Elastic N.V. 10-K

Item 8. Financial Statements and Supplementary Data. The supplementary financial information required by this Item 8, is included in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , under the caption “Quarterly Results of Operations Data,” which is incorporated herein by reference. The following financial statements are filed as part of this Annual Report on Form 10-K: Report of Independent Registered Public Accounting Firm 70 Financial Statements: Consolidated Balance Sheets as of April 30, 2020 and 2019 73 Consolidated Statements of Operations for the years ended April 30, 2020, 2019 and 2018 74 Consolidated Statements of Comprehensive Loss for the years ended April 30, 2020, 2019 and 2018 75 Consolidated Statements of Redeemable Convertible Preference Shares and Shareholders’ Equity (Deficit) for the years ended April 30, 2020, 2019 and 2018 76 Consolidated Statements of Cash Flows for the years ended April 30, 2020, 2019 and 2018 77 Notes to Consolidated Financial Statements 78 69 Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Elastic N.V. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Elastic N.V. and its subsidiaries (the “Company”) as of April 30, 2020 and 2019, and the related consolidated statements of operations, of comprehensive loss, of redeemable convertible preference shares and shareholders’ equity (deficit), and of cash flows for each of the three years in the period ended April 30, 2020, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of April 30, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of April 30, 2020 and 2019 , and the results of its operations and its cash flows for each of the three years in the period ended April 30, 2020 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of April 30, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Change in Accounting Principle As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases as of May 1, 2019. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the 70 company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Revenue Recognition – Identification and Evaluation of Terms and Conditions in Contracts As described in Note 2 to the consolidated financial statements, management applies the following steps in their determination of revenue to be recognized: (i) identification of the contract with a customer; (ii) determination of whether the promised goods or services are performance obligations; (iii) measurement of the transaction price; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when the Company satisfies each performance obligation. The Company’s contracts include varying terms and conditions, and identifying and evaluating the impact of these terms and conditions on revenue recognition requires significant judgment. For the fiscal year ended April 30, 2020, the Company’s revenue was $427.6 million. The principal considerations for our determination that performing procedures relating to revenue recognition, specifically the identification and evaluation of terms and conditions in contracts, is a critical audit matter are there was significant judgment by management in identifying and evaluating terms and conditions in contracts that impact revenue recognition. This in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and in evaluating the audit evidence to determine whether terms and conditions in contracts were appropriately identified and evaluated by management. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls related to the identification and evaluation of terms and conditions in contracts that impact revenue recognition. These procedures also included, among others (i) testing the completeness and accuracy of management’s identification and evaluation of the specific terms with customers by examining revenue contracts on a sample basis and (ii) assessing the terms and conditions of the contract including their impact on revenue recognition. Acquisition of Endgame, Inc. - Valuation of Developed Technology Intangible Asset As described in Note 5 to the consolidated financial statements, on October 8, 2019, the Company completed the acquisition of Endgame, Inc. for a total acquisition price of $234.0 million, of which approximately $32.7 million of developed technology was recorded. As disclosed by management, a multi-period excess earnings model was used to value the developed technology intangible asset. Management applied significant judgment in estimating the fair value of the developed technology intangible asset, which involved the use of significant estimates related to the revenue growth rate assumption for both existing and any future product offerings. The principal considerations for our determination that performing procedures relating to the valuation of the developed technology intangible asset as a result of the acquisition of Endgame, Inc. is a critical audit matter are there was significant judgment by management in estimating the fair value of the developed technology intangible asset. This in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and in evaluating management’s fair value measurement of the developed technology intangible asset, including the revenue growth rate assumption for any future product offerings. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing of the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the developed technology intangible asset, as well as controls over the development of significant assumptions and validity of the supporting data related to the developed technology intangible asset, including the revenue growth rate for any future product offerings. These procedures also included, among others (i) testing management’s process for estimating the fair value of the developed technology intangible asset, (ii) 71 evaluating the appropriateness of the multi-period excess earnings model, (iii) testing the completeness, accuracy, and relevance of underlying data used in the model, and (iv) evaluating the reasonableness of the significant assumptions used by management, including the revenue growth rate for any future product offerings. Evaluating the reasonableness of the assumption related to the revenue growth rate for any future product offerings involved considering (i) the past performance of the acquired business, (ii) the consistency with external market and industry data, and (iii) whether this assumption was consistent with other evidence obtained in other areas of the audit. /s/ PricewaterhouseCoopers LLP San Jose, California June 26, 2020 We have served as the Company’s auditor since 2018. 72 Elastic N.V. Consolidated Balance Sheets ( in thousands, except share and per share data ) As of April 30, 2020 2019 Assets Current assets: Cash and cash equivalents $ 297,081 $ 298,000 Restricted cash 2,308 2,280 Accounts receivable, net of allowance for doubtful accounts of $ 1,247 and $ 1,411 as of April 30, 2020 and April 30, 2019, respectively 128,690 81,274 Deferred contract acquisition costs 19,537 17,215 Prepaid expenses and other current assets 32,623 30,872 Total current assets 480,239 429,641 Property and equipment, net 7,760 5,448 Goodwill 197,877 19,846 Operating lease right-of-use assets 32,783 — Intangible assets, net 50,455 6,723 Deferred contract acquisition costs, non-current 24,012 8,935 Deferred tax assets 3,164 1,748 Other assets 7,621 13,397 Total assets $ 803,911 $ 485,738 Liabilities and Shareholders’ Equity Current liabilities: Accounts payable $ 11,485 $ 4,450 Accrued expenses and other liabilities 22,210 18,740 Accrued compensation and benefits 48,409 22,147 Operating lease liabilities 7,639 — Deferred revenue 231,681 158,243 Total current liabilities 321,424 203,580 Deferred revenue, non-current 28,021 12,423 Operating lease liabilities, non-current 27,827 — Other liabilities, non-current 12,992 6,723 Total liabilities 390,264 222,726 Commitments and contingencies (Note 7) Shareholders’ equity: Convertible preference shares, € 0.01 par value; 165,000,000 shares authorized, 0 shares issued and outstanding as of April 30, 2020 and April 30, 2019 — — Ordinary shares, par value € 0.01 per share: 165,000,000 shares authorized; 82,856,978 shares issued and outstanding as of April 30, 2020 and 73,675,083 shares issued and outstanding as of April 30, 2019 856 754 Treasury stock, 35,937 shares (repurchased at an average price of $ 10.30 per share) ( 369 ) ( 369 ) Additional paid-in capital 898,788 581,135 Accumulated other comprehensive loss ( 1,377 ) ( 1,431 ) Accumulated deficit ( 484,251 ) ( 317,077 ) Total shareholders’ equity 413,647 263,012 Total liabilities and shareholders’ equity $ 803,911 $ 485,738 The accompanying notes are an integral part of these consolidated financial statements. 73 Elastic N.V. Consolidated Statements of Operations ( in thousands, except share and per share data ) Year Ended April 30, 2020 2019 2018 Revenue License - self-managed $ 53,536 $ 39,474 $ 25,759 Subscription - self-managed and SaaS 338,634 208,780 123,623 Total subscription revenue 392,170 248,254 149,382 Professional services 35,450 23,399 10,553 Total revenue 427,620 271,653 159,935 Cost of revenue Cost of license - self-managed 948 387 387 Cost of subscription - self-managed and SaaS 84,819 53,560 27,920 Total cost of revenue - subscription 85,767 53,947 28,307 Cost of professional services 36,923 24,063 12,433 Total cost of revenue 122,690 78,010 40,740 Gross profit 304,930 193,643 119,195 Operating expenses Research and development 165,370 101,167 55,641 Sales and marketing 219,040 147,296 82,606 General and administrative 91,625 46,536 28,942 Total operating expenses 476,035 294,999 167,189 Operating loss ( 171,105 ) ( 101,356 ) ( 47,994 ) Other income (expense), net 1,963 3,441 ( 1,357 ) Loss before income taxes ( 169,142 ) ( 97,915 ) ( 49,351 ) Provision for (benefit from) income taxes ( 1,968 ) 4,388 3,376 Net loss $ ( 167,174 ) $ ( 102,303 ) $ ( 52,727 ) Net loss per share attributable to ordinary shareholders, basic and diluted $ ( 2.12 ) $ ( 1.86 ) $ ( 1.65 ) Weighted-average shares used to compute net loss per share attributable to ordinary shareholders, basic and diluted 78,799,732 54,893,365 32,033,792 The accompanying notes are an integral part of these consolidated financial statements. 74 Elastic N.V. Consolidated Statements of Comprehensive Loss ( in thousands ) Year Ended April 30, 2020 2019 2018 Net loss $ ( 167,174 ) $( 102,303 ) $ ( 52,727 ) Other comprehensive loss: Foreign currency translation adjustments 54 ( 470 ) 931 Other comprehensive income (loss) 54 ( 470 ) 931 Total comprehensive loss $ ( 167,120 ) $ ( 102,773 ) $ ( 51,796 ) The accompanying notes are an integral part of these consolidated financial statements. 75 Elastic N.V. Consolidated Statements of Redeemable Convertible Preference Shares and Shareholders’ Equity (Deficit) ( in thousands, except share data ) Redeemable Convertible Preference Shares Ordinary Shares Treasury Shares Amount Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders' Equity (Deficit) Shares Amount Shares Amount Balances as of April 30, 2017 28,939,466 $ 200,921 31,130,047 $ 31 $ ( 25 ) $ 35,395 $ ( 1,892 ) $ ( 162,047 ) $ ( 128,538 ) Issuance of ordinary shares upon exercise of stock options — — 668,518 1 — 2,336 — — 2,337 Issuance of ordinary shares related to early exercised stock options — — 148,630 — — — — — — Repurchase of ordinary shares — — ( 33,937 ) — ( 344 ) — — — ( 344 ) Vesting of early exercised stock options — — — — 109 109 Ordinary shares issued in connection with the acquisition of Prelert — — 98,425 — — — — — — Ordinary shares issued in connection with the acquisition of Opbeat — — 488,998 — — 4,018 — — 4,018 Ordinary shares issued in connection with the acquisition of Swiftype — — 732,274 1 — 8,391 — — 8,392 Stock-based compensation — — — — — 12,293 — — 12,293 Net loss — — — — — — — ( 52,727 ) ( 52,727 ) Foreign currency translation — — — — — — 931 — 931 Balances as of April 30, 2018 28,939,466 200,921 33,232,955 33 ( 369 ) 62,542 ( 961 ) ( 214,774 ) ( 153,529 ) Change in par value upon conversion from B.V. to N.V. — — — 303 — ( 303 ) — — — Conversion of redeemable convertible preference shares to ordinary shares upon initial public offering ( 28,939,466 ) ( 200,921 ) 28,939,466 289 — 200,632 — — 200,921 Issuance of ordinary shares upon initial public offering, net of underwriting discounts and issuance costs — — 8,050,000 93 — 263,749 — — 263,842 Issuance of ordinary shares upon exercise of stock options — — 3,117,320 33 — 18,519 — — 18,552 Issuance of ordinary shares upon subscription of restricted stock awards — — 244,498 3 — ( 3 ) — — — Vesting of early exercised stock options — — — — — 1,019 — — 1,019 Vesting of ordinary shares subject to repurchase — — — — — 449 — — 449 Repurchase of early exercised stock options — — ( 43,630 ) — — — — — — Ordinary shares issued in connection with the acquisition of Lambda Lab — — 134,474 — — — — — — Stock-based compensation — — — — — 34,531 — — 34,531 Net loss — — — — — — — ( 102,303 ) ( 102,303 ) Foreign currency translation — — — — — — ( 470 ) — ( 470 ) Balances as of April 30, 2019 — — 73,675,083 754 ( 369 ) 581,135 ( 1,431 ) ( 317,077 ) 263,012 Issuance of ordinary shares upon exercise of stock options — — 6,815,098 77 — 61,386 — — 61,463 Issuance of ordinary shares upon release of restricted stock units — — 152,688 2 — — — — 2 Ordinary shares issued in connection with the acquisition of Endgame — — 1,983,663 21 — 167,316 — — 167,337 Ordinary shares issued in connection with the acquisition of Endgame held in escrow — — 235,031 2 — 19,824 — — 19,826 Assumption of stock option plan as consideration for acquisition of Endgame — — — — — 9,309 — — 9,309 Repurchase of unvested RSAs — — ( 4,585 ) — — — — — — Vesting of ordinary shares subject to repurchase — — — — — 2,730 — — 2,730 Stock-based compensation — — — — — 57,088 — — 57,088 Net loss — — — — — — — ( 167,174 ) ( 167,174 ) Foreign currency translation — — — — — — 54 — 54 Balances as of April 30, 2020 — $ — 82,856,978 $ 856 $ ( 369 ) $ 898,788 $ ( 1,377 ) $ ( 484,251 ) $ 413,647 The accompanying notes are an integral part of these consolidated financial statements. 76 Elastic N.V. Consolidated Statements of Cash Flows ( in thousands ) Year Ended April 30, 2020 2019 2018 Cash flows from operating activities Net loss $ ( 167,174 ) $ ( 102,303 ) $ ( 52,727 ) Adjustments to reconcile net loss to cash used in operating activities: Depreciation and amortization 12,859 5,695 5,066 Amortization of deferred contract acquisition costs 28,314 21,374 12,731 Non-cash operating lease cost 7,422 — — Stock-based compensation expense 60,007 39,942 12,742 Non-cash acquisition expense settled with shares 8,834 — — Deferred income taxes ( 1,539 ) 3,621 ( 323 ) Other 1,123 69 1 Changes in operating assets and liabilities, net of impact of business acquisitions: Accounts receivable, net ( 46,753 ) ( 29,804 ) ( 21,606 ) Deferred contract acquisition costs ( 46,217 ) ( 30,006 ) ( 20,497 ) Prepaid expenses and other current assets ( 2,950 ) ( 18,049 ) ( 6,920 ) Other assets 5,603 ( 3,292 ) ( 8,502 ) Accounts payable 5,968 2,226 ( 23 ) Accrued expenses and other liabilities 5,220 10,872 5,380 Accrued compensation and benefits 19,710 3,842 8,045 Operating lease liabilities ( 6,661 ) — — Deferred revenue 85,670 71,876 45,814 Net cash used in operating activities ( 30,564 ) ( 23,937 ) ( 20,819 ) Cash flows from investing activities Purchases of property and equipment ( 5,063 ) ( 3,447 ) ( 2,968 ) Maturities of short-term investments — — 15,000 Business acquisitions, net of cash acquired ( 24,373 ) ( 1,986 ) ( 3,702 ) Other 249 ( 2,850 ) — Net cash provided by (used in) investing activities ( 29,187 ) ( 8,283 ) 8,330 Cash flows from financing activities Net proceeds from issuance of ordinary shares in initial public offering — 269,514 — Proceeds from issuance of ordinary shares upon exercise of stock options 61,463 18,552 2,337 Proceeds from the issuance of ordinary shares related to early exercise of stock options — — 1,566 Repurchase of ordinary shares — — ( 344 ) Repurchase of early exercised options — ( 500 ) — Repayment of notes payable ( 90 ) ( 106 ) ( 132 ) Payment of deferred offering costs — ( 5,672 ) — Payment of withholding taxes related to acquisition expense settled in shares ( 2,834 ) — — Net cash provided by financing activities 58,539 281,788 3,427 Effect of exchange rate changes on cash, cash equivalents, and restricted cash 321 ( 897 ) 781 Net increase (decrease) in cash, cash equivalents, and restricted cash ( 891 ) 248,671 ( 8,281 ) Cash, cash equivalents, and restricted cash, beginning of period 300,280 51,609 59,890 Cash, cash equivalents, and restricted cash, end of period $ 299,389 $ 300,280 $ 51,609 Supplemental disclosures of cash flow information Cash paid for income taxes $ 3,497 $ 3,067 $ 3,189 Cash paid for operating lease liabilities $ 7,371 $ — $ — Cash paid for interest $ 2 $ 9 $ 14 Supplemental disclosures of non-cash investing and financing information Purchases of property and equipment included in accounts payable $ 101 $ 157 $ 6 Operating lease right-of-use assets for new lease obligations $ 12,332 $ — $ — Vesting of early exercised stock options $ — $ 1,019 $ 109 Vesting of shares subject to repurchase $ 2,730 $ 449 $ — Issuance of ordinary shares for business acquisition $ 178,329 $ — $ 12,410 Assumption of stock option plan as consideration for business combination $ 9,309 $ — $ — Deferred offering costs accrued, unpaid $ — $ — $ 242 The accompanying notes are an integral part of these consolidated financial statements. 