headwinds, including high inflation, elevated interest rates, and uncertain corporate spending, which have lengthened enterprise sales cycles and reduced revenue growth and the trailing 12-month net dollar expansion rate for Enterprise customers, which fell to 101%c from 115%. Online average monthly churn improved to 3.1% from 3.4%. Enterprise customers rose to approximately 220,400 and now account for 57.9% of revenue.
A strengthening U.S. dollar reduced revenue by $34.1 milliond. The company completed a restructuring plan that reduced its workforce by approximately 15%, with $73.0 million in net restructuring costs recorded in fiscal 2024.
At year end, the company held cash, cash equivalents, and marketable securities totaling $7.0 billion, and it authorized a new $1.5 billion Class A stock repurchase program in February 2024. The filing also discloses ongoing DOJ and SEC investigations related to privacy and security matters, securities and derivative litigation, and a dual-class structure in which Class B shares held by insiders carry 64.1% of the voting power.
02—Key points
Key Highlights
- Revenue of $4,527.2 million for fiscal 2024, up 3.1% from $4,393.0 million in fiscal 2023.
- Net income of $637.5 million, compared with $103.7 million in fiscal 2023; income from operations rose to $525.3 million from $245.4 million.
- Gross margin improved to 76.2% from 74.9%, and sales and marketing expense declined 9.2% to $1,541.3 million.
- Trailing 12-month net dollar expansion rate for Enterprise customers fell to 101%, from 115% a year earlier, while Enterprise customers grew to approximately 220,400.
- Net cash provided by operating activities was $1,598.8 million; free cash flow was $1,471.9 million (non-GAAP).
- Cash, cash equivalents, and marketable securities totaled $7.0 billion at January 31, 2024; a new $1.5 billion share repurchase program was authorized in February 2024, with no repurchases made as of March 1, 2024.
- Class B shares held by insiders carried 64.1% of the voting power, and ongoing DOJ and SEC investigations concern privacy and security matters.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2024, Zoom Communications kept $0.14.
- Revenue$4.53B100.0%
- Cost of revenue−$1.08B23.8%
- Gross profit$3.45B76.2%
- Operating costs−$2.92B64.6%
- Operating income$525.3M11.6%
- Interest, other & tax$112.2M2.5%
- Net income$637.5M14.1%
Where FY2024 revenue went
$4.53B- Other operating costs: $2.12B, 47% of revenue
- Cost of revenue: $1.08B, 24% of revenue
- R&D: $803.2M, 18% of revenue
- Operating income: $525.3M, 12% of revenue
Kept 12% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2024filed March 4, 2024Financial Statements
FY2024 against FY2023
| Line item | FY2024FY2023 | Change |
|---|---|---|
| Revenue | $4.53B$4.39B | +3.1% |
| Cost of Revenue | $1.08B$1.10B | −2.1% |
| Gross Profit | $3.45B$3.29B | +4.8% |
| R&D Expenses | $803.19M$774.06M | +3.8% |
| Operating Expenses | $2.92B$3.05B | −4.0% |
| Operating Income | $525.28M$245.43M | +114.0% |
| Net Income | $637.46M$103.71M | +514.7% |
| EPS (Basic) | $2.12$0.35 | +505.7% |
| EPS (Diluted) | $2.07$0.34 | +508.8% |
| Shares Outstanding (Basic) | 300.75M296.56M | +1.4% |
| Shares Outstanding (Diluted) | 308.52M304.23M | +1.4% |
05—Questions
Frequently Asked Questions
How did Zoom's revenue and profitability change in fiscal 2024?
Revenue rose 3.1% to $4,527.2 million. Net income increased to $637.5 million from $103.7 million, and income from operations increased to $525.3 million from $245.4 million, helped by a higher gross margin and lower sales and marketing expense.
What pressures on growth does management identify?
Management cites high inflation, elevated interest rates, recessionary uncertainty, and a stronger U.S. dollar, which reduced revenue by $34.1 million. These factors lengthened enterprise sales cycles and reduced corporate spending, and the Enterprise net dollar expansion rate declined to 101% from 115%.
How strong is Zoom's balance sheet and cash position?
At January 31, 2024, cash, cash equivalents, and marketable securities totaled $7.0 billion, and management believes these resources along with operating cash flow will meet needs for at least the next 12 months. The company reported no debt-related obligations beyond operating leases and purchase commitments.
Who controls voting power at Zoom?
Class B common stock carries 10 votes per share. As of January 31, 2024, Class B holders held 64.1% of voting power, and founder and CEO Eric S. Yuan, with affiliates, controlled approximately 31.0% of voting power while holding about 7.4% of outstanding capital stock.
What legal and regulatory matters could affect investors?
The company is cooperating with DOJ and SEC investigations concerning privacy, security, and interactions with foreign governments. It also has securities class action litigation, for which it agreed to pay $150.0 million, and derivative lawsuits that remain pending, and it cannot estimate the possible loss from these actions.
06—Continue