What changed in this filing

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Item 1. Financial Statements

2021-06-04 compared with 2020-12-04 · 205 added, 294 removed, 405 unchanged (55% of the section changed)

Financial Statements (unaudited)

Condensed Consolidated Balance Sheets as of October 31, 2020 and January 31, 2020

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended October 31, 2020 and 2019

Condensed Consolidated Statement of Stockholders' Equity for the Three and Nine Months Ended October 31, 2020 and 2019

Condensed Consolidated Statements of Cash Flows for the Three and Nine Months Ended October 31, 2020 and 2019

Condensed Consolidated Balance Sheets as of April 30, 2021 and January 31, 2021

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended April 30, 2021 and 2020

Condensed Consolidated Statement of Stockholders' Equity for the Three Months Ended April 30, 2021 and 2020

Condensed Consolidated Statements of Cash Flows for the Three Months Ended April 30, 2021 and 2020

Notes to Condensed Consolidated Financial Statements

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Exhibit Index

DocuSign, Inc.

| 2022 Form 10Q | 2

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risk and uncertainties.

All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, market growth and trends, and our objectives for future operations, and the impact of the ongoing coronavirus pandemic (the “COVID-19 pandemic”) on our financial conditions and results of operations are forward-looking statements.

All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, market growth and trends, and objectives for future operations, and the impact of the ongoing coronavirus pandemic (the “COVID-19 pandemic”) on our financial conditions and results of operations are forward-looking statements.

Forward-looking statements generally relate to future events or our future financial or operating performance.

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Moreover, we operate in a very competitive and rapidly changing environment.

New risks and uncertainties emerge from time to time, such as the COVID-19 pandemic.

Many of the risks and uncertainties are currently elevated by, and may or will continue to be elevated by, the current COVID-19 pandemic.

New risks and uncertainties emerge from time to time, including risks and uncertainties related to the COVID-19 pandemic.

Many risks and uncertainties are currently elevated by, and may or will continue to be elevated by, the COVID-19 pandemic.

It is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q.

We cannot assure you that the results, events, and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

DocuSign, Inc.

| 2022 Form 10Q | 3

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which such statements are made.

We undertake no obligation to update any forward-looking statements after the date of this Quarterly Report on Form 10-Q or to conform such statements to actual results or revised expectations, except as required by law.

DocuSign, Inc.

| 2022 Form 10Q | 4

PART I - FINANCIAL INFORMATION

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands, except per share data) October 31, 2020 January 31, 2020

(in thousands, except per share data) April 30, 2021 January 31, 2021

Current assets

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Investments—current 261,660 207,450

Restricted cash 281 280

Accounts receivable, net 261,085 237,841

Accounts receivable, net of allowance for doubtful accounts of $ 5,393 and $ 5,362 as of April 30, 2021 and January 31, 2021

250,365 323,570

Contract assets—current 15,267 16,883

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Total assets $ 2,297,120 $ 2,336,507

Liabilities and Stockholders’ Equity

Liabilities and Equity

Current liabilities

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Accrued compensation 129,640 156,158

Convertible senior notes—current 13,343 20,469

Contract liabilities—current 829,844 779,642

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Total current liabilities 1,097,912 1,093,173

Convertible senior notes, net 486,149 465,321

Convertible senior notes, net—noncurrent 742,577 693,219

Contract liabilities—noncurrent 17,938 16,492

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Commitments and contingencies ( Note 8 )

Convertible senior notes ( Note 7 )

Stockholders’ equity

Preferred stock, $ 0.0001 par value;

10,000 shares authorized, 0 shares issued and outstanding as of October 31, 2020 and January 31, 2020

10,000 shares authorized, 0 shares issued and outstanding as of April 30, 2021 and January 31, 2021

Common stock, $ 0.0001 par value;

500,000 shares authorized, 186,531 shares outstanding as of October 31, 2020;

500,000 shares authorized, 194,734 shares outstanding as of April 30, 2021;

500,000 shares authorized, 192,807 shares outstanding as of January 31, 2021

Treasury stock, at cost:

5 shares as of October 31, 2020 and 0 shares as of January 31, 2020

5 shares as of April 30, 2021 and 5 shares as of January 31, 2021

( 1,219 ) ( 1,048 )

Additional paid-in capital 1,615,646 1,702,254

Accumulated other comprehensive loss ( 1,140 ) ( 1,673 )

Accumulated other comprehensive income 5,358 4,964

Accumulated deficit ( 1,376,567 ) ( 1,380,452 )

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243,237 325,737

Total liabilities and stockholders’ equity

$ 2,051,119 $ 1,891,138

Total liabilities and equity $ 2,297,120 $ 2,336,507

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

DocuSign, Inc.

| 2022 Form 10Q | 5

DOCUSIGN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)

Three Months Ended October 31, Nine Months Ended October 31,

Three Months Ended April 30,

(in thousands, except per share data) 2021 2020

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Interest expense ( 1,672 ) ( 7,560 )

Interest income and other income (expense), net ( 311 ) 5,801 6,032 15,549

Interest income and other income, net 6,037 3,742

Loss before provision for income taxes ( 6,372 ) ( 45,671 )

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(in thousands) Shares Amount

Balances at July 31, 2020 185,137 $ 19 $ 1,749,323 $ — $ 2,098 $ ( 1,249,549 ) $ 501,891

Exercise of stock options 171 — 1,945 — — — 1,945

Settlement of RSUs 1,015 — — — — — —

Tax withholding on net share settlement of RSUs and ESPP — — ( 114,277 ) ( 1,048 ) — — ( 115,325 )

Employee stock purchase plans 208 — 16,269 — — — 16,269

Employee stock-based compensation — — 82,981 — — — 82,981

Net loss — — — — — ( 58,491 ) ( 58,491 )

Other comprehensive loss, net — — — — ( 3,238 ) — ( 3,238 )

Balances at October 31, 2020 186,531 $ 19 $ 1,736,241 $ ( 1,048 ) $ ( 1,140 ) $ ( 1,308,040 ) $ 426,032

Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity

(in thousands) Shares Amount

Balances at July 31, 2019 175,953 $ 18 $ 1,612,786 $ ( 2,945 ) $ ( 1,043,180 ) $ 566,679

Exercise of stock options 1,877 — 19,815 — — 19,815

Settlement of RSUs 1,145 — — — — —

Tax withholding on RSU settlement — — ( 39,310 ) — — ( 39,310 )

Employee stock purchase plans 277 — 13,309 — — 13,309

Employee stock-based compensation — — 53,713 — — 53,713

Net loss — — — — ( 46,598 ) ( 46,598 )