77 1. Organization and Description of Business Elastic N.V. (“Elastic” or the “Company”) was incorporated under the laws of the Netherlands in 2012. Elastic is a search company. It created the Elastic Stack, a powerful set of software products that ingest and store data from any source and in any format, and perform search, analysis, and visualization in milliseconds or less. Developers build on top of the Elastic Stack to apply the power of search to their data and solve business problems. The Company also offers software solutions built on the Elastic Stack: Enterprise Search, Observability, and Security. The Elastic Stack and the Company’s solutions are designed to run in public or private clouds, in hybrid environments, or in traditional on-premises environments. Initial Public Offering In October 2018, the Company completed its initial public offering (“IPO”) in which it issued and sold 8,050,000 ordinary shares at an offering price of $ 36.00 per share, including 1,050,000 ordinary shares pursuant to the exercise in full of the underwriters’ option to purchase additional shares. The Company received net proceeds of $ 263.8 million, after deducting underwriting discounts and commissions of $ 20.3 million and offering expenses of $ 5.7 million. Immediately prior to the completion of the IPO, all 28,939,466 shares of the Company’s then-outstanding redeemable convertible preference shares automatically converted into 28,939,466 ordinary shares at their respective conversion ratios and the Company reclassified $ 200.6 million from temporary equity to additional paid-in capital and $ 0.3 million to ordinary shares on its consolidated balance sheet. The Company’s articles of association designated and authorized the Company to issue 72 million ordinary shares with a par value of € 0.001 per share up until immediately prior to the completion of the IPO at which time the authorized ordinary shares increased to 165 million. In addition, the par value of ordinary shares was changed from € 0.001 per share to € 0.01 per share as required by Dutch law at the time of the Company’s conversion into a Dutch public company with limited liability ( naamloze vennootschap ). 2. Summary of Significant Accounting Policies Basis of Presentation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the financial statements of the Company and its wholly owned subsidiaries. All intercompany transactions and accounts have been eliminated in consolidation. Fiscal Year The Company’s fiscal year ends on April 30. References to fiscal 2020, for example, refer to the fiscal year ended April 30, 2020. Use of Estimates and Judgments The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Such estimates include, but are not limited to, allocation of revenue between recognized and deferred amounts, deferred contract acquisition costs, allowance for doubtful accounts, valuation of stock-based compensation, fair value of ordinary shares in periods prior to the Company’s initial public offering, fair value of acquired intangible assets and goodwill, useful lives of acquired intangible assets and property and equipment, whether an arrangement is or contains a lease, the discount rate used for operating leases and valuation allowance for deferred income taxes. The Company bases these estimates on historical and anticipated results, trends and various other assumptions that it believes are reasonable under the circumstances, including assumptions as to future events. In March 2020, the World Health Organization declared the 2019 novel Coronavirus Disease (“COVID-19”) a pandemic. The pandemic is expected to result in a global slowdown of economic activity that is likely to decrease demand for a broad variety of goods and services, including from the Company’s customers, while also disrupting sales channels and marketing activities for an unknown period of time. The full extent to which COVID-19 may impact the Company’s financial condition or results of operations is uncertain. Estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require the exercise of judgment. As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates, judgments or revise the carrying value 78 of the Company’s assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the Company’s financial statements. JOBS Act Extended Transition Period As a result of the market value of our common stock held by our non-affiliates as of October 31, 2019, the Company ceased to be an “emerging growth company” ("EGC"), as defined in the Jumpstart Our Business Startups Act of 2012, with the Company’s transition to a large accelerated filer status as of April 30, 2020. As an EGC, the Company elected not to avail itself of the extended transition periods available for complying with new or revised accounting pronouncements applicable to public companies that are not emerging growth companies. Accordingly, the transition to a large accelerated filer did not have an impact to the Company’s consolidated financial statements. Foreign Currency The reporting currency of the Company is the U.S. dollar. The Company determines the functional currency of each subsidiary in accordance with ASC 830, Foreign Currency Matters, based on the currency of the primary economic environment in which each subsidiary operates. Items included in the financial statements of such subsidiaries are measured using that functional currency. For the subsidiaries where the U.S. dollar is the functional currency, foreign currency denominated monetary assets and liabilities are re-measured into U.S. dollars at current exchange rates and foreign currency denominated nonmonetary assets and liabilities are re-measured into U.S. dollars at historical exchange rates. Gains or losses from foreign currency re-measurement and settlements are included in other income (expense), net in the consolidated statement of operations. For the years ended April 30, 2020, 2019 and 2018, the Company recognized re-measurement loss of $ 2.2 million, $ 0.2 million and $ 1.3 million, respectively. For subsidiaries where the functional currency is other than the U.S. dollar, the Company uses the period-end exchange rates to translate assets and liabilities, the average monthly exchange rates to translate revenue and expenses, and historical exchange rates to translate shareholders’ equity (deficit), into U.S. dollars. The Company records translation gains and losses in accumulated other comprehensive loss as a component of shareholders’ equity in the consolidated balance sheet. Comprehensive Loss The Company’s comprehensive loss includes net loss and unrealized gains and losses on foreign currency translation adjustments. Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments, including money market funds with an original maturity of three months or less at the date of purchase, to be cash equivalents. The carrying amount of the Company’s cash equivalents approximates fair value, due to the short maturities of these instruments. Restricted cash represents cash on deposit with financial institutions in support of letters of credit in favor of certain landlords for non-cancelable lease agreements. Cash, cash equivalents, and restricted cash as reported in the Company’s consolidated statements of cash flows includes the aggregate amounts of cash and cash equivalents and the restricted cash as shown on the consolidated balance sheet. Cash, cash equivalents, and restricted cash as reported in the Company’s consolidated statements of cash flows consists of the following (in thousands): As of April 30, 2020 2019 Cash and cash equivalents $ 297,081 $ 298,000 Restricted cash 2,308 2,280 Cash, cash equivalents and restricted cash $ 299,389 $ 300,280 Short-Term Investments Investments with an original maturity of three months or less at the date of purchase are considered cash equivalents, while all other investments are classified as short-term or long-term based on the nature of the investments, their maturities, and their availability for use in current operations. The Company determines the appropriate classification of its investments at the time of purchase and reevaluates such designation at each balance sheet date. The Company’s short-term investments consisted 79 of bank deposits with original maturities greater than three months but less than twelve months and are classified as short-term investments within current assets in the consolidated balance sheet. Fair Value of Financial Instruments The Company’s financial instruments consist of cash equivalents, accounts receivable, accounts payable, and accrued liabilities. Cash equivalents are stated at amortized cost, which approximates fair value at the balance sheet dates, due to the short period of time to maturity. Accounts receivable, accounts payable and accrued liabilities are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment date. Assets and liabilities recorded at fair value on a recurring basis in the consolidated balance sheet consisting primarily of cash equivalents are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The Company measures its financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value: • Level 1: Observable inputs, such as unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. • Level 2: Observable inputs, other than Level 1 prices, such as quoted prices in active markets for similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The carrying values of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their respective fair values due to the short period of time to maturity, receipt or payment. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash, cash equivalents, restricted cash, short-term investments, and accounts receivable. The primary focus of the Company’s investment strategy is to preserve capital and meet liquidity requirements. The Company maintains its cash accounts with financial institutions where, at times, deposits exceed federal insurance limits. The Company invests its excess cash in highly-rated money market funds and in short-term investments. The Company extends credit to customers in the normal course of business. The Company performs credit analyses and monitors the financial health of its customers to reduce credit risk. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Management performs ongoing credit evaluations of customers and maintains allowances for potential credit losses on customers’ accounts when deemed necessary. One customer represented 10% or more of net accounts receivable ( 11 %) as of April 30, 2020, and no customer represented more than 10% or more of net accounts receivable as of April 30, 2019. No customer accounted for more than 10 % of the Company’s revenue for the years ended April 30, 2020, 2019 and 2018, respectively. Accounts Receivable, Unbilled Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable primarily consists of amounts billed currently due from customers. The Company’s accounts receivable are subject to collection risk. Gross accounts receivable are reduced for this risk by an allowance for doubtful accounts. This allowance is for estimated losses resulting from the inability of the Company’s customers to make required payments. The Company determines the need for an allowance for doubtful accounts based upon various factors, including past collection experience, credit quality of the customer, age of the receivable balance, and current economic conditions, as well as specific circumstances arising with individual customers. Accounts receivables are written off against the allowance when management determines a balance is uncollectible and the Company no longer actively pursues collection of the receivable. 80 The Company does not typically offer right of refund in its contracts. The allowance for doubtful accounts reflects the Company’s best estimate of probable losses inherent in the Company’s receivables portfolio. The Company has not experienced significant credit losses from its accounts receivable. As of April 30, 2020 and 2019, the allowance for doubtful accounts was $ 1.2 million and $ 1.4 million, respectively. Activity related to the Company’s allowance for doubtful accounts was as follows (in thousands): Year ended April 30, 2020 2019 2018 Beginning balance $ 1,411 $ 776 $ 357 Bad debt expense 193 1,105 1,265 Accounts written off ( 357 ) ( 470 ) ( 846 ) Ending balance $ 1,247 $ 1,411 $ 776 Unbilled accounts receivable represents amounts for which the Company has recognized revenue, pursuant to the Company’s revenue recognition policy, for fulfilled obligations, but not yet billed. The unbilled accounts receivable balance was $ 2.6 million and $ 1.7 million as of April 30, 2020 and 2019, respectively. Capitalized Software Costs Software development costs for software to be sold, leased, or otherwise marketed are expensed as incurred until the establishment of technological feasibility, at which time those costs are capitalized until the product is available for general release to customers and amortized over the estimated life of the product. Technological feasibility is established upon the completion of a working prototype that has been certified as having no critical bugs and is a release candidate. To date, costs to develop software that is marketed externally have not been capitalized as the current software development process is essentially completed concurrently with the establishment of technological feasibility. As such, all related software development costs are expensed as incurred and included in research and development expense in the consolidated statement of operations. Costs related to software acquired, developed, or modified solely to meet the Company’s internal requirements, with no substantive plans to market such software at the time of development, or costs related to development of web-based products are capitalized. Costs incurred during the preliminary planning and evaluation stage of the project and during the post implementation operational stage are expensed as incurred. Costs incurred during the application development stage of the project are capitalized. The Company did not capitalize any costs related to software developed for internal use or web-based products in the years ended April 30, 2020, 2019 and 2018. Property and Equipment Property and equipment are recorded at cost and depreciated over their estimated useful lives using the straight-line method. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the financial statements and any resulting gain or loss is reflected within the consolidated statement of operations. There was no material gain or loss incurred as a result of retirement or sale in the periods presented. Repair and maintenance costs are expensed as incurred. Leases Leases arise from contractual obligations that convey the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. The Company determines whether an arrangement is or contains a lease at inception, based on whether there is an identified asset and whether the Company controls the use of the identified asset throughout the period of use. At the lease commencement date, the Company determines the lease classification between finance and operating and recognizes a right-of-use asset and corresponding lease liability for each lease component. A right-of-use asset represents the Company’s right to use an underlying asset and a lease liability represents the Company’s obligation to make payments during the lease term. The operating lease right-of-use asset also includes any lease payments made and excludes lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company accounts for lease components and non-lease components as a single lease component. The lease liability is initially measured as the present value of the remaining lease payments over the lease term. The discount rate used to determine the present value is the Company’s incremental borrowing rate unless the interest rate implicit in the lease is readily determinable. The Company estimates its incremental borrowing rate based on the information available at lease commencement date for borrowings with a similar term. The right-of-use asset is initially measured as the present value of the lease payments, adjusted for initial direct costs, prepaid lease payments to lessors and lease incentives. 81 Acquisitions The Company has completed a number of acquisitions of other businesses in the past and may acquire additional businesses or technologies in the future. The results of businesses acquired in a business combination are included in the Company’s consolidated financial statements from the date of acquisition. The Company allocates the purchase price, which is the sum of the consideration provided and may consist of cash, equity or a combination of the two, in a business combination to the identifiable assets and liabilities of the acquired business at their acquisition date fair values. The excess of the purchase price over the amount allocated to the identifiable assets and liabilities, if any, is recorded as goodwill. Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenue and cash flows, discount rates and selection of comparable companies. When the Company issues stock-based or cash awards to an acquired company’s shareholders, the Company evaluates whether the awards are consideration or compensation for post-acquisition services. The evaluation includes, among other things, whether the vesting of the awards is contingent on the continued employment of the acquired company’s shareholders beyond the acquisition date. If continued employment is required for vesting, the awards are treated as compensation for post- acquisition services and recognized as expense over the requisite service period. To date, the assets acquired and liabilities assumed in the Company’s business combinations have primarily consisted of goodwill and finite-lived intangible assets, consisting primarily of developed technologies, in-process research & development, customer relationships and trade names. The estimated fair values and useful lives of identifiable intangible assets are based on many factors, including estimates and assumptions of future operating performance and cash flows of the acquired business, the nature of the business acquired, and the specific characteristics of the identified intangible assets. The estimates and assumptions used to determine the fair values and useful lives of identified intangible assets could change due to numerous factors, including market conditions, technological developments, economic conditions and competition. In connection with determination of fair values, the Company may engage independent appraisal firms to assist with the valuation of intangible and certain tangible assets acquired and certain assumed obligations. Acquisition-related transaction costs incurred by the Company are not included as a component of consideration transferred, but are accounted for as an operating expense in the period in which the costs are incurred. Goodwill Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations accounted for using the acquisition method for accounting and is not amortized. The Company tests goodwill for impairment at least annually, in the fourth quarter of each year, or more frequently if events or changes in circumstances indicate that this asset may be impaired. For the purposes of impairment testing, the Company has determined that it has one operating segment and one reporting unit. The Company’s test of goodwill impairment starts with a qualitative assessment to determine whether it is necessary to perform a quantitative goodwill impairment test. If qualitative factors indicate that the fair value of the reporting unit is more likely than not less than its carrying amount, then a quantitative goodwill impairment test is performed. For the quantitative analysis, the Company compares the fair value of its reporting unit to its carrying value. If the estimated fair value exceeds book value, goodwill is considered not to be impaired and no additional steps are necessary. However, if the fair value of the reporting unit is less than book value, then under the second step the carrying amount of the goodwill is compared to its implied fair value. There was no impairment of goodwill recorded for the years ended April 30, 2020, 2019 and 2018. Acquired Intangible Assets Acquired amortizable intangible assets are amortized on a straight-line basis over the estimated useful lives of the assets. Useful life (in years) Developed technology 4 - 5 Customer relationships 4 Trade names 4 Impairment of Long-Lived Assets The Company evaluates the recoverability of long-lived assets, including property and equipment and amortizable acquired intangible assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be fully recoverable. Such events and changes may include: significant changes in performance relative to expected operating results, significant changes in asset use, significant negative industry or economic trends, and changes in the 82 Company’s business strategy. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If such review indicates that the carrying amount of long-lived assets is not recoverable, the carrying amount of such assets is reduced to fair value. The Company determined that there were no events or changes in circumstances that indicated that its long-lived assets were impaired during the years ended April 30, 2020, 2019 and 2018. In addition to the recoverability assessment, the Company periodically reviews the remaining estimated useful lives of property and equipment and amortizable intangible assets. If the estimated useful life assumption for any asset is changed, the remaining unamortized balance would be depreciated or amortized over the revised estimated useful life, on a prospective basis. Deferred Offering Costs Deferred offering costs were capitalized and consisted of fees and expenses incurred in connection with the sale of the Company’s ordinary shares in its IPO, including the legal, accounting, printing and other IPO-related costs. Upon consummation of the IPO in October 2018, $ 0.2 million of previously deferred offering costs along with additional offering costs of $ 5.5 million were reclassified to shareholders’ equity (deficit) and recorded against the proceeds from the offering. Revenue Recognition The Company generates revenue primarily from the sale of self-managed subscriptions (which include licenses for proprietary features, support, and maintenance) and SaaS subscriptions. The Company also generates revenue from professional services, which consist of consulting and training. Under ASC Topic 606, Revenue from Contracts with Customers, the Company recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company’s contracts include varying terms and conditions, and identifying and evaluating the impact of these terms and conditions on revenue recognition requires significant judgment. In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements, the Company performs the following steps: (i) identification of the contract with a customer; The Company contracts with its customers through order forms, which in some cases are governed by master sales agreements. The Company determines that it has a contract with a customer when the order form has been approved, each party’s rights regarding the products or services to be transferred can be identified, the payment terms for the services can be identified, the Company has determined the customer has the ability and intent to pay and the contract has commercial substance. The Company applies judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s historical payment experience or, in the case of a new customer, credit, reputation and financial or other information pertaining to the customer. At contract inception the Company evaluates whether two or more contracts should be combined and accounted for as a single contract and whether the combined or single contract includes more than one performance obligation. The Company has concluded that its contracts with customers do not contain warranties that give rise to a separate performance obligation. (ii) determination of whether the promised goods or services are performance obligations; Performance obligations promised in a contract are identified based on the products and services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the products or services either on their own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the products and services is separately identifiable from other promises in the contract. The Company’s self-managed subscriptions include both an obligation to provide access to proprietary features in its software, as well as an obligation to provide support (on both open source and proprietary features) and maintenance. The Company’s SaaS products provide access to hosted software as well as support, which the Company considers to be a single performance obligation. Services-related performance obligations relate to the provision of consulting and training services. These services are distinct from subscriptions and do not result in significant customization of the software. (iii) measurement of the transaction price; The Company measures the transaction price with reference to the standalone selling price (“SSP”) of the various performance obligations inherent within a contract. The SSP is determined based on the prices at which the Company separately sells these products, assuming the majority of these fall within a pricing range. In instances where SSP is not directly observable, such as when the Company does not sell the software license separately, the Company derives the SSP using 83 information that may include market conditions and other observable inputs that can require significant judgment. There is typically more than one SSP for individual products and services due to the stratification of those products and services by quantity, term of the subscription, sales channel and other circumstances. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of the Company’s contracts contain a significant financing component. (iv) allocation of the transaction price to the performance obligations; and If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. For contracts that contain multiple performance obligations, the Company allocates the transaction price to each performance obligation based on a relative SSP. If one of the performance obligations is outside of the SSP range, the Company allocates SSP considering the midpoint of the range. The Company also considers if there are any additional material rights inherent in a contract, and if so, the Company allocates a portion of the transaction price to such rights based on SSP. (v) recognition of revenue when the Company satisfies each performance obligation; Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised product or service to the customer. The Company’s self-managed subscriptions include both upfront revenue recognition when the license is delivered as well as revenue recognized ratably over the contract period for support and maintenance based on the stand-ready nature of these subscription elements. Revenue on the Company’s SaaS products is recognized ratably over the contract period when the Company satisfies the performance obligation. Professional services comprise consulting services as well as public and private training. Consulting services are generally time-based arrangements. Revenue from professional services is recognized as these services are performed. The Company generates sales directly through its sales team and through its channel partners. Sales to channel partners are made at a discount and revenues are recorded at this discounted price once all the revenue recognition criteria above are met. To the extent that the Company offers rebates, incentives or joint marketing funds to such channel partners, recorded revenues are reduced by this amount. Channel partners generally receive an order from an end-customer prior to placing an order with the Company. Payment from channel partners is not contingent on the partner’s collection from end-customers. Deferred Contract Acquisition Costs Deferred contract acquisition costs represent costs that are incremental to the acquisition of customer contracts, which consist mainly of sales commissions and associated payroll taxes. The Company determines whether costs should be deferred based on sales compensation plans, if the commissions are in fact incremental and would not have occurred absent the customer contract. During the fiscal year ended April 30, 2020, the Company updated its sales commissions plan by incorporating different commission rates for contracts with new customers and incremental sales to existing customers, and subsequent subscription renewals. Subsequent to this change, sales commissions for renewal of a subscription contract are not considered commensurate with the commissions paid for contracts with new customers and incremental sales to existing customers given the substantive difference in commission rates in proportion to their respective contract values. Effective May 1, 2019, commissions paid for contracts with new customers and incremental sales to existing customers are amortized over an estimated period of benefit of five years while commissions paid for renewal contracts are amortized based on the pattern of the associated revenue recognition over the related contractual renewal period for the pool of renewal contracts. The Company determines the period of benefit for commissions paid for contracts with new customers and incremental sales to existing customers by taking into consideration its initial estimated customer life and the technological life of its software and related significant features. Commissions paid on professional services are typically amortized in accordance with the associated revenue as the commissions paid on new and renewal professional services are commensurate with each other. Amortization of deferred contract acquisition costs is recognized in sales and marketing expense in the