01—Abstract
Summary
Summary of the 10-K filed February 28, 2025. Cited figures are marked; the original filing is the authoritative source.
Zoom Communications, Inc. (Nasdaq: ZM) reported revenue of $4,665.4 milliona for the fiscal year ended January 31, 2025, up from $4,527.2 million in fiscal 2024 and $4,393.0 million in fiscal 2023, representing year-over-year growth of 3.1%.
Net income rose to $1,010.2 millionb from $637.5 million, and income from operations increased to $813.3 million from $525.3 million. Gross margin declined slightly to 75.8% from 76.2%, mainly due to costs associated with AI functionality and investments to upgrade the data center backbone. Operating cash flow was $1,945.3 million and free cash flow (non-GAAP) was $1,808.7 million.
The company positions itself as an AI-first work platform, with Zoom AI Companion and a federated approach that draws on multiple large language models. Revenue from Enterprise customers represented 59.0%c of total revenue, while the trailing 12-month net dollar expansion rate for Enterprise customers fell to 98% from 101% a year earlier. Online monthly churn improved to 2.9% from 3.1%.
Enterprise customer count was approximately 192,600 after about 26,800 lower-MRR customers were moved to the Online category, and the company will stop reporting that metric beginning in fiscal 2026. As of January 31, 2025, cash, cash equivalents and marketable securities totaled $7.8 billiond.
The company repurchased 15,888,316 Class A shares for about $1.1 billion during the year, with $1.6 billion of authorization remaining. Class B shares held 61.8% of voting power, and the filing discloses ongoing U.S. government investigations related to privacy and security matters, with an $18.0 million tentative SEC settlement accrued.
02—Key points
Key Highlights
- Revenue of $4,665.4 million, up 3.1% from $4,527.2 million in fiscal 2024.
- Net income of $1,010.2 million, compared with $637.5 million in fiscal 2024; diluted EPS of $3.21 versus $2.07.
- Income from operations of $813.3 million, up from $525.3 million; operating margin of 17.4% versus 11.6%.
- Gross margin of 75.8%, down from 76.2%, mainly from AI functionality costs and data center backbone upgrades.
- Free cash flow (non-GAAP) of $1,808.7 million, compared with $1,471.9 million in fiscal 2024.
- Trailing 12-month net dollar expansion rate for Enterprise customers was 98%, down from 101%.
- Class B shares held 61.8% of voting power as of January 31, 2025, with Eric S. Yuan and affiliates controlling 31.8% of voting power.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2025, Zoom Communications kept $0.22.
- Revenue$4.67B100.0%
- Cost of revenue−$1.13B24.2%
- Gross profit$3.54B75.8%
- Operating costs−$2.72B58.4%
- Operating income$813.3M17.4%
- Interest, other & tax$196.9M4.2%
- Net income$1.01B21.7%
Where FY2025 revenue went
$4.67B- Other operating costs: $1.87B, 40% of revenue
- Cost of revenue: $1.13B, 24% of revenue
- R&D: $852.4M, 18% of revenue
- Operating income: $813.3M, 17% of revenue
Kept 17% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2025filed February 28, 2025Financial Statements
FY2025 against FY2024
| Line item | FY2025FY2024 | Change |
|---|---|---|
| Revenue | $4.67B$4.53B | +3.1% |
| Cost of Revenue | $1.13B$1.08B | +4.8% |
| Gross Profit | $3.54B$3.45B | +2.5% |
| R&D Expenses | $852.41M$803.19M | +6.1% |
| Operating Expenses | $2.72B$2.92B | −6.9% |
| Operating Income | $813.29M$525.28M | +54.8% |
| Net Income | $1.01B$637.46M | +58.5% |
| EPS (Basic) | $3.28$2.12 | +54.7% |
| EPS (Diluted) | $3.21$2.07 | +55.1% |
| Shares Outstanding (Basic) | 307.98M300.75M | +2.4% |
| Shares Outstanding (Diluted) | 315.07M308.52M | +2.1% |
05—Questions
Frequently Asked Questions
How did Zoom's profitability change in fiscal 2025?
Net income rose to $1,010.2 million from $637.5 million, driven by higher income from operations of $813.3 million versus $525.3 million. Operating expenses fell to $2,722.5 million from $2,924.1 million, with decreases in sales and marketing and general and administrative expenses, partly offset by higher research and development costs. Other income, net increased to $325.1 million from $197.3 million.
What drove the slight decline in gross margin?
Gross margin decreased to 75.8% from 76.2%. The filing attributes this mainly to increased costs associated with the use of AI functionality and investments to upgrade the data center backbone, which included a $67.5 million increase in hosting and infrastructure costs.
Is Zoom's customer base growing and retaining well?
Total revenue grew 3.1%, with Enterprise subscription revenue up 5.2%. Enterprise net dollar expansion fell to 98% from 101%, reflecting slower hiring and seat downsells. Online average monthly churn improved to 2.9% from 3.1%. Customers contributing more than $100,000 in trailing 12-month revenue rose to 4,088 from 3,810.
How much capital did Zoom return to shareholders and what remains?
Zoom repurchased and retired 15,888,316 Class A shares for about $1.1 billion during fiscal 2025. As of January 31, 2025, $1.6 billion of the repurchase authorization remained available. The company has never paid cash dividends and does not expect to do so in the foreseeable future.
What legal and regulatory matters should investors note?
Zoom is cooperating with ongoing investigations by the U.S. Attorney's Offices for the Eastern District of New York and the Northern District of California and the SEC related to privacy, security, and government interactions. The company accrued $18.0 million for a tentative SEC settlement that remains subject to SEC approval. A securities class action related to data privacy and security measures was settled for $150.0 million, paid in fiscal 2024.
06—Continue