Other comprehensive income, net — — — 1,754 — 1,754

Balances at October 31, 2019 179,252 $ 18 $ 1,660,313 $ ( 1,191 ) $ ( 1,089,778 ) $ 569,362

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

DOCUSIGN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

Common Stock Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders' Equity

(in thousands) Shares Amount

Balances at January 31, 2021 192,807 $ 19 $ 1,702,254 $ ( 1,048 ) $ 4,964 $ ( 1,380,452 ) $ 325,737

Cumulative impact of Accounting Standards Update 2020-06 adoption — — ( 86,144 ) — — 12,239 ( 73,905 )

Settlement of convertible senior notes due in 2023 352 — ( 446 ) — — — ( 446 )

Exercise of stock options 488 — 6,616 — — — 6,616

Settlement of RSUs 3,095 1 ( 1 ) — — — —

Tax withholding on net share settlement of RSUs and ESPP — — ( 250,449 ) ( 1,048 ) — — ( 251,497 )

Settlement of restricted stock units 955 — — — — — —

Tax withholding on net share settlement of restricted stock units and employee stock purchase plan — — ( 113,412 ) ( 171 ) — — ( 113,583 )

Employee stock purchase plan 132 — 23,167 — — — 23,167

Issuance of shares as consideration for acquisition 247 — 48,361 — — — 48,361

Employee stock-based compensation — — 83,611 — — — 83,611

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Other comprehensive income, net — — — — 394 — 394

Balances at October 31, 2020 186,531 $ 19 $ 1,736,241 $ ( 1,048 ) $ ( 1,140 ) $ ( 1,308,040 ) $ 426,032

Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders' Equity

(in thousands) Shares Amount

Balances at April 30, 2021 194,734 $ 19 $ 1,615,646 $ ( 1,219 ) $ 5,358 $ ( 1,376,567 ) $ 243,237

Balances at January 31, 2020 181,254 $ 18 $ 1,685,167 $ — $ ( 1,673 ) $ ( 1,137,185 ) $ 546,327

Exercise of stock options 840 — 7,635 — — — 7,635

Settlement of RSUs 3,695 1 ( 1 ) — — —

Tax withholding on RSU settlement — — ( 125,288 ) — — ( 125,288 )

Settlement of restricted stock units 1,078 — — — — — —

Tax withholding on net share settlement of restricted stock units — — ( 46,723 ) — — — ( 46,723 )

Employee stock purchase plan 256 — 13,590 — — — 13,590

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Net loss — — — — — ( 47,804 ) ( 47,804 )

Cumulative impact of Topic 842 adoption — — — — ( 48 ) ( 48 )

Other comprehensive income, net — — — 774 — 774

Balances at October 31, 2019 179,252 $ 18 $ 1,660,313 $ ( 1,191 ) $ ( 1,089,778 ) $ 569,362

Other comprehensive loss, net — — — — ( 5,030 ) — ( 5,030 )

Balances at April 30, 2020 183,428 $ 18 $ 1,714,462 $ — $ ( 6,703 ) $ ( 1,184,989 ) $ 522,788

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

Nine Months Ended October 31,

Three Months Ended April 30,

(in thousands) 2021 2020

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Amortization of debt discount and transaction costs 1,319 6,842

Fair value adjustments to strategic investments ( 5,119 ) —

Non-cash operating lease costs 6,943 6,324

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Cash flows from investing activities:

Cash paid for acquisition, net of acquired cash ( 180,370 ) —

Purchases of marketable securities ( 96,925 ) —

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Purchases of property and equipment ( 12,596 ) ( 26,389 )

Net cash provided by (used in) investing activities 100,064 ( 350,795 )

Net cash (used in) provided by investing activities ( 70,506 ) 169,668

Cash flows from financing activities:

Payment of tax withholding obligation on RSU settlement ( 247,277 ) ( 125,288 )

Repayments of convertible senior notes ( 36,684 ) —

Payment of tax withholding obligation on net share settlement of restricted stock units ( 106,053 ) ( 46,723 )

Proceeds from exercise of stock options 6,616 7,635

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Cash, cash equivalents and restricted cash at beginning of period (1)

566,336 241,483

Cash, cash equivalents and restricted cash at end of period (1)

$ 519,252 $ 442,517

(1) $ 0.3 million of restricted cash was included in Other assets—noncurrent at April 30, 2021, and January 31, 2021.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Unaudited)

Nine Months Ended October 31,

Three Months Ended April 30,

(in thousands) 2021 2020

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Operating lease right-of-use assets exchanged for lease obligations — 18,745

Derecognition of build-to-suit lease — 2,479

Fair value of shares issued as consideration for acquisition 48,361 —

Fair value of shares issued as part of the repayments of convertible senior notes 74,657 —

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Summary of Significant Accounting Policies

Revenue and Performance Obligations

Fair Value Measurements

Property and Equipment, Net

Goodwill and Intangible Assets, Net

Contract Balances

Intangible Assets, Net

Deferred Contract Acquisition and Fulfillment Costs

Convertible Senior Notes

Commitments and Contingencies

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GAAP have been condensed or omitted pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”).

Therefore, these unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our 2020 Annual Report on Form 10-K.

Our condensed consolidated financial statements are unaudited and have been prepared on a basis consistent with that used to prepare the audited annual consolidated financial statements and, in our opinion, include all adjustments of a normal recurring nature necessary for the fair statement of our financial position, results of operations and cash flows.

Our condensed consolidated balance sheet as of January 31, 2021 was derived from audited financial statements but does not include all disclosures required by U.S.

The results of operations for the nine months ended October 31, 2020 are not necessarily indicative of the results to be expected for the year ending January 31, 2021 .

The results of operations for the three months ended April 30, 2021 are not necessarily indicative of the results to be expected for the year ending January 31, 2022 .

O ur fiscal year ends on January 3 1.

References to fiscal 2022, for example, are to the fiscal year ending January 31, 2022 .

Certain prior year amounts have been reclassified to conform to current year presentation.

These amounts were not material to any of the periods presented.

Use of Estimates

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• the recognition, measurement and valuation of deferred income taxes.

The World Health Organization declared in March 2020 that the outbreak of the coronavirus disease named COVID-19 constitutes a pandemic.

We have undertaken measures to protect our employees, partners and customers.

There can be no assurance that these measures will be effective, however, or that we can adopt them without adversely affecting our business operations.

In addition, the COVID-19 pandemic has created and may continue to create significant uncertainty in global financial markets, which may decrease technology spending, depress demand for our solutions and harm our business and results of operations.

Since the emergence of the COVID-19 pandemic, we have undertaken measures to protect our employees, partners and customers, including providing the majority of our employees the option to work remotely until at least October 4, 2021.