consolidated statement of operations. The Company periodically reviews the carrying amount of deferred contract acquisition costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit of these deferred costs. Further disclosures with respect to the Company’s deferred contract acquisition costs are also included in Note 6, Balance Sheet Components. Cost of Revenue Cost of revenue consists primarily of costs related to providing subscription and professional services to the Company’s customers, including personnel costs (salaries, bonuses and benefits, and stock-based compensation) and related 84 expenses for customer support and services personnel, as well as cloud infrastructure costs, third-party expenses, depreciation of fixed assets, amortization associated with acquired intangible assets, and allocated overhead. Research and Development Research and development costs are expensed as incurred and consist primarily of personnel costs, including salaries, bonuses and benefits, and stock-based compensation. Research and development costs also include depreciation and allocated overhead. Advertising Advertising costs are charged to operations as incurred or the first time the advertising takes place, based on the nature of the advertising, and include direct marketing, events, public relations, sales collateral materials and partner programs. Advertising costs were $ 7.7 million, $ 6.5 million, $ 1.7 million for the years ended April 30, 2020, 2019 and 2018 respectively. Advertising costs are recorded in sales and marketing expense in the consolidated statement of operations. Stock-Based Compensation Compensation expense related to stock awards issued to employees, including stock options, restricted stock awards (“RSAs”), and restricted stock units (“RSUs”) is measured at the fair value on the date of the grant and recognized over the requisite service period. The fair value of stock options is estimated on the date of the grant using the Black-Scholes option-pricing model. The fair value of RSAs and RSUs is estimated on the date of the grant based on the fair value of the Company’s underlying ordinary shares. Compensation expense for stock options and RSUs is recognized on a straight-line basis over the requisite service period. Compensation expense for RSAs is amortized on a graded basis over the requisite service period as long as the underlying performance condition is probable to occur. RSAs issued till date included a performance condition in the form of a specified liquidity event. The liquidity event condition was satisfied upon the effectiveness of the Company’s registration statement on Form S-1 ("IPO registration statement"), on October 4, 2018. On that date, the Company recorded a cumulative stock-based compensation expense of $ 1.7 million using the accelerated attribution method for all RSAs, for which the service condition had been fully satisfied as of October 4, 2018. The remaining unrecognized stock-based compensation expense related to the RSAs will be recorded over their remaining requisite service periods. The Company recognizes forfeitures as they occur. Net Loss per Share Attributable to Ordinary Shareholders The Company calculates basic net loss per share by dividing the net loss by the weighted-average number of ordinary shares outstanding during the period, less shares subject to repurchase. Diluted net loss per share is computed by giving effect to all potentially dilutive ordinary share equivalents outstanding for the period, including stock options and restricted stock units. Prior to the completion of the IPO in October 2018, the Company calculated basic and diluted net loss per share attributable to ordinary shareholders in conformity with the two-class method required for companies with participating securities. The Company considered all series of redeemable convertible preference shares and early exercised stock options to be participating securities as the holders were entitled to receive non-cumulative dividends on a pari passu basis in the event that a dividend was paid on ordinary shares. Under the two-class method, the net loss attributable to ordinary shareholders was not allocated to the redeemable convertible preference shares and early exercised stock options as the holders of redeemable convertible preference shares and early exercised stock options did not have a contractual obligation to share in losses. Under the two-class method, basic net loss per share attributable to ordinary shareholders was calculated by dividing the net loss by the weighted-average number of ordinary shares outstanding during the period, less shares subject to repurchase. Diluted net loss per share attributable to ordinary shareholders was computed by giving effect to all potentially dilutive ordinary shares outstanding for the period. For purposes of this calculation, redeemable convertible preference shares, stock options to acquire ordinary shares, contingently issuable shares, and early exercised stock options were considered potentially dilutive ordinary shares, but had been excluded from the calculation of diluted net loss per share attributable to ordinary shareholders as their effect was antidilutive. Upon completion of the IPO, all shares of redeemable convertible preference shares then outstanding were automatically converted into an equivalent number of shares of ordinary shares on a one-to-one basis and their carrying amount reclassified into stockholders’ equity (deficit). As of April 30, 2020, the Company did not have any preference shares issued and outstanding. 85 Treasury Shares Ordinary shares of the Company that are repurchased are recorded as treasury shares at cost and are included as a component of shareholders’ equity. Segments Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”). The Company’s Chief Executive Officer is its CODM. The Company’s CODM reviews financial information presented on a consolidated basis for the purposes of making operating decisions, allocating resources and evaluating financial performance. As such, the Company has determined that it operates in one operating and one reportable segment. The Company presents financial information about its operating segment and geographical areas in Note 15 to the consolidated financial statements. Income Taxes The Company is subject to income taxes in the Netherlands and numerous foreign jurisdictions. These foreign jurisdictions may have different statutory rates than the Netherlands. The Company records a provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, the Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and the tax basis of assets and liabilities, as well as for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. The Company records a valuation allowance to reduce its deferred tax assets to the net amount that it believes is more likely than not to be realized. The calculation of the Company’s tax obligations involves dealing with uncertainties in the application of complex tax laws and regulations. ASC 740, Income Taxes, provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. The Company has assessed its income tax positions and recorded tax benefits for all years subject to examination, based upon the Company’s evaluation of the facts, circumstances and information available at each period end. For those tax positions where the Company has determined there is a greater than fifty percent likelihood that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit that may potentially be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is determined there is less than fifty percent likelihood that a tax benefit will be sustained, no tax benefit has been recognized. Although the Company believes that it has adequately reserved for its uncertain tax positions, the Company can provide no assurance that the final tax outcome of these matters will not be materially different. As the Company expands internationally, it will face increased complexity, and the Company’s unrecognized tax benefits may increase in the future. The Company makes adjustments to its reserves when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made. Customer Deposits Certain of the Company’s contracts, acquired via the Endgame, Inc. (“Endgame”) acquisition, allow for termination at the customer’s convenience, or the Company may receive prepayments on master sales agreements. In these cases, the Company does not consider a contract to exist past the term in which enforceable rights and obligations exist. Amounts received related to these agreements are classified outside of deferred revenue in the consolidated balance sheet, and these amounts do not represent contract balances. As of April 30, 2020, the Company had $ 2.6 million of customer deposits included in accrued expenses and other liabilities, and $ 8.5 million of non-refundable customer deposits included in other liabilities, non-current on the consolidated balance sheet. Recently Adopted Accounting Pronouncements Leases: In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-02, codified as Accounting Standards Codification 842 (“ASC 842”), which requires lessees to record the assets and liabilities arising from all leases, with the exception of short-term leases, on the balance sheet. Under ASC 842, lessees recognize a liability for lease payments and a right-of-use asset. This guidance retains the distinction between finance leases and operating leases and the classification criteria for finance leases remains similar. For finance leases, a lessee recognizes the interest on a lease liability separate from amortization of the right-of-use asset. In addition, repayments of the 86 principal amount are presented within financing activities, and interest payments are presented within operating activities in the consolidated statements of cash flows. For operating leases, a lessee recognizes a single lease cost on a straight-line basis and classifies all cash payments within operating activities in the consolidated statements of cash flows. The Company adopted the new lease accounting standard effective May 1, 2019 using the additional transition method described in ASU No. 2018-11, Leases – Targeted Improvements, which was issued in July 2018. Under the additional transition method, the Company recognized the cumulative effect of initially applying the guidance as an adjustment to the operating lease right-of-use assets and operating lease liabilities on its consolidated balance sheet on May 1, 2019 without retrospective application to comparative periods. Upon adoption, the Company elected the following: • the package of practical expedients which allows for not reassessing (1) whether existing contracts contain leases, (2) the lease classification for existing leases, and (3) whether existing initial direct costs meet the new definition, • the practical expedient in ASC Subtopic 842-10 to not separate non-lease components from lease components and instead account for each separate lease component and non-lease components associated with that lease component as a single lease component by class of the underlying asset, and • not to recognize right-of-use assets and lease liabilities for short-term leases, which have a lease term of twelve months or less and do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. The adoption of ASC 842 resulted in recognition of right-of-use assets of $ 28.1 million, which included the impact of existing deferred rents of $ 1.0 million, prepaid rent of $ 0.2 million and lease liabilities of $ 28.9 million as of May 1, 2019. See Note 9, Leases, for additional details. The adoption of the new lease accounting standard had no impact on cash provided by or used in operating, investing or financing activities in the Company’s consolidated statements of cash flows. The adoption of the new lease accounting standard did not impact the Company’s consolidated statements of operations and the Company's Consolidated Statements of Redeemable Convertible Preference Shares and Shareholders’ Equity (Deficit) nor previously reported financial results. Comprehensive Income: In February 2018, the FASB issued ASU No. 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which provides financial statement preparers with an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act (or “TCJA”) (or portion thereof) is recorded. The amendments in this ASU can be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company adopted this guidance on May 1, 2019. No reclassifications out of accumulated other comprehensive loss to net income were recorded in fiscal 2020. New Accounting Pronouncements Not Yet Adopted Credit Losses: In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and has since issued various amendments including ASU No. 2018-19, ASU No. 2019-04, and ASU No. 2019-05. The standard and related amendments modify the accounting for credit losses for most financial assets and require the use of an expected loss model, replacing the currently 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 new guidance becomes effective for the Company for the fiscal year ending April 30, 2021, though early adoption is permitted. The Company does not expect the adoption of the new accounting standard will have a material impact on its consolidated financial statements. Goodwill Impairment: In January 2017, the FASB issued ASU No. 2017-04, Intangibles— Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The new standard will simplify the measurement of goodwill by eliminating step two of the two-step impairment test. Step two measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. The new guidance requires an entity to compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The new guidance becomes effective for the Company for the year ending April 30, 2021, though early adoption is permitted. The Company does not expect the adoption of the new accounting standard will have a material impact on its consolidated financial statements. Fair Value Measurements: In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820), which modifies, removes and adds certain disclosure requirements on fair value measurements based on the FASB 87 Concepts Statement, Conceptual Framework for Financial Reporting—Chapter 8: Notes to Financial Statements. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The new guidance becomes effective for the Company for the fiscal year ending April 30, 2021. Early adoption is permitted. The Company does not expect the adoption of the new accounting standard to have a material impact on its consolidated financial statements. Intangible Assets: In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, 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 ASU. The new guidance becomes effective for the Company for the fiscal year ending April 30, 2021, though early adoption is permitted. The Company does not expect the adoption of the new accounting standard will have a material impact on its consolidated financial statements. Income Taxes: In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes , eliminating certain exceptions to the general principles in ASC 740 related to intra-period tax allocation, deferred tax liability and general methodology for calculating income taxes. Additionally, the ASU makes other changes for matters such as franchise taxes that are partially based on income, transactions with a government that result in a step up in the tax basis of goodwill, separate financial statements of legal entities that are not subject to tax, and enacted changes in tax laws in interim periods. The new guidance becomes effective for the Company for the fiscal year ending April 30, 2022. Early adoption is permitted. The Company does not expect the adoption of the new accounting standard to have a material impact on its consolidated financial statements. 