Zoom Communications (ZM) risk factors, FY2025 10-K

Risks Related to Our Business and Our Industry

1. 01Our 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
2. 02Our 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
3. 03Our revenue growth rate has fluctuated in prior periods, and may continue to decline in future periods
4. 04Interruptions, delays, or outages in service from our co-located data centers or cloud hosting services and a variety of other factors, would impair the delivery of our services, require us to issue credits or pay penalties, and harm our business
5. 05We operate in competitive markets, and we must continue to compete effectively
6. 06Other 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
7. 07Our results have fluctuated and may in the future fluctuate significantly and may not fully reflect the underlying performance of our business
8. 08Our business may be significantly affected by changes in the economy, including any resulting effect on consumer or business spending
9. 09As we increase sales to large organizations, our sales cycles have and could continue to lengthen, and we could experience greater deployment challenges
10. 10We 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
11. 11critical 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
12. 12We have incurred net losses in the past and there are no assurances we will be able to maintain or increase profitability in the future
13. 13We may not be able to respond to rapid technological changes, extend our platform, or develop new features
14. 14We 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
15. 15The 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
16. 16Failures 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
17. 17services, including our platform, by restricting or prohibiting the use of their infrastructure to support or facilitate third-party services or by charging increased fees to third parties or the users of third-party services, any of which would make our platform less attractive to users and reduce our revenue
18. 18Our business depends on a strong brand, and if we are not able to maintain and enhance our brand, our ability to expand our base of users will be impaired and our business will be harmed
19. 19If we fail to manage our growth effectively, our business, financial condition and results of operations may be harmed
20. 20Our ability to sell subscriptions to our platform could be harmed by real or perceived material defects or errors in our platform
21. 21If 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
22. 22The failure to attract and retain additional qualified personnel or to maintain our happiness-centric company culture could harm our business and culture and prevent us from executing our business strategy
23. 23We 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
24. 24We are subject to various U.S. and international anti-corruption laws, and any failure to comply with such laws could harm our business, financial condition, and results of operations
25. 25Geopolitical tension between the United States and China, or between other economies, such as Taiwan, and China, may intensify and lead to increased scrutiny of our business operations in China
26. 26We recognize revenue from subscriptions to our platform over the terms of these subscriptions. Consequently, increases or decreases in new sales may not be immediately reflected in our results of operations and may be difficult to discern
27. 27Any failure to offer high-quality support for our customers and users may harm our relationships with our customers and users and, consequently, our business
28. 28We utilize our network of resellers to sell our products and services, and our failure to effectively develop, manage, and maintain our indirect sales channels would harm our business
29. 29Our results of operations, which are reported in U.S. dollars, could be adversely affected if currency exchange rates fluctuate substantially in the future
30. 30Our sales to government entities and other government contractors are subject to a number of additional challenges and risks
31. 31To the extent that we become more reliant on contracts with government entities and/or other government contractors in the future, our exposure to such risks and challenges could increase, which in turn could adversely impact our business
32. 32Our current platform, as well as products, features, and functionality that we may introduce in the future, may not be widely accepted by our customers and users or may receive negative attention or may require us to compensate or reimburse third parties, any of which may lower our margins and harm our business
33. 33If we experience excessive fraudulent activity or cannot meet evolving credit card association merchant standards, we could incur substantial costs and lose the right to accept credit cards for payment, which could cause our customer and paid user base to decline significantly
34. 34We may have exposure to greater than anticipated tax liabilities, which could harm our business
35. 35We have acquired and may continue to acquire other businesses or receive offers to be acquired, which could require significant management attention, disrupt our business, or dilute stockholder value
36. 36We 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
37. 37We rely on data from tools to calculate certain of our key business metrics. Real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business

Risks Related to Laws and Regulations

1. 38Laws in the United States
2. 39Laws Outside of the United States
3. 40Personal Information, Singapore’s Personal Data Protection Act, and India's new privacy legislation, the Digital Personal Data Protection Act
4. 41Consumer Preferences and Protection
5. 42Government Inquiries and Investigations
6. 43Failure to Comply with our Obligations
7. 44Changes in government trade policies, including the imposition of tariffs and export restrictions, could limit our ability to sell our products to certain customers, which may materially adversely affect our sales and results of operations
8. 45We may be subject to additional liabilities on past sales for taxes, surcharges, and fees
9. 46We are subject to governmental export and import controls that could impair our ability to compete in international markets due to licensing requirements and subject us to liability if we are not in compliance with applicable laws
10. 47Changes in law or policy could compel us or limit our ability to engage in content moderation, or otherwise limit the ability of users to engage in inappropriate or harmful behavior, and could expose us to liability
11. 48immunized the company under Section 230. We cannot predict whether any such state legislation will be adopted, enforced, modified, overturned, or vacated

Risks Related to Our Intellectual Property

1. 49We are currently, and may be in the future, party to intellectual property rights claims and other litigation matters, which, if resolved adversely, could harm our business
2. 50Our failure to protect our intellectual property rights and proprietary information could diminish our brand and other intangible assets
3. 51Our use of third-party open source software could negatively affect our ability to offer and sell subscriptions to our platform and subject us to possible litigation

Risks Related to Ownership of Our Class A Common Stock

1. 52The trading price of our Class A common stock may be volatile, and you could lose all or part of your investment
2. 53Future sales and issuances of our capital stock or rights to purchase capital stock could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to decline
3. 54Sales of a substantial number of shares of our Class A common stock and Class B common stock (after automatically converting to Class A common stock) in the public market, or the perception that these sales might occur, could depress the market price of our Class A common stock
4. 55There are provisions in our certificate of incorporation and bylaws that may make it difficult for a third party to acquire, or attempt to acquire, control of Zoom, even if a change in control was considered favorable by our stockholders
5. 56We do not intend to pay dividends for the foreseeable future
6. 57Estimates of our market opportunity and forecasts of market growth may prove to be inaccurate, and even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all
7. 58Our business could be disrupted by catastrophic events
8. 59We are subject to risks associated with our strategic investments, including partial or complete loss of invested capital. Significant changes in the fair value of our investment portfolio could negatively impact our financial results
9. 60Our reported results of operations may be adversely affected by changes in accounting principles generally accepted in the United States
10. 61We may need additional capital, and we cannot be certain that additional financing will be available on favorable terms, or at all
11. 62If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate consolidated financial statements or comply with applicable regulations could be impaired
12. 63violation, which significantly increases the enforcement risk faced by us and other public companies for any weaknesses in disclosure controls and internal control over financial reporting
13. 64Our Class A common stock market price and trading volume could decline if securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business
14. 65We incur costs and demands upon management as a result of complying with the laws and regulations affecting public companies in the United States, which may harm our business
15. 66Regulators', investors’ and other stakeholders’ expectations of our performance relating to environmental, social and governance factors may impose additional costs and expose us to new risks
16. 67There are inherent climate-related risks wherever business is conducted. We have a global workforce, and operate in leased office spaces and data centers, and the short, medium and long term climate impacts to our business are unclear