However, there can be no assurance that these measures will be effective, that we will be able to adopt new measures as needed, or that we will be able to discontinue these measures without adversely affecting our business operations.

In addition, the COVID-19 pandemic and related recent developments (including, for example, vaccine deployments, national and regional outbreaks, and the emergence of disease variants) have created and may continue to create significant uncertainty in global financial markets, which may decrease technology spending, depress demand for our products and harm our business and results of operations.

As of the date of issuance of the financial statements, we are not aware of any specific event or circumstance that would require us to update our estimates, judgments or revise the carrying value of our assets or liabilities.

These estimates may change, as new events occur and additional information is obtained, and are recognized in the condensed consolidated financial statements as soon as they become known.

These estimates may change, as new events occur and additional information is obtained, and are recognized in the condensed consolidated financial statements as soon as they

become known.

Actual results could differ from those estimates and any such differences may be material to our financial statements.

Significant Accounting Policies

There have been no changes to our significant accounting policies described in our 2020 Annual Report on Form 10-K that have had a material impact on our consolidated financial statements and related notes.

Concentration of Credit Risk

Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash, cash equivalents, marketable securities and accounts receivable.

Although we deposit our cash with multiple financial institutions, the deposits, at times, may exceed federally insured limits.

We have not experienced any losses on our deposits of cash and cash equivalents.

Cash equivalents consist of money market funds which are invested through financial institutions in the U.S.

Management believes that the institutions are financially stable and, accordingly, minimal credit risk exists.

We perform ongoing credit evaluations of our customers, do not require collateral and maintain allowances for potential credit losses on customers’ accounts using the expected loss model.

Investments in marketable securities consist of commercial paper, corporate notes and bonds, as well as U.S.

Treasury and government agency securities.

Management determines the appropriate classification of investments at the time of purchase and reevaluates such determination at each balance sheet date.

Marketable securities are classified as available-for-sale and are carried at fair value in the consolidated balance sheet and are classified as short-term or long-term based on their remaining contractual maturities.

We evaluate our investments with unrealized loss positions at the individual security level to determine whether the unrealized loss was related to credit or noncredit factors.

We consider whether a credit loss exists based on the extent of the unrealized loss position, any adverse conditions specifically related to the security or the issuer's operating environment, pay structure of the security, the issuer's payment history and any changes in the issuer's credit rating.

Estimated credit losses are determined using a discounted cash flow model and recorded as an allowance, with changes in expected credit losses on our investments recorded in “Interest income and other income (expense), net” in the consolidated statements of operations and comprehensive loss.

Unrealized gains and losses related to noncredit factors are reflected in “Accumulated other comprehensive loss” on the consolidated balance sheets.

Other than as described below, there have been no changes to our significant accounting policies described in our fiscal 2021 Annual Report on Form 10-K that have had a material impact on our consolidated financial statements and related notes.

Convertible Debt

On February 1, 2021, we early adopted Accounting Standards Update (“ASU”) No.

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) using the modified retrospective approach.

Effective February 1, 2021, we account for our convertible debt instruments as a single liability measured at its amortized cost.

At issuance, the carrying amount is calculated as the proceeds, net of initial purchasers’ discounts and transaction costs.

The difference between the principal amount and carrying value is amortized to interest expense over the term of the convertible debt instruments using the effective interest rate method.

At settlement, the carrying amount of the liability is derecognized and the excess of the cash consideration, if any, over the carrying amount is recorded as a reduction to additional paid-in capital.

Refer to Note 1 of our 2021 Annual Report on Form 10-K for our convertible debt policy prior to the adoption of ASU 2020-06.

Recently Adopted Accounting Pronouncements

On February 1, 2020, we adopted Accounting Standards Update (“ASU”) No.

2016-13, Financial Instruments — Credit Losses (Topic 326).

The Financial Accounting Standards Board (“FASB”) subsequently issued ASU No.

2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.

These updates change the impairment model for most financial assets and require the use of an expected loss model in place of the previously used incurred loss method.

Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset.

The effect of adopting ASU 2016-13 and ASU 2019-04 on our consolidated financial statements and related disclosures was not material to the consolidated financial statements.

On February 1, 2020, we adopted ASU No.

2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40), which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license).

The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update.

The effect of adopting ASU 2018-15 on our consolidated financial statements and related disclosures was not material to the consolidated financial statements.

Other Recent Accounting Pronouncements

In August 2020, the FASB issued ASU No.

On February 1, 2021, we early adopted ASU No.

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40).

The update removes separation models for convertible debt with a cash conversion feature and convertible instruments with a beneficial conversion feature.

Such convertible debt will be accounted for as a single liability measured at its amortized cost and convertible preferred stock will be accounted for as a single equity instrument measured at its historical cost, as long as no other features require bifurcation and recognition as derivatives.

The update also requires the if-converted method to be used for convertible instruments and the effect of potential share settlement be included in the diluted earnings per share calculation when an instrument may be settled in cash or shares.

The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years.

The amendment is to be adopted through either a fully retrospective or modified retrospective method of transition.

Early adoption is permitted.

We are in the process of evaluating the impact of the adoption of the update on our consolidated financial statements.

Revenue and Performance Obligations

Subscription revenue is recognized over time and accounted for approximately 96 % and 95 % of our revenue for the three months ended October 31, 2020 and 2019.

It accounted for approximately 95 % and 94 % of our revenue for the nine months ended October 31, 2020 and 2019.

As of October 31, 2020, the amount of the transaction price allocated to remaining performance obligations for contracts greater than one year was $ 937.9 million.

We expect to recognize 54 % of the transaction price allocated to remaining performance obligations within the 12 months following October 31, 2020, in our consolidated statement of operations and comprehensive loss.

This ASU removes separation models for convertible debt with a cash conversion feature and convertible instruments with a beneficial conversion feature.

Such convertible debt is accounted for as a single liability measured at its amortized cost and convertible preferred stock will be accounted for as a single equity instrument measured at its historical cost, as long as no other features require bifurcation and recognition as derivatives.

The ASU also requires the if-converted method to be used for convertible instruments and the effect of potential share settlement be included in the diluted earnings per share calculation when an instrument may be settled in cash or shares.

The adoption of the ASU using the modified retrospective method resulted in:

• an increase of $ 77.3 million to the total carrying value of our convertible senior notes to reflect the full principal amount of the convertible notes outstanding net of issuance costs,

• reductions of $ 86.1 million to additional paid-in capital and $ 3.4 million to mezzanine equity to remove the equity component separately recorded for the conversion features associated with the convertible notes, and

• a cumulative-effect adjustment of $ 12.2 million to the beginning balance of accumulated deficit as of February 1, 2021.