3. Revenue and Performance Obligations Disaggregation of Revenue The following table presents revenue by category (in thousands): Year Ended April 30, 2020 2019 2018 Amount % of Total Revenue Amount % of Total Revenue Amount % of Total Revenue Self-managed subscription $ 299,880 70 % $ 202,419 74 % $ 123,898 77 % License 53,536 12 % 39,474 14 % 25,759 16 % Subscription 246,344 58 % 162,945 60 % 98,139 61 % SaaS 92,290 22 % 45,835 17 % 25,484 16 % Total subscription revenue 392,170 92 % 248,254 91 % 149,382 93 % Professional services 35,450 8 % 23,399 9 % 10,553 7 % Total revenue $ 427,620 100 % $ 271,653 100 % $ 159,935 100 % Remaining Performance Obligations As of April 30, 2020, the Company had $ 535.6 million of remaining performance obligations, which is comprised of product and services revenue not yet delivered. As of April 30, 2020, the Company expects to recognize approximately 83 % of its remaining performance obligations as revenue over the next 24 months and the remainder thereafter. 4. Fair Value Measurements The Company measures financial assets and liabilities that are measured at fair value on a recurring basis at each reporting period using a fair value hierarchy that prioritizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. 88 The following table summarizes assets that are measured at fair value on a recurring basis as of April 30, 2020 (in thousands): Level 1 Level 2 Level 3 Total Financial Assets: Cash and cash equivalents: Money market funds $ 197,314 $ — $ — $ 197,314 The following table summarizes assets that are measured at fair value on a recurring basis as of April 30, 2019 (in thousands): Level 1 Level 2 Level 3 Total Financial Assets: Cash and cash equivalents: Money market funds $ 261,864 $ — $ — $ 261,864 Money market funds consist of cash equivalents with remaining maturities of three months or less at the date of purchase. The Company uses quoted prices in active markets for identical assets to determine the fair value of its Level 1 investments in money market funds. 5. Acquisitions Fiscal 2020 Acquisition Endgame, Inc. On October 8, 2019, the Company acquired all outstanding shares of Endgame, a security company offering endpoint protection technology, for a total acquisition price of $ 234.0 million. Elastic paid the purchase price through (i) the issuance of 2,218,694 ordinary shares in respect of Endgame’s outstanding capital stock, warrants, convertible notes, and certain retention awards, (ii) the cash repayment of Endgame’s outstanding indebtedness of $ 20.4 million, (iii) the assumption of Endgame’s outstanding stock options, (iv) a $ 0.4 million cash deposit to an expense fund for the fees and expenses of the representative and agent of Endgame securityholders, (v) the cash payment of Endgame’s transaction expenses of $ 5.9 million, and (vi) the cash payment of withholding taxes related to acquisition expense settled in shares of $ 2.8 million. Approximately 11 % of the ordinary shares issued, or 235,031 shares, is being held in an indemnity escrow fund for 18 months after the acquisition close date. For purposes of determining the total acquisition price of $ 234.0 million, the Company used the ordinary share price of $ 89.3836 which was determined on the basis of the volume weighted average price per share rounded to four decimal places for the twenty (20) consecutive trading days ending with the complete trading day ending five (5) trading days prior to the date upon which the acquisition was consummated. The fair value of the shares transferred as consideration was $ 84.12 per share and was determined on the basis of the closing stock price of the Company’s ordinary shares on the date of acquisition. The fair value of the assumed stock options was determined by using a Black-Scholes option pricing model with the applicable assumptions as of the acquisition date. The stock options assumed on the acquisition date will continue to vest as the Endgame employees provide services in the post-acquisition period. The fair value of these awards will be recorded as share-based compensation expense over the respective vesting period of each stock option. The acquisition was accounted for as a business combination and the total purchase price was allocated to the net tangible and intangible assets and liabilities based on their respective fair values on the acquisition date and the excess was recorded as goodwill. The values assigned to the assets acquired and liabilities assumed are based on preliminary estimates of fair value available as of the date of this Annual Report on Form 10-K. The Company continues to collect information with regards to its estimates and assumptions, including potential liabilities, contingencies, and the allocation of the purchase price. The Company will record adjustments to the fair value of the net assets acquired, liabilities assumed and goodwill within the measurement period, if necessary. 89 The following table summarizes the components of the U.S. GAAP purchase price and the preliminary allocation of the purchase price at fair value (in thousands): Cash paid $ 26,633 Ordinary shares 178,331 Assumption of stock option plan 9,309 Total consideration $ 214,273 The above U.S. GAAP purchase price consideration does not include ordinary shares of Elastic issued as part of acceleration of equity awards and participation in the retention bonus pool. The following table summarizes the preliminary estimated fair values of assets acquired and liabilities assumed (in thousands): Cash and cash equivalents $ 2,220 Restricted cash 40 Accounts receivable 2,661 Prepaid and other current assets 549 Operating lease right-of-use assets 4,363 Property and equipment 503 Intangible assets 53,800 Other assets 58 Goodwill 178,764 Accounts payable ( 1,112 ) Accrued expenses and other current liabilities ( 3,035 ) Accrued compensation and benefits ( 5,042 ) Operating lease liabilities, current ( 981 ) Deferred revenue, current ( 3,532 ) Deferred revenue, non-current ( 2,661 ) Operating lease liabilities, non-current ( 3,551 ) Other liabilities, non-current ( 8,771 ) Total purchase consideration $ 214,273 Identifiable intangible assets include (in thousands): Total Useful life (in years) Developed technology $ 32,700 5 Customer relationships 19,200 4 Trade name 1,900 4 Intangible assets $ 53,800 Developed technology consists of software products and security platform developed by Endgame. Customer relationships consists of contracts with platform users that purchase Endgame’s products and services that carry distinct value. Trade names represent the Company’s right to the Endgame trade names and associated design, as it exists as of the acquisition closing date. The fair value assigned to developed technology was determined primarily using the multi-period excess earnings model, which estimates the revenue and cash flows derived from the asset and then deducts portions of the cash flow that can be attributed to supporting assets otherwise recognized. Management applied significant judgment in estimating the fair value of the developed technology intangible asset, which involved the use of significant estimates related to the revenue growth rate assumption for both existing and any future product offerings. The fair value of the Company’s customer relationships was determined using the income approach, which discounts expected future cash flows to present value using estimates and assumptions related to revenue and customer growth rate as determined by management. The fair value assigned to trade name 90 was determined using the relief from royalty method, where the owner of the asset realizes a benefit from owning the intangible asset rather than paying a rental or royalty rate for use of the asset. The acquired intangible assets are being amortized on a straight-line basis over their respective useful lives, which approximates the pattern in which these assets are utilized. Recognized goodwill of $ 178.8 million is not deductible for tax purposes and is primarily attributed to planned growth in new markets, synergies arising from the acquisition and the value of the acquired workforce. Net tangible assets and liabilities assumed were valued at their respective carrying amounts as of the acquisition date, as the Company believes that these amounts approximate their current fair values. Endgame has been included in the Company’s consolidated results of operations since the acquisition date. Endgame’s results were immaterial to the Company’s consolidated results for the year ended April 30, 2020. The following unaudited pro forma condensed consolidated financial information gives effect to the acquisition of Endgame as if it were consummated on May 1, 2018 (the beginning of the comparable prior reporting period), including pro forma adjustments related to the valuation and allocation of the purchase price, primarily amortization of acquired intangible assets and deferred revenue fair value adjustments; share-based compensation expense; alignment of accounting policies; the impact of applying ASC Topic 606, Revenue From Contracts With Customers, to Endgame’s historical financial statements; and direct transaction costs reflected in the historical financial statements. This data is presented for informational purposes only and is not intended to represent or be indicative of the results of operations that would have been reported had the acquisition occurred on May 1, 2018. It should not be taken as representative of future results of operations of the combined company (in thousands). Year Ended April 30, 2020 2019 Pro forma revenue (1) $ 435,234 $ 285,917 Pro forma net loss (1) $ ( 176,019 ) $ ( 152,280 ) (1) As if the acquisition of Endgame was consummated on May 1, 2018 Non-recurring acquisition costs incurred by the Company of $ 17.5 million, including a non-cash expense settled in the Company’s ordinary shares for $ 8.8 million and a related cash payment of withholding taxes of $ 2.8 million, were charged to general and administrative expenses in the consolidated statement of operations for the year ended April 30, 2020, and are reflected in the pro forma net loss presented above for the year ended April 30, 2019. Non-recurring acquisition costs incurred by Endgame of $ 1.5 million are also reflected in the pro forma net loss presented above for the year ended April 30, 2019. Fiscal 2019 Acquisition Lambda Lab Corp. In July 2018, the Company acquired 100 % of the share capital of Lambda Lab Corp. (“Lambda Lab”), a privately held company headquartered in the United States. Lambda Lab was a code search company whose product was built on top of Elasticsearch and focused on building semantic understanding of code, exposed through powerful search features. Purchase consideration for the acquisition was $ 2.0 million in cash. Excluded from the purchase consideration were 134,474 ordinary shares of $ 2.2 million issued to certain employees of Lambda Lab. These shares were subject to repurchase and were contingent upon these employees’ continued employment with the Company. As of April 30, 2020, no shares were subject to repurchase and all stock-based compensation expense had been recognized. During the years ended April 30, 2020 and 2019, the Company recorded stock-based compensation expense of $ 0.9 million and $ 1.4 million, respectively. The following table summarizes the components of the Lambda Lab purchase price and the preliminary allocation of the purchase price at fair value (in thousands): Cash paid $ 1,997 Developed technology $ 1,339 Trade name 15 Goodwill 1,038 Net liabilities acquired ( 395 ) Total purchase consideration $ 1,997 The amount allocated to developed technology was $ 1.3 million. The fair value assigned to developed technology was determined primarily using the multi-period excess earnings model, which estimates the revenue and cash flows derived from 91 the asset and then deducts portions of the cash flow that can be attributed to supporting assets otherwise recognized. The acquired developed technology is being amortized on a straight-line basis over four years , which approximates the pattern in which these assets are utilized. Goodwill of $ 1.0 million, none of which is deductible for tax purposes, was recorded in connection with the Lambda Lab acquisition, which is primarily attributed to synergies arising from the acquisition and the value of the acquired workforce. Acquisition costs of $ 0.2 million were charged to general and administrative expenses in the consolidated statement of operations for the year ended April 30, 2019. Lambda Lab has been included in the Company’s consolidated results of operations since the acquisition date. Fiscal 2018 Acquisitions Swiftype, Inc. In October 2017, the Company acquired 100 % of the share capital of Swiftype, Inc. (“Swiftype”), a privately held company headquartered in the United States. Swiftype provided enterprise search and search engine platforms for organizations, websites and applications. The acquisition has been accounted for as a business combination and the Company has included the financial results of Swiftype in the consolidated financial statements from the date of the acquisition. The following table summarizes the components of the Swiftype purchase price and the allocation of the purchase price at fair value (in thousands): Cash paid $ 1,724 Ordinary shares 8,392 Total consideration $ 10,116 Developed technology $ 5,392 Trade name 97 Customer relationships 158 Goodwill 1,885 Net assets acquired 2,584 Total purchase consideration $ 10,116 Included in net assets acquired was $ 1.1 million of cash acquired. Fifteen percent of the equity consideration, or 109,842 ordinary shares issued to the former shareholders, was subject to repurchase on the fifteen -month anniversary of the close of the acquisition for any indemnity claims. No indemnity claims were made by the Company during the indemnification period that expired in January 2019. The amounts allocated to developed technology, customer relationships and trade name (the acquired intangible assets) total $ 5.6 million. The fair value assigned to developed technology was determined using the multi-period excess earnings model, which estimates the revenue and cash flows derived from the asset and then deducts portions of the cash flow that can be attributed to supporting assets otherwise recognized. The fair value of the Company’s customer relationships was determined using the income approach, which discounts expected future cash flows to present value using estimates and assumptions determined by management. The fair value assigned to trade name was determined using the relief from royalty method, where the owner of the asset realizes a benefit from owning the intangible asset rather than paying a rental or royalty rate for use of the asset. The acquired identifiable intangible assets are being amortized on a straight-line basis over four years , which approximates the pattern in which these assets are utilized. The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in thousands): Fair Value Useful life (in years) Developed technology $ 5,392 4 Customer relationships 158 4 Trade name 97 4 Total identifiable intangible assets $ 5,647 92 Goodwill of $ 1.9 million, none of which is deductible for tax purposes, was recorded in connection with the Swiftype acquisition, which is primarily attributed to synergies arising from the acquisition and the value of the acquired workforce. Acquisition costs of $ 0.3 million were charged to general and administrative expenses in the consolidated statement of operations for the year ended April 30, 2018. Opbeat, Inc. In May 2017, the Company acquired 100 % of the share capital of Opbeat, Inc. (“Opbeat”), a privately-held company headquartered in the United States. Opbeat was an APM company that helped developers find and fix issues faster by monitoring the end-to-end performance impact of changes to the application