Summary
Zoom closed fiscal 2021 with a fourth quarter that still showed pandemic-driven scale. Revenue for the quarter ended January 31, 2021 was $882.5 million, up 369% from the prior-year quarter. Full fiscal year revenue reached $2.651 billion, up 326%. GAAP income from operations was $256.1 million in the quarter, up 2327%, and $659.8 million for the fiscal year, up 5097%. GAAP net income was $260.6 million in the quarter, up 1599%, and $672.3 million for the fiscal year, up 2556.9%. Diluted EPS was $0.87 in the quarter, up $0.82, and $2.25 for the fiscal year, up $2.16.
Margins tell a split story. Gross margin fell to 69.7% in the quarter from 82.7% a year earlier, a decline of 13.0 percentage points. For the fiscal year, gross margin was 69.0%, down 12.5 percentage points. The drop reflects higher costs from third-party cloud hosting, co-located data centers, and PSTN services, plus a heavier mix of free users. Operating margin moved the other way, rising to 29.0% in the quarter from 5.6%, up 23.4 percentage points. Full-year operating margin was 24.9%, up 22.8 percentage points. Sales and marketing, research and development, and general and administrative expenses all increased in the fiscal year.
Cash generation was strong. Operating cash flow was $399.4 million in the quarter, up 992.6%, and $1.471 billion for the fiscal year, up 868.6%. Capital expenditures were $21.46 million in the quarter, up 115.6%, and $79.97 million for the fiscal year, up 110.0%. Free cash flow, which subtracts purchases of property and equipment from operating cash flow, was $377.9 million in the quarter and $1.391 billion for the fiscal year. Deferred revenue, current portion, was $858.28 million at January 31, 2021, up 309.6%. Remaining performance obligations were $1.75 billion, up 189.8%.
Customer metrics show how far the platform spread during the pandemic. At the end of the fourth quarter of fiscal year 2021, Zoom had approximately 467,100 customers with more than 10 employees, up approximately 470% from the same quarter last fiscal year. It had 1,644 customers contributing more than $100,000 in trailing 12 months revenue, up approximately 156%. The trailing 12-month net dollar expansion rate for customers with more than 10 employees was above 130% for the 11th consecutive quarter.
Guidance points to slower growth in the next fiscal year. For the first quarter of fiscal year 2022, total revenue is expected to be between $900.0 million and $905.0 million, and non-GAAP income from operations is expected to be between $295.0 million and $300.0 million. Non-GAAP diluted EPS is expected to be between $0.95 and $0.97 with approximately 307 million non-GAAP weighted average shares outstanding. For the full fiscal year 2022, total revenue is expected to be between $3.760 billion and $3.780 billion, and non-GAAP income from operations is expected to be between $1.125 billion and $1.145 billion. Full fiscal year non-GAAP diluted EPS is expected to be between $3.59 and $3.65 with approximately 311 million non-GAAP weighted average shares outstanding. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort because of uncertainty of future expenses.