Other Recent Accounting Pronouncements

Other recently issued accounting pronouncements are not expected to have a material impact on our consolidated financial statements.

Subscription revenue is recognized over time and accounted for approximately 96 % and 95 % of our revenue for the three months ended April 30, 2021 and 2020.

Performance Obligations

As of April 30, 2021, the amount of the transaction price allocated to remaining performance obligations for contracts greater than one year was $ 1.2 billion.

We expect to recognize 53 % of the transaction price allocated to remaining performance obligations within the 12 months following April 30, 2021 in our consolidated statement of operations and comprehensive loss.

Contract Balances

Contract assets represent amounts for which we have recognized revenue, pursuant to our revenue recognition policy, for contracts that have not yet been fully invoiced to our customers where there remains a performance obligation, typically for our multi-year arrangements.

Total contract assets were $ 15.9 million and $ 17.5 million as of April 30, 2021 and January 31, 2021, of which $ 0.6 million and $ 0.6 million were noncurrent and included within “Other assets—noncurrent” on our condensed consolidated balance sheets.

The change in contract assets reflects the difference in timing between the satisfaction of our remaining performance obligations and our contractual right to bill our customers.

Contract liabilities consist of deferred revenue and include payments received in advance of performance under the contract.

Such amounts are generally recognized as revenue over the contractual period.

For the three months ended April 30, 2021 and 2020, we recognized revenue of $ 357.8 million and $ 224.7 million that was included in the corresponding contract liability balance at the beginning of the periods presented.

We receive payments from customers based upon contractual billing schedules.

We record accounts receivable when the right to consideration becomes unconditional.

Payment terms on invoiced amounts are typically 30 days.

Fair Value Measurements

The following table summarizes our financial assets that are measured at fair value on a recurring basis:

October 31, 2020

April 30, 2021

(in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value

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Level 2 total 299,375 388 ( 96 ) 299,667

Available-for-sale securities

Corporate notes and bonds 500 — — 500

Total $ 584,187 $ 388 $ ( 96 ) $ 584,479

(1) Included in “cash and cash equivalents” in our consolidated balance sheets as of October 31, 2020 and January 31, 2020, in addition to cash of $ 221.6 million and $ 75.8 million.

(1) Included in “cash and cash equivalents” in our consolidated balance sheets as of April 30, 2021, and January 31, 2021, in addition to cash of $ 371.1 million and $ 281.7 million.

We use quoted prices in active markets for identical assets to determine the fair value of our Level 1 investments.

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The fair value of our Level 3 investments is determined based on an income approach using unobservable inputs.

The fair value of our available-for-sale securities as of October 31, 2020, by remaining contractual maturities, were as follows (in thousands):

The fair value of our available-for-sale securities as of April 30, 2021, by remaining contractual maturities, were as follows (in thousands):

Due in one year or less $ 261,660

Due in one to two years 94,930

As of October 31, 2020, we had a total of 94 available-for-sale securities, with 30 securities in an unrealized loss position.

An allowance for credit losses was deemed unnecessary for these securities, given the extent of the unrealized loss positions as

well the issuers' high credit ratings and consistent payment history.

As of January 31, 2020, we had 178 available-for-sale securities, none of which were considered to be other-than-temporarily impaired.

We had no liabilities measured at fair value on a recurring basis as of October 31, 2020 and January 31, 2020.

As of April 30, 2021 and January 31, 2021, securities in an unrealized loss position were individually and in aggregate not material.

An allowance for credit losses was deemed unnecessary for these securities, given the extent of the unrealized loss positions as well the issuers' high credit ratings and consistent payment history.

We had no liabilities measured at fair value on a recurring basis as of April 30, 2021 and January 31, 2021.

Strategic Investments

During the three months ended April 30, 2021, investments in equity securities without readily determinable fair values increased by $ 5.1 million due to adjustments related to observable price changes.

Such investments are recorded in “Other assets—noncurrent” on our condensed consolidated balance sheets.

Convertible Senior Notes

As of October 31, 2020 and January 31, 2020, the estimated fair value of our 0.5 % Convertible Senior Notes (the “Notes”) with aggregate principal amount of $ 575.0 million was $ 1.6 billion and $ 743.5 million.

We estimated the fair value based on the quoted market prices in an inactive market on the last trading day of the reporting period (Level 2).

The Notes are recorded at face value less unamortized debt discount and transaction costs as “Convertible senior notes, net” on our consolidated balance sheets.

We estimated the fair value of the Notes based on the quoted market prices in an inactive market on the last trading day of the reporting period (Level 2).

The Notes are recorded at face value less unamortized debt discount and transaction costs as “Convertible senior notes—current” and “Convertible senior notes, net—noncurrent” on our condensed consolidated balance sheets.

Refer to Note 7 for further information.

(in thousands) April 30, 2021 January 31, 2021

0.5 % Convertible Senior Notes due in 2023

Aggregate principal amount $ 78,318 $ 115,000

Fair value amount 245,245 373,928

0 % Convertible Senior Notes due in 2024

Aggregate principal amount $ 690,000 $ 690,000

Fair value amount 684,825 725,100

Property and Equipment, Net

Property and equipment consisted of the following:

(in thousands) October 31, 2020 January 31, 2020

(in thousands) April 30, 2021 January 31, 2021

Computer and network equipment $ 104,017 $ 102,163

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$ 164,128 $ 165,039

As of October 31, 2020 and January 31, 2020 , work in progress consisted of capitalized costs of internally-developed software projects under development and data center build-out projects.

For the three months ended October 31, 2020 and 2019, we capitalized $ 9.5 million and $ 4.2 million of internally developed software, including $ 1.9 million and $ 1.0 million of capitalized stock-based compensation.

For the nine months ended October 31, 2020 and 2019, we capitalized $ 20.5 million and $ 14.5 million of internally developed software, including $ 4.9 million and $ 3.6 million of capitalized stock-based compensation.

Depreciation expense associated with property and equipment was $ 12.1 million and $ 8.4 million for the three months ended October 31, 2020 and 2019, and $ 32.4 million and $ 23.5 million for the nine months ended October 31, 2020 and 2019.

Acquisition of Seal Software Group Limited

On May 1, 2020, we completed the acquisition of Seal Software Group Limited (“Seal”), a contract analytics and artificial intelligence (“AI”) technology provider headquartered in Walnut Creek, California.

We expect to integrate Seal's technology comprehensively across the DocuSign Agreement Cloud to deliver increased functionality to companies using the Agreement Cloud to prepare, sign, act on and manage agreements.

Under the terms of the purchase agreement, we paid $ 184.7 million in cash, net of cash acquired, transaction costs and working capital adjustments, for Seal’s outstanding stock.