code. The following table summarizes the components of the Opbeat purchase price and the allocation of the purchase price at fair value (in thousands): Cash paid $ 3,123 Ordinary shares 4,019 Total consideration $ 7,142 Developed technology $ 1,846 Goodwill 4,925 Net assets acquired 371 Total purchase consideration $ 7,142 Included in net assets acquired was $ 0.1 million of cash acquired. Fifteen percent of the equity consideration, or 73,349 ordinary shares, was subject to repurchase on the fifteen -month anniversary of the close of the acquisition for any indemnity claims. No indemnity claims were made by the Company during the indemnification period that expired in August 2018. The amount allocated to developed technology was $ 1.8 million. The fair value assigned to developed technology was determined primarily using the multi-period excess earnings model, which estimates the revenue and cash flows derived from the asset and then deducts portions of the cash flow that can be attributed to supporting assets otherwise recognized. The acquired developed technology is being amortized on a straight-line basis over four years , which approximates the pattern in which these assets are utilized. The following table sets forth the components of the identifiable intangible asset acquired and its estimated useful life as of the date of acquisition (in thousands): Fair Value Useful life (in years) Developed technology $ 1,846 4 Goodwill of $ 4.9 million, none of which is deductible for tax purposes, was recorded in connection with the Opbeat acquisition, which is primarily attributed to synergies arising from the acquisition and the value of the acquired workforce. Acquisition costs of $ 0.3 million were charged to general and administrative expenses in the consolidated statement of operations for the year ended April 30, 2018. Founders consideration holdback Founders of Opbeat received an aggregate cash payment of $ 0.7 million at each of the one and two-year anniversary of the close of the acquisition. These payments were contingent upon continued employment with the Company and therefore were excluded from the purchase consideration. Also excluded from the purchase consideration were 93,052 ordinary shares of $ 0.9 million issued to the founders of Opbeat as these were subject to repurchase until the two year anniversary of the close of the acquisition and are contingent upon these founders’ continued employment with the Company. The repurchase option lapsed as to fifty percent of the ordinary shares on each anniversary of the close of the acquisition. The Company recorded stock-based compensation expense of $ 0.9 million over the two -year vesting term. For the years ended April 30, 2020 and 2019, the Company recorded stock-based compensation expense of less than $ 0.1 million and $ 0.5 million, respectively. 93 Fair Value of Ordinary Shares Used for Purchase Consideration The fair value of the ordinary shares issued as part of the consideration paid for the acquisitions prior to the Company’s IPO was determined by the Company’s board of directors based on numerous subjective and objective factors, including, but not limited to, a contemporaneous valuation performed by an independent third-party valuation firm. Because the Company was not publicly traded at the time the acquisitions were completed, the Company’s board of directors considered valuations of comparable companies, sales of redeemable convertible preference shares, sales of ordinary shares to unrelated third parties, operating and financial performance, the lack of liquidity of the Company’s ordinary shares, and general and industry-specific economic outlook, among other factors. 6. Balance Sheet Components Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands): As of April 30, 2020 2019 Prepaid hosting costs $ 12,228 $ 12,006 Deposits 1,857 1,268 Prepaid software subscription costs 3,104 4,326 Deferred stock-based compensation expense — 784 Prepaid taxes 3,612 Prepaid value added taxes 5,167 4,239 Other 6,655 8,249 Total prepaid expenses and other current assets $ 32,623 $ 30,872 Property and Equipment, Net The cost and accumulated depreciation of property and equipment were as follows (in thousands): As of April 30, Useful Life (in years) 2020 2019 Leasehold improvements Lesser of estimated useful life or remaining lease term $ 8,405 $ 6,176 Computer hardware and software 3 5,687 5,393 Furniture and fixtures 3 - 5 5,072 3,094 Assets under construction 1,661 1,243 Total property and equipment 20,825 15,906 Less: accumulated depreciation ( 13,065 ) ( 10,458 ) Property and equipment, net $ 7,760 $ 5,448 Depreciation expense related to property and equipment was $ 2.8 million, $ 2.7 million and $ 3.0 million for the years ended April 30, 2020, 2019 and 2018, respectively. Intangible Assets, Net Intangible assets consisted of the following as of April 30, 2020 (in thousands): Gross Fair Value Accumulated Amortization Net Book Value Weighted Average Remaining Useful Life (in years) Developed technology $ 44,830 $ 12,412 $ 32,418 4.1 Customer relationships 19,598 3,210 16,388 3.4 Trade names 2,872 1,223 1,649 3.4 Total $ 67,300 $ 16,845 $ 50,455 3.9 94 Intangible assets consisted of the following as of April 30, 2019 (in thousands): Gross Fair Value Accumulated Amortization Net Book Value Weighted Average Remaining Useful Life (in years) Developed technology $ 12,130 $ 5,646 $ 6,484 2.5 Customer relationships 398 268 130 2.2 Trade names 972 863 109 2.2 Total $ 13,500 $ 6,777 $ 6,723 2.5 Amortization expense for the intangible assets for the years ended April 30, 2020, 2019 and 2018 was as follows (in thousands): Year Ended April 30, 2020 2019 2018 Cost of revenue—cost of license—self-managed $ 948 $ 387 $ 387 Cost of revenue—cost of subscription—self-managed and SaaS 5,820 2,421 1,521 Sales and marketing 3,300 148 119 Total amortization of acquired intangible assets $ 10,068 $ 2,956 $ 2,027 The expected future amortization expense related to the intangible assets as of April 30, 2020 was as follows (in thousands, by fiscal year): 2021 $ 14,167 2022 12,948 2023 11,890 2024 8,716 2025 2,734 Thereafter — Total $ 50,455 Goodwill The following table represents the changes to goodwill (in thousands): Carrying Amount Balance as of April 30, 2018 $ 19,182 Addition from acquisition 1,038 Foreign currency translation adjustment ( 374 ) Balance as of April 30, 2019 $ 19,846 Addition from acquisition 178,764 Foreign currency translation adjustment ( 733 ) Balance as of April 30, 2020 $ 197,877 There was no impairment of goodwill during the years ended April 30, 2020, 2019 and 2018. 95 Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consisted of the following (in thousands): As of April 30, 2020 2019 Accrued expenses $ 10,864 $ 8,124 Income taxes payable — 149 Value added taxes payable 7,230 4,236 Share repurchase liability — 1,612 Other 4,116 4,619 Total accrued expenses and other liabilities $ 22,210 $ 18,740 Accrued Compensation and Benefits Accrued compensation and benefits consisted of the following (in thousands): As of April 30, 2020 2019 Accrued vacation $ 17,971 $ 9,655 Accrued commissions 16,259 6,510 Accrued payroll and withholding taxes 7,588 1,868 Post-combination compensation liability — 655 Other 6,591 3,459 Total accrued compensation and benefits $ 48,409 $ 22,147 Contract Balances The timing of revenue recognition may differ from the timing of invoicing to customers. For annual contracts, the Company typically invoices customers at the time of entering into the contract. For multi-year agreements, the Company generally invoices customers on an annual basis prior to each anniversary of the contract start date. The Company records unbilled accounts receivable related to revenue recognized in excess of amounts invoiced as the Company has an unconditional right to invoice and receive payment in the future related to those fulfilled obligations. Contract liabilities consist of deferred revenue which is recognized over the contractual period. The following table provides information about unbilled accounts receivable, deferred contract acquisition costs, and deferred revenue from contracts with customers (in thousands): As of April 30, 2020 2019 Unbilled accounts receivable, included in accounts receivable, net $ 2,622 $ 1,710 Deferred contract acquisition costs $ 43,549 $ 26,150 Deferred revenue $ 259,702 $ 170,666 Significant changes in the unbilled accounts receivable and the deferred revenue balances were as follows (in thousands): Unbilled Accounts Receivable Year Ended April 30, 2020 2019 2018 Beginning balance $ 1,710 $ 1,139 $ 1,114 Amounts transferred to accounts receivable from unbilled accounts receivable presented at the beginning of the period ( 1,710 ) ( 1,139 ) ( 1,114 ) Revenue recognized during the period in excess of invoices issued 2,622 1,710 1,139 Ending balance $ 2,622 $ 1,710 $ 1,139 96 Deferred Revenue Year Ended April 30, 2020 2019 2018 Beginning balance $ 170,666 $ 102,561 $ 54,152 Additions through acquisition 6,192 — 859 Increases due to invoices issued, excluding amounts recognized as revenue during the period 242,136 163,963 96,944 Revenue recognized that was included in deferred revenue balance at beginning of period ( 159,292 ) ( 95,858 ) ( 49,394 ) Ending balance $ 259,702 $ 170,666 $ 102,561 Deferred Contract Acquisition Costs Deferred contract acquisition costs represent costs that are incremental to the acquisition of customer contracts, which consist mainly of sales commissions and associated payroll taxes. The Company determines whether costs should be deferred based on sales compensation plans, if the commissions are in fact incremental and would not have occurred absent the customer contract. During the fiscal years ended April 30, 2019 and 2018, sales commissions for renewal of a contract were considered commensurate with the commissions paid for contracts with new customers and incremental sales to existing customers given there was no substantive difference in commission rates in proportion to their respective contract values. Effective May 1, 2019, the Company updated its sales commissions plan by incorporating different commission rates for contracts with new customers and incremental sales to existing customers, and for subsequent subscription renewals. Subsequent to this change, sales commissions for renewal of a subscription contract are not considered commensurate with the commissions paid for contracts with new customers and incremental sales to existing customers given the substantive difference in commission rates in proportion to their respective contract values. Accordingly, commissions paid for contracts with new customers and incremental sales to existing customers are now amortized over an estimated period of benefit of five years while commissions paid related to renewal contracts are now amortized based on the pattern of the associated revenue recognition over the related contractual renewal period for the pool of renewal contracts. The Company determines the period of benefit for commissions paid for contracts with new customers and incremental sales to existing customers by taking into consideration its initial estimated customer life and the technological life of its software and related significant features. Commissions paid on professional services are typically amortized in accordance with the associated revenue as the commissions paid on new and renewal professional services are commensurate with each other. Amortization of deferred contract acquisition costs is recognized in sales and marketing expense in the consolidated statement of operations. The Company periodically reviews the carrying amount of deferred contract acquisition costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit of these deferred costs. The Company did no t recognize any impairment of deferred contract acquisition costs during the years ended April 30, 2020, 2019 and 2018. The following table summarizes the activity of the deferred contract acquisition costs (in thousands): Year Ended April 30, 2020 2019 2018 Beginning balance $ 26,150 $ 18,079 $ 10,135 Capitalization of contract acquisition costs 45,713 29,445 20,675 Amortization of deferred contract acquisition costs ( 28,314 ) ( 21,374 ) ( 12,731 ) Ending balance $ 43,549 $ 26,150 $ 18,079 Deferred contract acquisition costs, current 19,537 17,215 12,125 Deferred contract acquisition costs, non- current 24,012 8,935 5,954 Total deferred contract acquisition costs $ 43,549 $ 26,150 $ 18,079 7. Commitments and Contingencies Cloud Hosting Commitments In December 2018, the Company entered into an amendment to a non-cancellable cloud hosting capacity agreement, effective January 2019, for a total purchase commitment of $ 60.0 million payable over the three years following the date of the agreement. In December 2019, the Company entered into an amendment to a non-cancellable cloud hosting capacity agreement 97 with a different vendor for a total purchase commitment of $ 100.0 million payable over the four years following the effective date of the agreement. In April 2020, the Company entered into a non-cancellable cloud hosting capacity agreement with a new vendor, effective April 2020, for a total purchase commitment of $ 4.2 million payable over the three years following the date of the agreement. The table below reflects these commitments on an annualized basis, however, the timing for payments may vary depending on services used. Furthermore, actual payments under these capacity commitments may be higher than the total minimum depending on services used. Future minimum cloud hosting commitments as of April 30, 2020 were as follows (in thousands): Years Ending April 30, Cloud Hosting Commitments 2021 $ 33,403 2022 37,583 2023 34,583 2024 28,333 Total $ 133,902 Letters of Credit The Company had a total of $ 2.3 million in letters of credit outstanding in favor of certain landlords for office space as of April 30, 2020. Legal Matters From time to time, the Company has become involved in claims and other legal matters arising in the ordinary course of business. The Company investigates these claims as they arise. Although claims are inherently unpredictable, the Company is currently not aware of any matters that, if determined adversely to the Company, would individually or taken together have a material adverse effect on its business, results of operations, financial position or cash flows. The Company accrues estimates for resolution of legal and other contingencies when losses are probable and reasonably estimable. Although the results of litigation and claims are inherently unpredictable, the Company does not believe that there were any matters under litigation or claims with a reasonable possibility of the Company incurring a material loss as of April 30, 2020. Indemnification The Company enters into indemnification provisions under its agreements with other companies in the ordinary course of business, including business partners, landlords, contractors and parties performing its research and development. Pursuant to these arrangements, the Company agrees to indemnify, hold harmless, and reimburse the indemnified party for certain losses suffered or incurred by the indemnified party as a result of the Company’s activities. The maximum potential amount of future payments the Company could be required to make under these agreements is not determinable. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes the fair value of these agreements is not material. The Company maintains commercial general liability insurance and product liability insurance to offset certain of the Company’s potential liabilities under these indemnification provisions. In addition, the Company indemnifies its officers, directors and certain key employees while they are serving in good faith in their respective capacities. To date, there have been no claims under any indemnification provisions. 