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It's a visualization of the income statement, not the cash flow statement.

You’re right and I’m a little drunk.

Enjoy while it lasts

Not great profits.

Also, *FY22

It's their fiscal year 2023 which ended on January 31 2023.

Confusing.. companies should just stick with January 1 to December 30 fiscal years if you ask me.

Wow, I had never heard of a fiscal year ending on 31st January, thanks for clarifying

What’s the cost of revenue? That’s new to me.

Cost of revenue contains costs that are directly needed to produce and distribute the product or service. For software companies, this contains for example server costs.

For an auto company that would contain the bill of material for the cars and the salaries of the manufacturing workers (but not the salaries of R&D engineers and management as they are not directly needed to produce the cars).

I wonder what it tells us about a company when it spends more on marketing than on making the product itself.

That's how media works. There's a video floating around of Matt Damon on Hot Ones explaining how movie profits work. They have to spend at least as much money on marketing as they do on production and distribution, so if a movie doesn't make roughly a 4x return on its cost, it's a financial flop. Since Twitch has to spend a lot on paying streamers, they're operating revenue is thinner than most.

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That seems like a proportionally rather high tax bill?

It makes sense if the company believes that it already offers a competitive product. The product lineup is also not as diverse as other industries like food or automobiles.

This isn't "how" rather it's "how much"

Zoom is also a very simple product with few moving parts. It makes more sense that way.

Paying more in taxes than you make in profit seems bad.

It shows which costs eat up how much of the revenue so I think it tells you how they make money.

However, revenue sources are not split up so I guess you have a point.

I may not be a Fortune 500 CEO but if I were one I’d probably avoid doing that.

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it says how they are spending the money but not how they are making it, is the revenue coming from subscriptions? advertising?

It’s because it’s not really their tax bill. There are a lot of things that can raise or lower income tax expense without changing the tax they pay, which can lead to super high or super low rates year to year

To be fair, they’re probably only paying a small fraction of that amount in taxes this year

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Yeah, it’s not showing how they are making money but how they are spending money. One assumes that they make it from subscriptions but the data does not show it.

Our FY ends in January 31st as well. It's fairly common in tech I believe for 2 reasons --

1. Provides additional time to close enterprise deals after the end of the year - closing deals December 31st can be challenging, to say the least
2. Reduces cost of accounting because most firms end their FY December 31st which is busy season for the big 4

Retail companies sometimes do this as well - or end a full quarter after March 31st instead of Dec 31st. Good luck to all the EY, PWC, DeLoitte people if every company ended Dec 31st lol

It depends. Lots of companies aim for 0 profit, because why pay high taxes and give money to shareholders when you can invest it back into the business instead? And it is even more relevant for high growth companies when additional customers are more valuable than money in the bank. Amazon famously did this for like two decades.

You have a point. I should have added some sort of revenue stream info.

Interesting tax burden. Most of the time in these charts it's like 10% of income. Here's it's over 50%.

I assure you there is nothing simple about the technical product that Zoom offers.

I mean it needs few things to keep it running: engineers and servers. Am I missing something else?

Innovations would be covered by the R&D sector which is a different expense line.

There are a lot of things that can raise the effective tax rate without actually changing the amount of tax you’ll pay year to year. Anytime there’s a rate above 30% or so, that’s likely the case