Prior to the acquisition, we held a $ 15.0 million minority investment in Seal’s outstanding stock.

As of the acquisition, the fair value of our minority interest, calculated as the difference between the total acquisition consideration and the portion attributable to third party Seal shareholders, approximated the carrying value.

Additionally, we granted certain continuing employees of Seal restricted stock units (“RSUs”) with service and performance conditions covering up to 0.1 million shares of our common stock with an aggregate grant date fair value of $ 11.4 million that will be accounted for as a post-acquisition compensation expense over the vesting period.

The performance-based

condition will be satisfied upon Seal meeting certain bookings targets for the year ended January 31, 2021.

As of October 31, 2020, it was not probable that these targets would be met .

We accounted for the transaction as a business combination using the acquisition method of accounting.

We allocated the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed based on their respective estimated fair values on the acquisition date.

Fair values were determined using the income and cost approaches.

Excess purchase price consideration was recorded as goodwill and is primarily attributable to the assembled workforce and expanded market opportunities when integrating Seal’s AI and analytics capabilities within our existing product offering.

The purchase price allocation was prepared on a preliminary basis and is subject to further adjustments as additional information becomes available and certain tax returns are finalized.

Any adjustments to the purchase price allocation will be made as soon as practicable but no later than one year from the acquisition date.

The following table summarizes the preliminary acquisition date fair values of assets acquired and liabilities assumed at the date of acquisition:

(in thousands) May 1, 2020

Cash and cash equivalents $ 729

Accounts receivable 9,654

Contract assets 5,813

Prepaid expense and other assets 7,204

Property and equipment 915

Goodwill 114,356

Intangible assets 83,700

Right-of-use Assets 3,130

Accounts payable ( 854 )

Accrued compensation ( 2,697 )

Contract liabilities ( 7,745 )

Accrued expenses and other liabilities ( 6,523 )

Lease liabilities ( 3,126 )

Deferred tax liability—noncurrent ( 4,103 )

None of the goodwill recognized upon acquisition was deductible for U.K.

federal income tax purposes.

The estimated useful lives of intangible assets, primarily based on the expected period of benefit to us, and fair values of the identifiable intangible assets at acquisition date were as follows:

(in thousands, except years) Estimated Fair Value Expected Useful Life

Existing technology $ 37,400 5 years

Customer relationships—subscription 41,700 10 years

Backlog—subscription 4,600 2 years

Total intangible assets $ 83,700

In the three and nine months ended October 31, 2020 , we incurred acquisition costs of $ 0.1 million and $ 6.2 million.

These costs included legal, accounting fees and other costs directly related to the acquisition of Seal and are recognized within operating expenses in our condensed consolidated statements of operations.

In the three and nine months ended October 31, 2020 , we recognized revenues from Seal of $ 5.4 million and $ 11.8 million and net losses of $ 9.2 million and $ 16.5 million, excluding the impact of acquired intangible asset amortization.

The results of operations of Seal were included in our consolidated statements of operations from the acquisition date.

The following unaudited pro forma information has been prepared for illustrative purposes only and assumes the acquisition occurred on February 1, 2019.

It includes pro forma adjustments related to the amortization of acquired intangible assets, share-based compensation expense, professional services revenue and contract acquisitions costs adjustments under the new revenue recognition standard, and contract liabilities fair value adjustment.

The unaudited pro forma results have been

prepared based on estimates and assumptions, which we believe are reasonable, however, they are not necessarily indicative of the consolidated results of operations had the acquisition occurred on February 1, 2019, or of future results of operations:

Three Months Ended October 31, Nine Months Ended October 31,

(in thousands) 2020 2019 2020 2019

Revenue $ 384,093 $ 255,734 $ 1,032,730 $ 715,246

Net loss ( 58,946 ) ( 59,205 ) ( 178,193 ) ( 206,896 )

Net loss per share attributable to common stockholders, basic and diluted ( 0.32 ) ( 0.33 ) ( 0.96 ) ( 1.18 )

Acquisition of Liveoak Technologies, Inc.

On July 6, 2020, we completed the acquisition of Liveoak Technologies, Inc.

(“Liveoak”), a virtual customer engagement and business platform based in Austin, Texas.

The company’s platform includes several technologies specific to remote agreements, such as video conferencing, video identity verification, collaborative form-filling, an integration with DocuSign eSignature, and a detailed audit trail.

The acquisition enables us to leverage Liveoak’s technology and expertise to accelerate the launch of DocuSign Notary, a new product for remote online notarization, where signers and the notary public are in different places.

The consideration to acquire Liveoak’s outstanding stock was $ 48.4 million, which consisted primarily of the fair value of our common stock issued and the fair value of stock options assumed.

We recorded approximately $ 39.7 million of goodwill which is primarily attributed to the assembled workforce and expanded market opportunities for integrating Liveoak’s technology with our existing product offering.

The purchase price allocation was prepared on a preliminary basis and is subject to further adjustments as additional information becomes available concerning the fair value of the assets acquired and liabilities assumed.

Any adjustments to the purchase price allocation will be made as soon as practicable but no later than one year from the acquisition date.

None of the goodwill recognized upon acquisition was deductible for U.S.

federal income tax purposes.

In the three and nine months ended October 31, 2020 , we incurred costs of $ 0.2 million and $ 1.8 million directly related to the acquisition of Liveoak.

These costs are recognized within operating expenses in our condensed consolidated statements of operations.

We included the results of operations of Liveoak in our condensed consolidated statements of operations from the acquisition date.

These results were not material to our condensed consolidated statements of operations for the three and nine months ended October 31, 2020.

Goodwill and Intangible Assets, Net

The changes in the carrying amount of goodwill were as follows (in thousands):

Balance at January 31, 2020 $ 194,882

Additions—Seal 114,356

Additions—Liveoak 39,726

Cumulative translation adjustment ( 460 )

Balance at October 31, 2020 $ 348,504

Depreciation and amortization expense associated with property and equipment was $ 13.5 million and $ 9.8 million for the three months ended April 30, 2021 and 2020.

For the three months ended April 30, 2021 and 2020, we capitalized $ 7.8 million and $ 5.1 million of internally developed software.