8. Redeemable Convertible Preference Shares The Company previously issued redeemable convertible preference shares in one or more series, each with such designations, rights, qualifications, limitations, and restrictions. Immediately prior to the completion of the IPO, all shares of redeemable convertible preference shares then outstanding were automatically converted into an equivalent number of ordinary shares on a one -to-one basis and their carrying amount reclassified into shareholders’ equity. As of April 30, 2020, there were no redeemable convertible preference shares issued and outstanding. 98 9. Leases The Company’s leases are comprised of corporate office spaces and various equipment under non-cancelable operating lease agreements that expire at various dates through 2025. As of April 30, 2020, the Company had no finance leases. Components of lease costs included in the consolidated statement of operations for the year ended April 30, 2020 were as follows (in thousands): Operating lease cost $ 8,435 Short-term lease cost 3,111 Variable lease cost 1,883 Total lease cost $ 13,429 Lease term and discount rate information as of April 30, 2020 are summarized as follows: Weighted average remaining lease term (years) 4.83 Weighted average discount rate 5.08 % Future minimum lease payments under non-cancelable operating leases on an undiscounted cash flow basis as of April 30, 2020 were as follows (in thousands): Years Ending April 30, 2021 $ 8,636 2022 8,138 2023 8,049 2024 7,112 2025 5,857 Thereafter 2,803 Total minimum lease payments $ 40,595 Less imputed interest $ ( 5,129 ) Present value of future minimum lease payments $ 35,466 Less current lease liabilities $ ( 7,639 ) Operating lease liabilities, non-current $ 27,827 Future minimum lease payments under non-cancelable financing and operating leases, based on the previous lease accounting standard, as of April 30, 2019 were as follows (in thousands): Years Ending April 30, 2020 $ 6,455 2021 5,494 2022 5,106 2023 5,217 2024 4,602 Thereafter 7,020 Total $ 33,894 10. Ordinary Shares The Company’s articles of association designated and authorized the Company to issue 72 million ordinary shares with a par value of € 0.001 per share up until immediately prior to the completion of the IPO at which time the authorized ordinary shares increased to 165 million. In addition, the par value per ordinary share was changed from € 0.001 per share to € 0.01 per share as required by Dutch law at the time of the Company’s conversion into a Dutch public company with limited liability ( naamloze vennootschap ). 99 Each holder of ordinary shares has the right to one vote per ordinary share . The holders of ordinary shares are also entitled to receive dividends whenever funds are legally available and when declared by the board of directors, subject to the prior rights of holders of all classes of shares outstanding having priority rights to dividends. No dividends have been declared by the Company’s board of directors from inception through the year ended April 30, 2020. Ordinary Shares Reserved for Issuance The Company had reserved shares of ordinary shares for issuance as follows: As of April 30, 2020 2019 Stock options issued and outstanding 15,260,506 22,866,438 RSUs issued and outstanding 2,472,092 740,467 Remaining shares available for future issuance under the 2012 Plan 12,461,850 9,649,123 Total ordinary shares reserved 30,194,448 33,256,028 Early Exercised Options Certain ordinary share option holders have the right to exercise unvested options, subject to a repurchase right held by the Company at the original exercise price, in the event of voluntary or involuntary termination of employment of the shareholder. As of April 30, 2020 and 2019, there were no unvested ordinary shares that had been early exercised and were subject to repurchase. The proceeds related to unvested ordinary shares are recorded as liabilities until the stock vests, at which point they are transferred to additional paid-in capital. Shares issued for the early exercise of options are included in issued and outstanding shares as they are legally issued and outstanding. 11. Equity Incentive Plans In September 2012, the Company’s board of directors adopted and the Company’s shareholders approved the 2012 Stock Option Plan, which was amended and restated in September 2018 (as amended and restated, the “2012 Plan”). Under the 2012 Plan, the board of directors and the compensation committee, as administrator of the 2012 Plan, may grant stock options and other equity-based awards, such as Restricted Stock Awards (“RSAs”) or Restricted Stock Units (“RSUs”), to eligible employees, directors, and consultants to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to employees, directors and consultants, and to promote the success of the Company’s business. The Company’s board of directors or compensation committee determines the vesting schedule for all equity-based awards. Stock options granted to new employees under the 2012 Plan generally vest over four years with 25 % of the option shares vesting one year from the vesting commencement date and then ratably over the following 36 months subject to the employees continued service to the Company. Refresh grants to existing employees generally vest monthly over four years subject to the employees continued service to the Company. Equity settled RSUs granted to new employees generally vest over a period of four years with 25 % vesting on the one -year anniversary of the vesting start date and the remainder vesting semi-annually over the next three years , subject to the grantee’s continued service to the Company. Equity settled RSUs granted to existing employees generally vest semi-annually over a period of four years , subject to the grantee’s continued service to the Company. The Company’s compensation committee may explicitly deviate from the general vesting schedules in its approval of an equity-based award, as it may deem appropriate. Stock options expire ten years after the date of grant. Stock options, RSAs and RSUs that are canceled under certain conditions become available for future grant or sale under the 2012 Plan unless the 2012 Plan is terminated. 100 The equity awards available for grant for the periods presented were as follows: Year Ended April 30, 2020 2019 Available at beginning of fiscal year 9,649,123 2,061,282 Awards authorized 3,683,754 12,000,000 Options granted ( 172,031 ) ( 4,722,404 ) Options cancelled 1,181,482 976,130 Options repurchased — 43,630 RSUs granted ( 2,101,271 ) ( 732,701 ) RSUs cancelled 216,208 23,186 RSAs repurchased 4,585 — Available at end of period 12,461,850 9,649,123 Endgame Stock Incentive Plan Assumed in Acquisition In connection with its acquisition of Endgame, the Company assumed all in-the-money stock options issued under Endgame’s Amended and Restated 2010 Stock Incentive Plan that were outstanding on the date of acquisition. The assumed stock options will continue to be outstanding and will be governed by the provisions of their respective plan and are included in the stock option activity table below. Stock Options The following table summarizes stock option activity (in thousands, except share and per share data): Stock Options Outstanding Number of Stock Options Outstanding Weighted- Average Exercise Price Remaining Contractual Term (in years) Aggregate Intrinsic Value Balance as of April 30, 2018 22,237,484 $ 8.65 8.31 $ 98,365 Stock options granted 4,722,404 $ 23.27 Stock options exercised ( 3,117,320 ) $ 5.95 Stock options cancelled ( 976,130 ) $ 11.78 Balance as of April 30, 2019 22,866,438 $ 11.90 7.98 $ 1,684,106 Stock options granted 172,031 $ 81.39 Stock options assumed in acquisition 245,390 $ 48.99 Stock options exercised ( 6,815,098 ) $ 9.01 Stock options cancelled ( 1,181,482 ) $ 15.81 Stock options assumed in acquisition cancelled ( 26,773 ) $ 71.35 Balance as of April 30, 2020 15,260,506 $ 14.17 7.27 $ 767,795 Exercisable as of April 30, 2020 8,007,248 $ 11.29 6.80 $ 424,133 Stock options exercisable include 352,391 stock options that were unvested as of April 30, 2020. Aggregate intrinsic value represents the difference between the exercise price of the stock options to purchase ordinary shares and the fair value of the Company’s ordinary shares. The weighted-average grant-date fair value per share of stock options granted was $ 50.92 and $ 10.22 for the years ended April 30, 2020 and 2019, respectively. As of April 30, 2020, the Company had unrecognized stock-based compensation expense of $ 53.8 million related to unvested stock options that the Company expects to recognize over a weighted-average period of 2.14 years. RSAs In October 2017, the Company acquired 100 % of the share capital of Swiftype, a privately-held company headquartered in the United States. As part of the transaction, the Company granted RSAs to certain employees with both service-based and performance-based vesting conditions. The performance-based vesting condition was to be satisfied on the earlier of: (1) a change of control transaction or (2) the expiration of the lock-up period after the effective date of the IPO, 101 subject to continued service through the end of the lock-up period. The service-based vesting condition was to be satisfied based on one of two vesting schedules: (i) vesting of 50 % of the shares upon the closing of the Swiftype acquisition, 25 % of the shares on the one -year anniversary of the closing, and 25 % of the shares on the two -year anniversary of the closing, or (ii) vesting of 50 % of the shares on the one -year anniversary of the closing of the Swiftype acquisition and 50 % of the shares on the two -year anniversary of the closing. The performance-based vesting condition related to these awards was deemed probable upon the effectiveness of the Company’s IPO on October 4, 2018. On that date, the Company recorded a cumulative catch-up stock-based compensation expense using the accelerated attribution method for the RSAs that had satisfied the applicable service-based vesting condition on that date with the remaining expense to be recognized over the remaining requisite service period. As of April 30, 2020, the underlying performance-based and service-based vesting conditions were fully satisfied and none of the ordinary shares issued were subject to repurchase by the Company. Stock-based compensation expense related to the RSAs was $ 0.2 million for the year ended April 30, 2020. The following table summarizes RSA activity for the 2012 Plan: Number of Awards Weighted- Average Grant Date Fair Value Outstanding at April 30, 2018 244,498 $ 11.46 RSAs subscribed ( 244,498 ) $ 11.46 Outstanding at April 30, 2019 — Outstanding at April 30, 2020 — RSUs During the year ended April 30, 2020, the Company granted 2,101,271 RSUs at a weighted average grant date fair value of $ 68.25 per unit, including 1,388 RSUs that are cash settled. Cash settled RSUs will be paid as a cash bonus based on the applicable vesting and payment terms. The cash settled RSUs vest upon the satisfaction of both service-based and performance-based vesting conditions. The service-based vesting condition is generally over four years with 25 % vesting on the one -year anniversary of the award and the remainder vesting quarterly over the next 36 months, subject to the grantee’s continued service to the Company. The performance-based vesting condition is defined as (i) a change in control where the consideration paid to the Company’s equity security holders is cash, publicly traded stock, or a combination of both, or (ii) the expiration of any lock-up period of the IPO, subject in each instance to the grantee’s continued service through such date. As a result of the Company’s IPO, the performance-based vesting condition was deemed probable and the Company recorded cumulative stock-based compensation expense of $ 0.8 million related to the cash settled RSUs in October 2018. As of April 30, 2020, the Company had a liability of $ 3.5 million related to the cash settled RSUs recorded in accrued compensation and benefits on the consolidated balance sheet. Stock-based compensation expense related to RSUs for the year ended April 30, 2020 was $ 28.1 million. As of April 30, 2020, the Company had unrecognized stock-based compensation expense of $ 144.3 million related to equity settled RSUs that the Company expects to recognize over a weighted-average period of 3.42 years. The following table summarizes RSU activity for the 2012 Plan: Number of Awards Weighted-Average Grant Date Fair Value Outstanding and unvested at April 30, 2018 57,000 $ 13.07 RSUs granted 732,701 $ 64.55 RSUs released ( 26,048 ) $ 14.84 RSUs cancelled ( 23,186 ) $ 59.93 Outstanding and unvested at April 30, 2019 740,467 $ 62.48 RSUs granted 2,101,271 $ 68.25 RSUs released ( 153,438 ) $ 72.55 RSUs cancelled ( 216,208 ) $ 62.25 Outstanding and unvested at April 30, 2020 2,472,092 $ 66.78 102 Determination of Fair Value The determination of the fair value of stock-based options on the date of grant using an option pricing model is affected by the fair value of the Company’s ordinary shares, as well as assumptions regarding a number of complex and subjective variables. The Company uses the Black-Scholes option pricing model to calculate the fair value of stock options, which requires the use of assumptions including actual and projected employee stock option exercise behaviors, expected price volatility of the Company’s ordinary shares, the risk-free interest rate and expected dividends. Each of these inputs is subjective and generally requires significant judgment to determine. Fair Value of Ordinary Shares: Prior to the IPO, the fair value of ordinary shares underlying the stock awards had historically been determined by the board of directors, with input from the Company’s management. The board of directors previously determined the fair value of the ordinary shares at the time of grant of the awards by considering a number of objective and subjective factors, including valuations of comparable companies, sales of redeemable convertible preference shares, sales of ordinary shares to unrelated third parties, operating and financial performance, the lack of liquidity of the Company’s ordinary shares, and general and industry-specific economic outlook. Subsequent to the IPO, the fair value of the underlying ordinary shares is determined by the closing price, on the date of the grant, of the Company’s ordinary shares, which are traded publicly on the New York Stock Exchange. Expected Term: The expected term represents the period that options are expected to be outstanding. For option grants that are considered to be “plain vanilla,” the Company determines the expected term using the simplified method. The simplified method deems the term to be the average of the time-to-vesting and the contractual life of the options. Expected Volatility: Since the Company has limited trading history of its ordinary shares, the expected volatility is derived from the average historical stock volatilities of several unrelated public companies within the Company’s industry that the Company considers to be comparable to its own business over a period equivalent to the option’s expected term. Risk-Free Interest Rate: The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero-coupon U.S. Treasury notes with maturities approximately equal to the option’s expected term. Dividend Rate: The expected dividend is assumed to be zero as the Company has never paid dividends and has no current plans to do so. The Company’s expected volatility and expected term involve management’s best estimates, both of which impact the fair value of the option calculated under the Black-Scholes option pricing model and, ultimately, the expense that will be recognized over the life of the option. The fair value of stock options granted and assumed was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: Year Ended April 30, 2020 2019 2018 Expected term (in years) 2.00 - 7.27 6.02 - 6.08 6.02 - 6.08 Expected stock price volatility 54.8 % 40.5 % - 46.7 % 40.7 % - 44.1 % Risk-free interest rate 1.4 % - 2.0 % 2.4 % - 3.1 % 1.8 % - 2.6 % Dividend yield 0 % 0 % 0 % Stock-Based Compensation Expense Total stock-based compensation expense recognized in the Company’s consolidated statements of operations was as follows (in thousands): Year Ended April 30, 2020 2019 2018 Cost of revenue—cost of subscription—self-managed and SaaS $ 4,147 $ 3,383 $ 699 Cost of revenue—professional services 2,980 1,208 329 Research and development 23,621 16,100 5,045 Sales and marketing 19,334 11,996 3,560 General and administrative 9,925 7,255 3,109 Total stock-based compensation expense $ 60,007 $ 39,942 $ 12,742 Total stock-based compensation expense for the years ended April 30, 2020, 2019 and 2018 includes a charge of $ 3.3 million, $ 4.4 million, and $ 0.4 million, respectively, related to an expense arising from business combinations. 