Risks remain tied to the pandemic and to capacity costs. COVID-19 drove a significant increase in paid hosts and revenue, but it also forced higher spending on network, data storage, and processing capacity. A large portion of that usage came from free Basic accounts and from more than 125,000 K-12 domains where the 40-minute time limit was removed, which does not generate revenue and has hurt gross margin. The company warns that tapering of the pandemic, particularly as vaccinations become widely available, may reduce paid hosts and users. Other named risks include competition from other providers of communications platforms, delays or outages in services from co-located data centers, failures in internet infrastructure, and challenges of international expansion. The MD&A also says cost of revenue and operating expenses are expected to increase in absolute dollars during the upcoming fiscal year, with research and development and sales and marketing expected to rise as a percentage of total revenue.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2021 | Q3 FY2021 | QoQ | Q4 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $882.5M | $777.2M | +13.5% | $188.3M | +368.8% |
| Gross profit | $615.2M | $518.5M | +18.7% | $155.7M | +295.1% |
| Gross margin | 69.7% | 66.7% | +3.0 pp | 82.7% | -13.0 pp |
| Research & development | $52.4M | $42.6M | +23.0% | $20.7M | +153.4% |
| Sales & marketing | $214.0M | $190.2M | +12.5% | $100.9M | +112.1% |
| General & administrative | $92.7M | $93.5M | -0.9% | $23.6M | +293.1% |
| Total operating expenses | $359.1M | $326.2M | +10.1% | $145.2M | +147.4% |
| Operating income (loss) | $256.1M | $192.2M | +33.2% | $10.6M | +2327.0% |
| Operating margin | 29.0% | 24.7% | +4.3 pp | 5.6% | +23.4 pp |
| Net income (loss) | $260.6M | $198.6M | +31.2% | $15.3M | +1599.0% |
| Net margin | 29.5% | 25.6% | +4.0 pp | 8.2% | +21.4 pp |
| Diluted EPS | $0.87 | $0.66 | +$0.21 | $0.06 | +$0.81 |
Risks
Risk factors state that user growth and revenue may decline once the COVID-19 pandemic tapers, particularly as a vaccine becomes widely available and users return to work or school, and MD&A notes there is no assurance paid hosts or users continue at current levels after the pandemic. A significant portion of increased usage is from free Basic accounts and removed K-12 time limits, which generate no revenue but require added capacity.
MD&A reports gross margin decreased to 69% for FY2021 from 81% for FY2020 due to higher incremental cost from third-party cloud hosting and a higher percentage of usage from free users. Cost of revenue rose 612% for FY2021, and risk factors say reliance on public cloud providers may increase variable costs.
Risk factors name Microsoft Teams, Google G Suite and Meet, Cisco Webex, LogMeIn GoToMeeting, Avaya, RingCentral, 8x8, and consumer platforms such as Amazon, Apple, and Facebook as competitors. Pricing is sensitive, competitors may offer lower-priced or free products or bundle broader suites, and the launch of Zoom Phone increases competition against PBX and UCaaS providers.
Risk factors state security measures were compromised in the past and may be again, citing a July 2019 researcher blog, a March 2020 macOS vulnerability, and negative publicity during the COVID-19 pandemic related to meeting disruptions and encryption. April and June 2020 putative class actions and derivative lawsuits allege false and misleading statements about data privacy and security measures.
MD&A says APAC and EMEA collectively represented 31% of total revenue for FY2021 compared with 19% for FY2020. Risk factors state China operations have caused regulatory scrutiny in both China and the United States, including the Chinese government turning off service in September 2019 without warning and June and July 2020 DOJ subpoenas.
Risk factors state Zoom expects its revenue growth rate to generally decline in future periods due to higher market penetration, increased competition, slowing demand especially once the COVID-19 pandemic tapers as a vaccine becomes widely available, and maturation of the business. Prior period growth should not be relied on as an indication of future performance.
Risk factors say increased usage from COVID-19 has strained data centers and may require greater reliance on public cloud providers such as Amazon Web Services and Oracle Cloud, raising variable costs. They also note potential delays in bringing new data centers online due to current shortages for certain parts, such as servers.
Risk factors state that as Zoom increases sales to large organizations, sales cycles could lengthen and deployment challenges may grow because large organizations demand additional features, support, pricing concessions, and security controls. This can lead to higher up-front sales costs and greater unpredictability in results.
Risk factors state headcount grew from 2,532 full-time employees as of January 31, 2020 to 4,422 as of January 31, 2021, straining management and internal controls. Competition for software developers and sales personnel is intense, many employees were hired recently and have never been to an office, and some management lacks public company experience.
Risk factors state an economic downturn could reduce discretionary spending on Zoom, lengthen payment cycles, and make collecting receivables more difficult. MD&A also reports that revenue from customers with 10 or fewer employees rose to 36% of total revenue for FY2021 from 18% for the prior fiscal year, a mix shift that could lead to higher non-renewal rates.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Free Cash Flow
Customers with More Than 10 Employees
Customers Contributing More Than $100,000 in TTM Revenue
Summary, forecast, risks and KPIs are extracted from Zoom Communications, Inc.'s SEC filings for Q4 FY2021 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.