Intangible Assets, Net

Intangible assets consisted of the following:

As of October 31, 2020 As of January 31, 2020

As of April 30, 2021 As of January 31, 2021

(in thousands, except years) Weighted-average Remaining Useful Life (Years) Estimated Fair Value Accumulated Amortization Acquisition-related Intangibles, Net Estimated Fair Value Accumulated Amortization Acquisition-related Intangibles, Net

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Amortization of finite-lived intangible assets was as follows:

Three Months Ended October 31, Nine Months Ended October 31,

Three Months Ended April 30,

(in thousands) 2021 2020

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Total $ 6,529 $ 4,259

As of October 31, 2020, future amortization of finite-lived intangibles that will be recorded in cost of revenue and operating expenses is estimated as follows:

As of April 30, 2021, future amortization of finite-lived intangibles that will be recorded is estimated as follows, excluding cumulative translation adjustment:

Fiscal Period:

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Total $ 114,673

Contract Balances

Contract assets represent amounts for which we have recognized revenue, pursuant to our revenue recognition policy, for contracts that have not yet been invoiced to our customers where there is a remaining performance obligation, typically for multi-year arrangements.

Total contract assets were $ 23.3 million and $ 13.4 million as of October 31, 2020 and January 31, 2020, of which $ 0.8 million and $ 0.9 million were noncurrent and included within “ Other assets—noncurrent ” on our condensed consolidated balance sheets.

The change in contract assets reflects the difference in timing between our satisfaction of remaining performance obligations and our contractual right to bill our customers.

Contract liabilities consist of deferred revenue and include payments received in advance of performance under the contract.

Such amounts are generally recognized as revenue over the contractual period.

For the nine months ended October 31, 2020 and 2019, we recognized revenue of $ 463.1 million and $ 342.6 million that was included in the corresponding contract liability balance at the beginning of the periods presented.

We receive payments from customers based upon contractual billing schedules.

We record accounts receivable when the right to consideration becomes unconditional.

Payment terms on invoiced amounts are typically 30 days.

Deferred Contract Acquisition and Fulfillment Costs

The following table represents a rollforward of our deferred contract acquisition and fulfillment costs:

Nine Months Ended October 31,

Three Months Ended April 30,

(in thousands) 2021 2020

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Ending balance $ 13,869 $ 10,678

In September 2018, we issued $ 575.0 million in aggregate principal amount of the Notes due in 2023, which included the initial purchasers’ exercise in full of their option to purchase an additional $ 75.0 million principal amount of the Notes, in a private placement to qualified institutional buyers in an offering exempt from registration under the Securities Act of 1933, as amended.

Convertible Senior Notes

In September 2018, we issued $ 575.0 million in aggregate principal amount of the 0.5 % Convertible Senior Notes due in 2023 (“2023 Notes”).

The net proceeds from the issuance of the 2023 Notes were $ 560.8 million after deducting the initial purchasers’ discounts and transaction costs.

As of October 31, 2020, the conversion conditions described in our 2020 Annual Report on Form 10-K were met.

The last reported sales price of our common stock was greater than or equal to 130 % of the conversion price for at least 20 trading days during a period of 30 consecutive trading days ending on, and including, the last trading day of the three months ended July 31, 2020.

The Notes therefore became convertible on August 1, 2020 and continue to be convertible through January 31, 2021.

The net carrying value of the liability component of the Notes was as follows:

(in thousands) October 31, 2020 January 31, 2020

In each fiscal quarter since the quarter ended July 31, 2020, the last reported sales price of our common stock for at least 20 trading days during a period of 30 consecutive trading days ending on, and including, the last trading day was greater than or equal to 130 % of the conversion price of the 2023 Notes.

The 2023 Notes therefore became convertible on August 1, 2020 and continue to be convertible through April 30, 2021.

In January 2021, we issued $ 690.0 million in aggregate principal amount of the 0 % Convertible Senior Notes due in 2024 (“2024 Notes,” and together with the 2023 Notes, the “Notes”).

The net proceeds from the issuance of the 2024 Notes were $ 677.3 million after deducting the initial purchasers’ discounts and transaction costs.

As of April 30, 2021, the conversion conditions for the 2024 Notes described in our 2021 Annual Report on Form 10-K were not met.

Conversions of the 2023 Notes

Early conversions and settlements of the Notes during the three months ended April 30, 2021 were accounted for under ASU 2020-06.

Refer to Note 1 for further discussion of early adoption.

During the three months ended April 30, 2021, we settled $ 36.7 million aggregate amount of the principal of 2023 Notes, including $ 23.9 million elected for conversion as of January 31, 2021, for aggregate consideration of $ 111.3 million, consisting of $ 36.7 million in cash and 0.4 million shares of our common stock with a value of $ 74.7 million.

The $ 0.4 million excess of the cash consideration over the corresponding carrying value was recorded as a reduction to additional paid-in capital.

Additionally, as of April 30, 2021, we had received conversion notices on our 2023 Notes for $ 13.5 million in aggregate principal amount to be settled in the following quarter.

The corresponding carrying value is reflected in Convertible senior notes—current on our condensed consolidated balance sheet.

From May 1, 2021 through June 3, 2021, we received conversion notices on our 2023 Notes for $ 10.0 million in aggregate principal amount, for which we elected to settle the principal amount in cash during the three months ended July 31, 2021.

The net carrying amounts of the liability and equity components of the Notes were as follows:

(in thousands) April 30, 2021 January 31, 2021

Principal $ 78,318 $ 115,000

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unamortized transaction costs ( 928 ) ( 1,224 )

Net carrying amount $ 486,149 $ 465,321

As of October 31, 2020 and January 31, 2020, the net carrying amount of the equity component of the Notes was $ 131.3 million, net of $ 3.3 million transaction costs.

The interest expense recognized related to the Notes was as follows:

Three Months Ended October 31, Nine Months Ended October 31,

Net carrying value of current and noncurrent liability component $ 77,390 $ 98,660

Proceeds allocated to the conversion option (debt discount) (1)

extinguishment or conversion ( 31,933 )

transaction costs ( 3,336 )

Net carrying value of mezzanine and permanent equity component $ 99,398

Principal $ 690,000 $ 690,000

unamortized debt discount (1)

unamortized transaction costs ( 11,464 ) ( 11,353 )

Net carrying value of noncurrent liability component $ 678,536 $ 615,028

Proceeds allocated to the conversion option (debt discount) (1)

transaction costs ( 1,185 )

Net carrying value of permanent equity component $ 63,268

(1) Not applicable under ASU 2020-06

The effective interest rate on the liability component of the 2023 Notes was 5.9 % prior to the adoption of ASU 2020-06 and 1.0 % after adoption.

The effective interest rate on the liability component of the 2024 notes was 3.8 % prior to the adoption of ASU 2020-06 and 0.6 % after adoption.

Interest expense recognized related to the Notes was as follows:

Three Months Ended April 30,

(in thousands) 2021 2020

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Total $ 1,217 $ 7,560

To minimize the potential economic dilution to our common stock upon conversion of the Notes, we entered into privately-negotiated capped call transactions (“Capped Calls”) with certain counterparties and incurred costs of $ 67.6 million related to the transactions.