103 12. Net Loss Per Share Attributable to Ordinary Shareholders The following table sets forth the computation of basic and diluted net loss per share attributable to ordinary shareholders (in thousands, except share and per share data): Year Ended April 30, 2020 2019 2018 Numerator: Net loss $ ( 167,174 ) $ ( 102,303 ) $ ( 52,727 ) Denominator: Weighted-average shares used in computing net loss per share attributable to ordinary shareholders, basic and diluted 78,799,732 54,893,365 32,033,792 Net loss per share attributable to ordinary shareholders, basic and diluted $ ( 2.12 ) $ ( 1.86 ) $ ( 1.65 ) The following outstanding potentially dilutive ordinary shares were excluded from the computation of diluted net loss per share attributable to ordinary shareholders for the periods presented because the impact of including them would have been antidilutive: Year Ended April 30, 2020 2019 2018 Redeemable convertible preference shares — — 28,939,466 Stock options 15,260,506 22,866,438 22,237,484 RSUs 2,368,740 595,503 — Contingently issuable shares 235,031 — — Shares subject to repurchase — 254,350 276,243 Early exercised stock options — — 148,630 Total 17,864,277 23,716,291 51,601,823 13. Income Taxes The Company is incorporated in the Netherlands but operates in various countries with differing tax laws and rates. The geographical breakdown of income (loss) before provision for income taxes is summarized as follows (in thousands): Year Ended April 30, 2020 2019 2018 Dutch $ ( 173,338 ) $ ( 121,803 ) $ ( 58,810 ) Foreign 4,196 23,888 9,459 Loss before income taxes $ ( 169,142 ) $ ( 97,915 ) $ ( 49,351 ) The components of the provision for income taxes were as follows (in thousands): Year Ended April 30, 2020 2019 2018 Current: Dutch $ 518 $ — $ — Foreign ( 560 ) 912 3,731 Total current tax expense $ ( 42 ) $ 912 $ 3,731 Deferred: Dutch $ — $ ( 233 ) $ — Foreign ( 1,926 ) 3,709 ( 355 ) Total deferred tax expense ( 1,926 ) 3,476 ( 355 ) Total provision for income taxes $ ( 1,968 ) $ 4,388 $ 3,376 The Company’s effective tax rate substantially differed from the Dutch statutory tax rate of 25% primarily due to the valuation allowance on the Dutch, United States and United Kingdom deferred tax assets in addition to a deferred tax asset revaluation as a result of enacted tax legislation in the Netherlands, offset by stock based compensation. A reconciliation of 104 income taxes at the statutory income tax rate to the provision for income taxes included in the consolidated statement of operations is as follows (in thousands, except for rates): Year Ended April 30, 2020 2019 2018 Tax Rate Tax Rate Tax Rate Dutch statutory income tax $ ( 42,286 ) 25.0 % $ ( 24,479 ) 25.0 % $ ( 12,338 ) 25.0 % Foreign income taxed at different rates 313 ( 0.2 ) % ( 310 ) 0.3 % ( 670 ) 1.4 % Stock-based compensation ( 53,050 ) 31.4 % ( 24,848 ) 25.3 % 4,669 ( 9.4 ) % Research and development credits ( 7,771 ) 4.6 % ( 2,161 ) 2.2 % ( 697 ) 1.4 % Change in valuation allowance 97,734 ( 57.8 ) % 43,071 ( 44.0 ) % 11,495 ( 23.3 ) % Deferred tax asset revaluation 1,991 ( 1.2 ) % 11,883 ( 12.1 ) % 1,081 ( 2.2 ) % Other 1,101 ( 0.6 ) % 1,232 ( 1.2 ) % ( 164 ) 0.3 % Provision for income taxes $ ( 1,968 ) 1.2 % $ 4,388 ( 4.5 ) % $ 3,376 ( 6.8 ) % Deferred Income Taxes Deferred tax assets are recognized for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. Management assesses whether it is more likely than not that some portion or all of the deferred tax assets will be realized. Deferred tax assets are reduced by valuation allowance to the extent management believes it is not more likely than not to be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. Management makes estimates and judgments about future taxable income based on assumptions that are consistent with the Company’s plans and estimates. Significant components of the Company’s deferred tax assets are summarized as follows (in thousands): As of April 30, 2020 2019 Deferred tax assets: Accrued compensation $ 3,267 $ 1,685 Net operating loss carryforward 208,629 84,194 Deferred revenue 3,876 — Intangibles/assets — 2,321 Stock-based compensation 7,203 4,089 Research and development credits 15,333 3,584 Other 3,882 1,875 Gross deferred tax assets 242,190 97,748 Less valuation allowance ( 225,197 ) ( 92,309 ) Total deferred tax assets $ 16,993 $ 5,439 Deferred tax liabilities: Deferred contract acquisition costs $ ( 8,423 ) $ ( 5,878 ) Intangible assets ( 8,841 ) — Deferred revenue — ( 858 ) Other ( 218 ) ( 674 ) Gross deferred tax liabilities ( 17,482 ) ( 7,410 ) Net deferred tax assets (liabilities) $ ( 489 ) $ ( 1,971 ) The valuation allowance for deferred tax assets as of April 30, 2020 and 2019 was $ 225.2 million and $ 92.3 million, respectively. As the Company has generated losses since inception in the Netherlands and California (United States) jurisdictions, management maintains a full valuation allowance against the net deferred tax assets in these jurisdictions. In addition, the United States and the United Kingdom jurisdictions are anticipated to have cumulative losses for the foreseeable future, and as such a valuation allowance has been established for these regions. The valuation allowance in the Netherlands, the United States and the United Kingdom jurisdictions increased by $ 35.3 million, $ 94.5 million and $ 3.1 million, 105 respectively, during the year ended April 30, 2020 and $ 10.6 million, $ 35.0 million and $ 0.8 million valuation allowance, respectively, for the year ended April 30, 2019. The valuation allowance for Dutch deferred tax assets as of April 30, 2020 and 2019 was $ 88.4 million and $ 53.1 million, respectively, the valuation allowance for the United States deferred tax assets as of April 30, 2020 and 2019 was $ 132.9 million and $ 38.4 million, respectively, and the valuation allowance for the United Kingdom deferred tax assets as of April 30, 2020 was $ 3.9 million and there was $ 0.8 million valuation allowance as of April 30, 2019. As of April 30, 2020, the Company had net operating loss (“NOL”) carryforwards for Dutch, United States (Federal and State) and United Kingdom income tax purposes of $ 396.2 million, $ 490.2 million, $ 416.8 million and $ 18.6 million, respectively, which begin to expire in the year ending April 30, 2022 , April 30, 2031 and April 30, 2024 , respectively, with United Kingdom losses being carried forward indefinitely. The Company also has research and development tax credit carryforwards for United States (Federal and State) and Canada, income tax purposes of $ 11.3 million , $ 1.3 million and $ 0.6 million respectively, which begin to expire April 30, 2030 , April 30, 2022 and April 30, 2037 , respectively. The deferred tax assets associated with the NOL carryforwards and other tax attributes in the Netherlands, the United States, and the United Kingdom are subject to a full valuation allowance. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (the “CARES Act”) Act was signed into United States law. The Act provides emergency assistance, opportunities for additional liquidity and other government programs to support individuals, families and businesses affected by the 2020 coronavirus pandemic, in part through amending United States tax law. Previously limited to 80% of taxable income by the TCJA, section 172(a), the CARES Act removes the limitation and grants taxpayers a five-year carryback period for NOLs arising in tax years beginning after December 31, 2017 and before January 1, 2021. Due to significant losses in the year ended April 30, 2019, and as a result of the CARES Act, the Company is planning to carry back the NOLs from the year ended April 30, 2019 back to five previous fiscal years (April 30, 2014 – April 30, 2018) to fully offset the taxable income in those tax years with an estimated income tax benefit of $ 3.3 million. Uncertain Tax Positions The calculation of the Company’s tax obligations involves dealing with uncertainties in the application of complex tax laws and regulations. ASC 740, Income Taxes , provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. The Company has assessed its income tax positions and recorded tax benefits for all years subject to examination, based upon the Company’s evaluation of the facts, circumstances and information available at each period end. Although the Company believes that it has adequately reserved for its uncertain tax positions, the Company can provide no assurance that the final tax outcome of these matters will not be materially different. As the Company expands, it will face increased complexity, and the Company’s unrecognized tax benefits may increase in the future. The Company makes adjustments to its reserves when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made. The Company had unrecognized tax benefits of $ 9.7 million as of April 30, 2020, of which none would impact the effective tax rate before consideration of any valuation allowance. The activity within the Company’s unrecognized gross tax benefits is summarized as follows (in thousands): As of April 30, 2020 2019 2018 Balance as of beginning of year $ 3,870 $ 2,019 $ 1,196 Increase related to tax positions taken in prior periods 2,283 240 6 Increase related to tax positions taken in the current period 3,553 1,611 817 Balance as of end of year $ 9,706 $ 3,870 $ 2,019 Approximately $ 2.3 million of the increase in fiscal 2020 for tax positions taken in prior periods is due to the amended U.S. Federal income tax return the Company is planning to file as part of the enacted CARES Act, which will generate additional research and development tax credit carryforward from prior years. Approximately $ 3.6 million of the increase in tax positions related to the current period is from the research and development tax credits from the acquisition of Endgame Inc. The Company’s policy is to recognize penalties and interests accrued on any unrecognized tax benefits as a component of income tax expense. During the year ended April 30, 2020, 2019 and 2018 the Company recognized less than $ 0.1 million, $ 0.1 million and $ 0.2 million, respectively, of interest and penalties. The amount of accrued interest and penalties recorded on the consolidated balance sheet as of April 30, 2020 and 2019 was $ 0.2 million and $ 0.3 million, respectively. 106 The Company is subject to periodic examination of income tax returns by various domestic and international tax authorities. The Company is currently under audit with the Dutch tax authority for the tax years ended April 30, 2015 to April 30, 2017 and the German tax authority for the tax years ended April 30, 2016 to April 30, 2018 The Company does not anticipate any significant increases or decreases in its uncertain tax positions within the next twelve months. The Company files tax returns in multiple jurisdictions, including the Netherlands and United States. The Company’s tax filings for fiscal years starting with the year ended April 30, 2014 remain open in various tax jurisdictions. If the examinations are resolved unfavorably, there is a possibility they may have a material negative impact on its results of operations. Dutch income taxes and non-Dutch withholding taxes associated with the repatriation of earnings or for temporary differences related to investments in non-Dutch subsidiaries, excluding the U.S subsidiaries, have not been provided for, as the Company intends to reinvest the earnings of such subsidiaries indefinitely or the Company has concluded that an immaterial additional tax liability would arise on the distribution of such earnings. Earnings from the Company’s U.S. subsidiaries are being treated as being currently repatriated back to the Netherlands though no Dutch income taxes nor U.S. withholding taxes in regard to such repatriations are being recorded due to the Dutch participation exemption provisions and exemption from withholding taxes under the income tax treaty between the Netherlands and the United States. At April 30, 2020, there were cumulative earnings of $ 48.9 million, from the non-U.S. subsidiaries. If such earnings were to be repatriated they would be exempt from taxation in the Netherlands and the amount of dividend withholding taxes from such foreign jurisdictions would be $ 0.8 million, due to the various income tax treaties between the Netherlands and the respective foreign jurisdictions. On December 22, 2017, the TCJA was signed into law making significant changes to the United States Internal Revenue code. Changes include, but are not limited to, a U.S. corporate income tax rate (“U.S. federal tax rate”) decrease to from 35% to 21% effective January 1, 2018. The TCJA contains several new tax provisions that became effective on January 1, 2018, such as the introduction of Global Intangible Low Taxed Income (“GILTI”). Due to the Company’s net operating loss, GILTI provision was $ 0.5 million and did not have a material impact on the Company’s results for the year ended April 30, 2020. 14. Employee Benefit Plans The Company has a defined-contribution plan in the U.S. intended to qualify under Section 401 of the Internal Revenue Code (the “401(k) Plan”). The Company has contracted with a third-party provider to act as a custodian and trustee, and to process and maintain the records of participant data. Substantially all the expenses incurred for administering the 401(k) Plan are paid by the Company. This 401(k) Plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis The Company makes contributions to the 401(k) Plan up to 6 % of the participating employee’s W-2 earnings and wages. The Company recorded $ 8.3 million, $ 5.0 million and $ 2.8 million of expense related to the 401(k) Plan during the years ended April 30, 2020, 2019 and 2018, respectively. The Company also has defined-contribution plans in certain other countries for which the Company recorded $ 3.6 million, $ 1.9 million and $ 1.4 million of expense during the years ended April 30, 2020, 2019 and 2018, respectively. 15. Segment Information The following table summarizes the Company’s total revenue by geographic area based on the billing address of the customers (in thousands): Year Ended April 30, 2020 2019 2018 United States $ 241,648 $ 155,935 $ 97,006 Rest of world 185,972 115,718 62,929 Total revenue $ 427,620 $ 271,653 $ 159,935 Other than the United States, no other individual country exceeded 10% or more of total revenue during the periods presented. 107 The following table presents the Company’s long-lived assets, including property and equipment, net, and operating lease right-of-use assets, by geographic region (in thousands): As of April 30, 2020 2019 United States $ 30,373 $ 3,219 The Netherlands 3,529 1,769 United Kingdom 5,854 251 Rest of world 787 209 Total long-lived assets $ 40,543 $ 5,448 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.