The Capped Calls each have an initial strike price of approximately $ 71.50 per share, subject to certain adjustments, which corresponds to the initial conversion price of the Notes.

The Capped Calls have initial cap prices of $ 110.00 per share, subject to certain adjustments.

The Capped Calls cover, subject to anti-dilution adjustments, approximately 8.0 million shares of common stock.

The material terms of the capped call transactions were as follows:

(in thousands, except per share amounts) 2023 Notes 2024 Notes

Aggregate cost of capped calls $ 67,563 $ 31,395

Initial strike price per share (1)

$ 71.50 $ 420.24

Initial cap price per share (1)

$ 110.00 $ 525.30

Shares of our common stock covered by the capped calls (1)

(1) Subject to adjustments for certain events, such as merger events and tender offers, and anti-dilution adjustments

Impact on Loss Per Share

In periods when we have net income, the conversion premium on the Notes is included in our diluted earnings per share when the average market price of our common stock exceeds the initial conversion price of $ 71.50 per share, as we intend and have the ability to settle the principal amount of the Notes in cash upon conversion.

We are required under the treasury stock method to compute the potentially dilutive shares of common stock related to the Notes for periods we report net income.

However, upon conversion, there will be no economic dilution from the Notes unless the market price of our common stock exceeds the cap price of $ 110.00 per share, as exercise of the Capped Calls offsets any dilution from the Notes from the conversion price up to the cap price.

After February 1, 2021, the date of the adoption of ASU 2020-06, in periods when we have net income, the shares of our common stock subject to the Notes outstanding during the period are included in our diluted earnings per share under the if-converted method.

As of the beginning of the fourth quarter of 2021, share settlement was presumed, and shares subject to the Notes would have been included under the if-converted method.

In periods prior to that, cash settlement was presumed and shares subject to the Notes would have been included under the treasury stock method.

Capped Calls are excluded from the calculation of diluted earnings per share, as they would be antidilutive.

As of October 31, 2020, the market price of our common stock exceeded the cap price of $ 110.00 per share;

Upon conversion, there will be no economic dilution from the Notes unless the market price of our common stock exceeds the cap prices listed above in the Capped Calls section, as exercise of the Capped Calls offsets any dilution from the Notes from the conversion price up to the cap price.

As of April 30, 2021, the market price of our common stock exceeded the $ 110.00 per share cap price associated with the 2023 Notes but not the $ 525.30 cap price associated with the 2024 Notes;

therefore, the 2023 Notes would have caused economic dilution if converted.

We lease offices under noncancelable operating lease agreements that expire at various dates through February 2032.

As of October 31, 2020, we had no finance leases.

Some operating leases contain escalation provisions for adjustments in the consumer price index.

The following table is a summary of our lease costs:

Three Months Ended October 31, Nine Months Ended October 31,

(in thousands) 2020 2019 2020 2019

Operating lease cost $ 8,640 $ 6,762 $ 25,256 $ 19,055

Short-term lease cost 319 60 782 474

Total lease cost $ 8,959 $ 6,822 $ 26,038 $ 19,529

Future lease payments under noncancelable operating leases as of October 31, 2020, were as follows:

Fiscal Period:

Amount (in thousands)

2021, remainder $ 10,172

Thereafter 72,184

Total undiscounted cash flows $ 230,165

imputed interest ( 30,454 )

Present value of lease liabilities $ 199,711

The weighted average remaining lease term and discount rate for operating leases as of October 31, 2020 were 6.8 years and 4.3 %.

Revolving Credit Facility

In January 2021, we entered into a credit agreement with a syndicate of banks.

The credit agreement extended a senior secured revolving credit facility (the “Credit Facility”) to us in an aggregate principal amount of $ 500.0 million, which amount may be increased by an additional $ 250.0 million subject to the terms of the credit agreement.

We may use the proceeds of future borrowings under the credit facility to finance working capital, capital expenditures and for other general corporate purposes, including permitted acquisitions.

The Credit Facility matures in January 2026 and requires us to comply with customary affirmative and negative covenants.

We were in compliance with all covenants as of April 30, 2021.

As of April 30, 2021, there were no outstanding borrowings under the Credit Facility.

The Credit Facility is subject to customary fees for loan facilities of this type, including ongoing commitment fees at a rate between 0.25 % and 0.30 % per annum on the daily undrawn balance.

Commitments and Contingencies

As of October 31, 2020, we had unused letters of credit outstanding associated with our various operating leases totaling $ 8.3 million.

As of April 30, 2021, we had unused letters of credit outstanding associated with our various operating leases totaling $ 7.7 million.

We have entered into certain noncancelable contractual arrangements that require future purchases of goods and services.

These arrangements primarily relate to cloud infrastructure support and sales and marketing activities.

As of October 31, 2020, our future noncancelable minimum payments due under these contractual obligations with a remaining term of more than one year were as follows:

As of April 30, 2021, the future noncancelable minimum payments due under these contractual obligations with a remaining term of more than one year were as follows:

Fiscal Period:

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Historically, we have not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements.

As a result, we believe the fair value of these indemnification agreements is not material as of October 31, 2020, and January 31, 2020.

As a result, we believe the fair value of these indemnification agreements is not material as of April 30, 2021, and January 31, 2021.

We maintain commercial general liability insurance and product liability insurance to offset certain of our potential liabilities under these indemnification agreements.

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Outstanding awards under these two plans continue to be subject to the terms and conditions of the respective plans.

As of October 31, 2020, 32.4 million shares of our common stock were available for issuance under the 2018 Plan.

As of April 30, 2021, 43.1 million shares of our common stock were available for issuance under the 2018 Plan.

The 2018 Plan provides that the number of shares reserved will automatically increase on the first day of each fiscal year, beginning on February 1, 2019, and ending on February 1, 2028, by 5 % of the total number of shares of our capital stock outstanding on the immediately preceding January 31st (or such lesser number of shares as our board of directors or a committee of our board of directors may approve).

The most recent automatic increase of 9.6 million shares occurred on February 1, 2021.

Stock Options

Option activity for the nine months ended October 31, 2020 was as follows:

(in thousands, except years and per share data) Number of Options Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value

Outstanding at January 31, 2020 6,882 $ 14.39 5.38 $ 441,247

Assumed 9 22.22

Exercised ( 1,471 ) 10.29

Canceled/expired ( 21 ) 18.09

Outstanding at October 31, 2020 5,399 $ 15.51 5.22 $ 1,008,292

Vested and expected to vest at October 31, 2020 5,396 $ 15.50 5.22 $ 1,007,687

Exercisable at October 31, 2020 5,199 $ 15.43 5.18 $ 971,253

As of October 31, 2020, our total unrecognized compensation cost related to stock option grants was $ 1.3 million.

We expect to recognize this expense over the remaining weighted-average period of approximately 0.3 years.

Restricted Stock Units

Restricted stock units (“RSUs”) granted under the 2018 Plan generally vest over a four-year period, either quarterly or with 25 % vesting at the end of one year and the remainder quarterly thereafter.

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The market-based conditions will be satisfied if certain milestones based on our common stock price or relative total shareholder return are met.

RSU activity for the nine months ended October 31, 2020 was as follows:

RSU activity for the three months ended April 30, 2021 was as follows:

(in thousands, except per share data) Number of Units Weighted-Average Grant Date Fair Value

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Canceled ( 453 ) $ 85.88

Unvested at October 31, 2020 12,008 $ 76.91

As of October 31, 2020, our total unrecognized compensation cost related to RSUs was $ 708.2 million.

Unvested at April 30, 2021 9,194 $ 94.26

As of April 30, 2021, our total unrecognized compensation cost related to RSUs was $ 671.2 million.

We expect to recognize this expense over the remaining weighted-average period of approximately 2.2 years.

Stock Options

Option activity for the three months ended April 30, 2021 was as follows:

(in thousands, except years and per share data) Number of Options Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value

Outstanding at January 31, 2021 4,798 $ 15.55 5.0 $ 1,042,879

Exercised ( 488 ) 13.48

Outstanding at April 30, 2021, all vested and exercisable 4,310 $ 15.78 4.9 $ 892,949

As of April 30, 2021, there was no remaining unrecognized compensation cost related to stock option grants.

2018 Employee Stock Purchase Plan

The Employee Stock Purchase Plan (“ESPP”) allows eligible employees to purchase shares of our common stock at a discounted price by accumulating funds, normally through payroll deductions, of up to 15 % of their earnings.

The Employee Stock Purchase Plan (“ESPP”) allows eligible employees to purchase shares of our common stock at a discounted price, normally through payroll deductions, of up to 15 % of their earnings, subject to the terms of the ESPP and applicable law.

The purchase price for common stock under the ESPP is equal to 85 % of the fair market value of our common stock on the first or last day of the offering period, whichever is lower.

The ESPP provides for separate six-month offering periods that begin in the first and third quarter of each year.

In the nine months ended October 31, 2020, 0.5 million shares of our common stock were purchased under the ESPP.

Compensation expense related to the ESPP was $ 3.4 million and $ 2.4 million for the three months ended October 31, 2020 and 2019, and $ 8.2 million and $ 6.4 million for the nine months ended October 31, 2020 and 2019.

In the three months ended April 30, 2021, 0.1 million shares of our common stock were purchased under the ESPP.

Compensation expense related to the ESPP was $ 4.3 million and $ 1.9 million for the three months ended April 30, 2021 and 2020.

The number of shares reserved under the ESPP will automatically increase on the first day of each fiscal year, starting on February 1, 2019 and continuing through February 1, 2028, in an amount equal to the lesser of (i) 1 % of the total number of shares of our common stock outstanding on January 31 of the preceding fiscal year, (ii) 3.8 million shares, or (iii) a lesser number of shares determined by our board of directors.

As of October 31, 2020, 6.3 million shares of our common stock were reserved for issuance under the ESPP.

As of April 30, 2021, 8.1 million shares of our common stock were reserved for issuance under the ESPP.

Net Loss per Share Attributable to Common Stockholders

The following table presents the calculation of basic and diluted net loss per share attributable to common stockholders for periods presented:

Three Months Ended October 31, Nine Months Ended October 31,

Three Months Ended April 30,

(in thousands, except per share data) 2021 2020

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Each quarter, we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment.

Our income tax provision was $ 1.9 million and $ 1.0 million for the three months ended October 31, 2020 and 2019.

Our income tax provision was $ 4.9 million and $ 3.6 million for the nine months ended October 31, 2020 and 2019.

The overall increase in the tax provision was primarily driven by higher foreign tax expenses, resulting from higher year-over-year earnings in certain foreign jurisdictions as we continue to scale our foreign operations to support our ongoing international growth.

There were no material discrete items in the quarter.

Our income tax provision was $ 2.0 million and $ 2.1 million for the three months ended April 30, 2021 and 2020.

We review the likelihood that we will realize the benefit of our deferred tax assets and, therefore, the need for valuation allowances, on a quarterly basis.

We maintain a valuation allowance against certain deferred tax assets, including all U.S.

consolidated group deferred tax assets and certain foreign deferred tax assets as a result of our history of losses in the U.S.

and certain foreign jurisdictions, and the variability and uncertainty of operating results.

consolidated group deferred tax assets and certain foreign deferred tax assets as a result of our history of losses in the United States and certain foreign jurisdictions, and the variability and uncertainty of our operating results.

In the event we determine our deferred tax assets are realizable based on our assessment of relevant factors, an adjustment to the valuation allowance may increase income in the period such determination is made.

As of October 31, 2020, our gross unrecognized tax benefits totaled $ 15.7 million, excluding related accrued interest and penalties, of which $ 2.7 million would impact the effective tax rate if recognized.

As of April 30, 2021, our gross unrecognized tax benefits totaled $ 35.7 million, excluding related accrued interest and penalties, of which $ 16.3 million would impact the effective tax rate if recognized.

Our policy is to account for interest and penalties related to uncertain tax positions as a component of income tax provision.

We do not expect to have any significant changes to unrecognized tax benefits during the next twelve months.

We are subject to taxation in the U.S.

and various foreign jurisdictions.

Our tax years from inception in 2003 through October 31, 2020 remain subject to examination by U.S.

We are subject to taxation in the United States and various foreign jurisdictions.

Our tax years from inception in 2003 through April 30, 2021 remain subject to examination by U.S.

and California taxing authorities, as well as taxing authorities in various other state and foreign jurisdictions.

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Revenue by geographic area was as follows:

Three Months Ended October 31, Nine Months Ended October 31,

Three Months Ended April 30,

(in thousands) 2021 2020

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No single country other than the U.S.

had revenue greater than 10% of total revenue in the three and nine months ended October 31, 2020 and 2019 .

had revenue greater than 10% of total revenue in the three months ended April 30, 2021 and 2020 .

Our long-lived assets by geographic area, which consist of property and equipment, net and operating lease right-of-use assets were as follows:

(in thousands) October 31, 2020 January 31, 2020

(in thousands) April 30, 2021 January 31, 2021

$ 216,952 $ 221,549

Ireland 64,842 66,670

International 34,519 36,172

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements