What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-06-25 compared with 2020-06-26 · 228 added, 333 removed, 1000 unchanged (36% of the section changed)

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Financial Statements:

Consolidated Balance Sheets as of April 30, 2020 and 2019

Consolidated Statements of Operations for the years ended April 30, 2020, 2019 and 2018

Consolidated Statements of Comprehensive Loss for the years ended April 30, 2020, 2019 and 2018

Consolidated Statements of Redeemable Convertible Preference Shares and Shareholders’ Equity (Deficit) for the years ended April 30, 2020, 2019 and 2018

Consolidated Statements of Cash Flows for the years ended April 30, 2020, 2019 and 2018

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Redeemable Convertible Preference Shares and Shareholders’ Equity (Deficit)

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

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Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of April 30, 2021, 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

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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

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.

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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.

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates 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 matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition – Identification and Evaluation of Terms and Conditions in Contracts

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(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;

(ii) identification of the performance obligations in the contract;

(iii) determination of the transaction price;

(iv) allocation of the transaction price to the performance obligations;

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For the fiscal year ended April 30, 2021, the Company’s revenue was $608.5 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.

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 the 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.

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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)

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.

These procedures also included (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.

/s/ PricewaterhouseCoopers LLP

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Restricted cash 2,894 2,308

Accounts receivable, net of allowance for doubtful accounts of $ 1,247 and $ 1,411 as of April 30, 2020 and April 30, 2019, respectively

Accounts receivable, net of allowance for credit losses of $ 2,344 and $ 1,247 as of April 30, 2021 and April 30, 2020, respectively

160,415 128,690

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Total liabilities 522,341 390,264

Commitments and contingencies (Note 7)

Commitments and contingencies (Note 7 and 9)

Shareholders’ equity:

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Operating loss ( 129,478 ) ( 171,105 ) ( 101,356 )

Other income (expense), net 1,963 3,441 ( 1,357 )

Other income, net 7,764 1,963 3,441

Loss before income taxes ( 121,714 ) ( 169,142 ) ( 97,915 )

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Balances as of April 30, 2018 28,939,466 $ 200,921 33,232,955 $ 33 $ ( 369 ) $ 62,542 $ ( 961 ) $ ( 214,774 ) $ ( 153,529 )

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

— — — — — — — ( 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.

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Balances as of April 30, 2020 — — 82,856,978 856 ( 369 ) 898,788 ( 1,377 ) ( 484,251 ) 413,647

Cumulative-effect adjustment from adoption of ASU 2016-13 — — — — — — — 367 367

Issuance of ordinary shares upon exercise of stock options — — 6,989,222 83 — 77,175 — — 77,258

Issuance of ordinary shares upon release of restricted stock units — — 687,785 9 — ( 9 ) — — —

Stock-based compensation — — — — — 93,018 — — 93,018

Reclassification of liability-classified awards — — — — — 2,703 — — 2,703

Net loss — — — — — — — ( 129,434 ) ( 129,434 )

Foreign currency translation — — — — — — ( 6,728 ) — ( 6,728 )

Balances as of April 30, 2021 — $ — 90,533,985 $ 948 $ ( 369 ) $ 1,071,675 $ ( 8,105 ) $ ( 613,318 ) $ 450,831

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

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Non-cash operating lease cost 7,927 7,422 —

Stock-based compensation expense 60,007 39,942 12,742

Stock-based compensation expense, net of amounts capitalized 93,680 60,007 39,942

Non-cash acquisition expense settled with shares — 8,834 —

Deferred income taxes 33 ( 1,539 ) 3,621

Foreign currency transaction gain ( 9,507 ) — —

Other ( 142 ) 1,123 69

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Deferred revenue 115,937 85,670 71,876

Net cash used in operating activities ( 30,564 ) ( 23,937 ) ( 20,819 )

Net cash provided by (used in) operating activities 22,545 ( 30,564 ) ( 23,937 )

Cash flows from investing activities

Purchases of property and equipment ( 3,912 ) ( 5,063 ) ( 3,447 )

Maturities of short-term investments — — 15,000

Business acquisitions, net of cash acquired — ( 24,373 ) ( 1,986 )

Capitalization of internal-use software ( 317 ) — —

Other 2,711 249 ( 2,850 )

Net cash provided by (used in) investing activities ( 29,187 ) ( 8,283 ) 8,330

Net cash used in investing activities ( 1,518 ) ( 29,187 ) ( 8,283 )

Cash flows from financing activities

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77,258 61,463 18,552

Proceeds from the issuance of ordinary shares related to early exercise of stock options

Repurchase of ordinary shares — — ( 344 )

Repurchase of early exercised options — — ( 500 )

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Supplemental disclosures of cash flow information

Cash paid for income taxes $ 3,497 $ 3,067 $ 3,189

Cash paid (refunds) for income taxes, net $ ( 423 ) $ 3,497 $ 3,067

Cash paid for operating lease liabilities $ 8,957 $ 7,371 $ —

Cash paid for interest $ 2 $ 9 $ 14

Supplemental disclosures of non-cash investing and financing information

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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.

Notes to Condensed Consolidated Financial Statements

Organization and Description of Business

Summary of Significant Accounting Policies

Revenue and Performance Obligations

Fair Value Measurements

Balance Sheet Components

Commitments and Contingencies

Redeemable Convertible Preference Shares

Ordinary Shares

Equity Incentive Plans

Net Loss Per Share Attributable to Ordinary Shareholders

14 Employee Benefit Plans

Segment Information

Organization and Description of Business

(“Elastic” or the “Company”) was incorporated under the laws of the Netherlands in 2012.

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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.

Such estimates include, but are not limited to, allocation of revenue between recognized and deferred amounts, deferred contract acquisition costs, allowance for credit losses, 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.

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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

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.

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

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Items included in the financial statements of such subsidiaries are measured using that functional currency.

The Company periodically re-assesses its operations to determine if previous conclusions are still valid.

Changes in functional currencies are applied prospectively if the operations encounter a significant and permanent change.

For the subsidiaries where the U.S.

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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 the years ended April 30, 2021, 2020 and 2019, the Company recognized a re-measurement gain of $ 7.7 million, and re-measurement loss of $ 2.2 million and $ 0.2 million, respectively.

For subsidiaries where the functional currency is other than the U.S.

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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

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.

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.

The Company had no short-term investments as of April 30, 2021 and April 30, 2020.

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.

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.

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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

No customer represented 10% or more of net accounts receivable as of April 30, 2021, and one customer represented 10% of net accounts receivable as of April 30, 2020.

No customer accounted for more than 10 % of the Company’s total revenue for the years ended April 30, 2021, 2020 and 2019.

Accounts Receivable, Unbilled Accounts Receivable and Allowance for Credit Losses

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.

Gross accounts receivable are reduced for this risk by an allowance for credit losses.

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.

The Company determines the need for an allowance for credit losses 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.

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):

The allowance for credit losses reflects the Company’s best estimate of probable losses inherent in the Company’s receivables portfolio.

As of April 30, 2021 and 2020, the allowance for credit losses was $ 2.3 million and $ 1.2 million, respectively.

Activity related to the Company’s allowance for credit losses was as follows (in thousands):

Year ended April 30,

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Beginning balance $ 1,247 $ 1,411 $ 776

Cumulative-effect adjustment from adoption of ASU 2016-13 ( 367 ) — —

Bad debt expense 5,095 193 1,105

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The unbilled accounts receivable balance was $ 5.2 million and $ 2.6 million as of April 30, 2021 and 2020, respectively.

Capitalized Software Costs

Capitalized Software Development and Implementation 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.

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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 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 and costs related to the development of web-based product are capitalized during the application development stage.

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.

No costs were capitalized during the years ended April 30, 2021 and 2020.

The Company also capitalizes qualifying implementation costs incurred in a hosting arrangement that is a service contract based on the existing guidance for internally developed software.

In accordance with the guidance, (i) capitalized implementation costs are classified in the same balance sheet line item as the amounts prepaid for the related hosting arrangement;

(ii) amortization of capitalized implementation costs are presented in the same income statement line item as the service fees for the related hosting arrangement;

and (iii) cash flows related to capitalized implementation costs are presented within the same category of cash flow activity as the cash flows for the related hosting arrangement (i.e.

operating activity).

The Company tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

The Company amortizes capitalized implementation costs over the expected life of the service contract.

The Company capitalized $ 0.3 million in implementation costs for software hosting arrangements during the fiscal year ended April 30, 2021.

No such costs were capitalized during the fiscal year ended April 30, 2020.

No amortization expense related to capitalized implementation costs was recorded during the fiscal years ended April 30, 2021, 2020 and 2019, respectively as the underlying implementation activities were not complete.

Property and Equipment

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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.

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, 2021, 2020 and 2019.

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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

Company’s business strategy.

significant changes in performance relative to expected operating results, significant changes in asset use, significant negative industry or economic trends, and changes in the 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.

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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.

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 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 generates revenue primarily from the sale of self-managed subscriptions (which include licenses for proprietary features, support, and maintenance) and from the sale of SaaS subscriptions.

The Company also generates revenue from professional services, which consist of consulting and training.

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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;

(ii) identification of the performance obligations in the contract;

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 self-managed subscriptions include both license providing the right to use 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.

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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

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.

(iii) determination of the transaction price;

The transaction price is the total amount of consideration we expect to be entitled to in exchange for the subscriptions and services in a contract.

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.

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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.

For contracts that contain multiple performance obligations, the Company allocates the transaction price to each performance obligation based on a relative standalone selling price (‘SSP”).

The SSP is determined based on the prices at which we separately sell these products assuming the majority of these fall within a pricing range.

In instances where SSP is not directly observable, such as when we do not sell the software license separately, we derive the SSP using information that may include market conditions and other observable and unobservable inputs which can require significant judgment.

If one of the performance obligations is outside of the SSP range, the Company allocates the transaction price considering the midpoint of the SSP 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 a relative SSP.

(v) recognition of revenue when the Company satisfies each performance obligation;

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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.

Revenue on the Company’s SaaS products is recognized ratably over the contract period as the Company satisfies the performance obligation.

Professional services comprise consulting services as well as public and private training.

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Payment from channel partners is not contingent on the partner’s collection from end-customers.

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.

Deferred Contract Acquisition Costs

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Cost of Revenue

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.

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 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

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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 were $ 16.7 million, $ 7.7 million and $ 6.5 million for the years ended April 30, 2021, 2020 and 2019 respectively.

Advertising costs are recorded in sales and marketing expense in the consolidated statement of operations.

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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.

RSAs issued 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 remaining unrecognized stock-based compensation expense

related to the RSAs was recorded over their remaining requisite service periods.

The Company recognizes forfeitures as they occur.

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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.

As of April 30, 2021, the Company did not have any redeemable convertible preference shares issued and outstanding.

Treasury Shares

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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.

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.

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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, 2021, the Company had $3.2 million of customer deposits included in accrued expenses and other liabilities.

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

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

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:

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2019-4, and ASU No.

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.

The standard and related amendments modify the accounting for credit losses for most financial assets and requires an entity to utilize a new impairment model known as current expected credit loss (“CECL”) model to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized costs basis of the financial asset, presents the amount expected to be collected on the financial asset.

Additionally, ASU No.

2016-13 amends the current available-for-sale security impairment model for debt securities held for investment.

The new model requires an estimate of expected credit losses when the fair value is below the amortized cost of the asset.

The credit-related impairment (and subsequent recoveries) are recognized as an allowance on the balance sheet with a corresponding adjustment to the income statement.

Non-credit related losses will continue to be recognized through OCI.

This guidance also requires new disclosures for financial assets measured at amortized cost, loans and available-for-sale debt securities.

Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted.

The Company adopted ASU No.

2016-13 on May 1, 2020.

The Company’s adoption of this ASU resulted in a $ 0.4 million reduction to accumulated deficit.

Goodwill Impairment :

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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.

The standard will simplify the measurement of goodwill impairment 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.

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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.

The Company adopted ASU No.

2017-4 on May 1, 2020.

The Company's adoption of this ASU did not have a material impact on the Company's 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

Concepts Statement, Conceptual Framework for Financial Reporting—Chapter 8:

2018-13, Fair Value Measurement (Topic 820) , which modifies, removes and adds certain disclosure requirements on fair value measurements based on the FASB Concepts Statement, Conceptual Framework for Financial Reporting—Chapter 8:

Notes to Financial Statements .

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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.

The Company adopted ASU No.

2018-13 on May 1, 2020.

The Company's adoption of this ASU did not have a material impact on the Company's consolidated financial statements.

Intangible Assets :

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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).

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.

The Company adopted ASU No.

2018-15 on May 1, 2020 and applied it prospectively to implementation costs incurred after the date of adoption.

The Company’s adoption of this ASU had no material impact on the Company’s consolidated financial statements.

New Accounting Pronouncements Not Yet Adopted

Income Taxes:

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The Company does not expect the adoption of the new accounting standard to have a material impact on its consolidated financial statements.

Equity Awards:

In May 2021, the FASB issued ASU No.

2021-4, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options , which clarifies the accounting for modifications or exchanges of a freestanding equity-classified written call option that is not within the scope of another Topic.

It addresses how an entity should treat, measure the effect of, and recognize the effect of a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange.

The new guidance becomes effective for the Company for the fiscal year ending April 30, 2023.

Early adoption is permitted, including in interim periods.

The Company does not expect the adoption of the new accounting standard to have a material impact on its consolidated financial statements.

Reclassification

In connection with the preparation of the Company’s consolidated financial statements for the year ended April 30, 2021, the Company identified an immaterial misclassification in the prior year balance sheet, which understated short term deferred revenue and overstated long term deferred revenue by $ 11.6 million as of April 30, 2020.

The Company has corrected for this immaterial misclassification in the accompanying consolidated balance sheet by revising the April 30, 2020 deferred revenue balances.

This change in classification has no effect on previously reported cash flows in the condensed consolidated statement of cash flows and has no effect on previously reported consolidated statements of operations for any period.

Revenue and Performance Obligations

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Remaining Performance Obligations

Remaining performance obligations represent the aggregate amount of the transaction price in contracts allocated to performance obligations not delivered, or partially undelivered, as of the end of the reporting period.

Remaining performance obligations include deferred revenue and the unfulfilled portion of multi-year contracts or other orders not yet invoiced and certain unfulfilled orders against accepted customer contracts at the end of any given period.

As of April 30, 2021, the Company had $ 796.4 million of remaining performance obligations, which is comprised of product and services revenue not yet delivered.

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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.

Approximately 11 % of the ordinary shares issued, or 235,031 shares, were being held in an indemnity escrow fund for 18 months after the acquisition close date and were released in April 2021.

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.

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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.

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):

GAAP purchase price and the allocation of the purchase price at fair value (in thousands):

Cash paid $ 26,633

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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):

The following table summarizes the fair values of assets acquired and liabilities assumed (in thousands):

Cash and cash equivalents $ 2,220

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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.

Trade names represent the Company’s right to the Endgame trade names and associated design, as it exists as of the acquisition date.

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 related to revenue and customer growth rate as 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 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 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.

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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;

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, 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;

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Pro forma net loss (1) $ ( 176,019 ) $ ( 152,280 )

(1) As if the acquisition of Endgame was consummated on May 1, 2018

(1) As if the acquisition of Endgame were 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.

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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

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.

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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 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):

Developed technology $ 5,392 4

Customer relationships 158 4

Trade name 97 4

Total identifiable intangible assets $ 5,647

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.

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 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):

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.

Fair Value of Ordinary Shares Used for Purchase Consideration

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Prepaid hosting costs $ 11,122 $ 12,228

Deposits 1,857 1,268

Prepaid value added taxes 9,408 5,167

Prepaid software subscription costs 5,636 3,104

Deferred stock-based compensation expense — 784

Deposits 2,410 1,857

Prepaid taxes 1,694 3,612

Prepaid value added taxes 5,167 4,239

Other 6,732 6,655

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Total $ 67,300 $ 31,012 $ 36,288 3.0

Foreign currency translation adjustment $ ( 2 )

Total $ 36,286

Intangible assets consisted of the following as of April 30, 2020 (in thousands):

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Balance as of April 30, 2020 $ 197,877

Addition from acquisition 178,764

Foreign currency translation adjustment 974

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Accrued expenses $ 12,772 $ 10,864

Income taxes payable — 149

Value added taxes payable 8,493 7,230

Share repurchase liability — 1,612

Income taxes payable 1,596 —

Other 6,048 4,116

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Accrued payroll and withholding taxes 5,522 7,588

Post-combination compensation liability — 655

Other 5,344 6,591

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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.

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):

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Beginning balance $ 259,702 $ 170,666 $ 102,561

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 )

Increases due to invoices issued, excluding amounts recognized as

revenue during the period 364,093 242,136 163,963

Amounts transferred to deferred revenue from accrued expenses and other

liabilities upon entering into contracts with customers, net of revenue

recognized during the period 5,424 — —

Increase from acquisitions, net of revenue recognized — 6,192 —

Revenue recognized that was included in deferred revenue balance at

beginning of period ( 231,519 ) ( 159,292 ) ( 95,858 )

Ending balance $ 397,700 $ 259,702 $ 170,666

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):

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Total deferred contract acquisition costs $ 86,352 $ 43,549 $ 26,150

The Company did no t recognize any impairment of deferred contract acquisition costs during the years ended April 30, 2021, 2020 and 2019.

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

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

The table below reflects the Company’s future minimum purchase obligations relating primarily to non-cancellable agreements for cloud hosting, subscription software, and sales and marketing as of April 30, 2021 (in thousands):

Years Ending April 30, Purchase Obligations

2022 $ 56,346

Total $ 348,478

Cloud Hosting Commitments

In April 2021, the Company entered into an amendment to a non-cancellable cloud hosting capacity agreement, effective April 1, 2021, for a total purchase commitment of $ 260.0 million payable over the five years following the date of the agreement.

In December 2019, the Company entered into an amendment to a non-cancellable cloud hosting capacity agreement 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.

Actual timing may vary depending on services used and total payments under these capacity commitments may be higher than the total minimum depending on services used.

Letters of Credit

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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.

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, 2021, there were no redeemable convertible preference shares issued and outstanding.

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.

The Company’s leases are composed of corporate office spaces and various equipment under non-cancelable operating lease agreements that expire at various dates through 2025.

As of April 30, 2021, 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):

Components of lease costs included in the consolidated statement of operations were as follows (in thousands):

Year Ended April 30,

Operating lease cost $ 8,825 $ 8,435

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Years Ending April 30,

Thereafter 2,803

Total minimum lease payments 31,024

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Operating lease liabilities, non-current $ 19,649

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,

Thereafter 7,020

Total $ 33,894

Ordinary Shares

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Shares issued for the early exercise of options are included in issued and outstanding shares as they are legally issued and outstanding.

Convertible Preference Shares

The Company’s board of directors has the authority, for a period of five years from October 10, 2018, without further action by the Company’s shareholders, to issue up to 165 million shares of undesignated convertible preference shares with rights and preferences, including voting rights, designated from time to time by the board of directors.

As of April 30, 2021, there were no convertible preference shares issued or outstanding.

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.

Under the 2012 Plan, the board of directors, the compensation committee, as administrator of the 2012 Plan, and a duly authorized committee 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, compensation committee or a duly authorized 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.

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.

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.

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Options cancelled 890,561 1,181,482

Options repurchased — 43,630

RSUs granted ( 1,965,644 ) ( 2,101,271 )

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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

Stock options granted 232,075 $ 139.68

Stock options assumed in acquisition 245,390 $ 48.99

Stock options exercised ( 6,989,222 ) $ 11.08

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As of April 30, 2021, the Company had unrecognized stock-based compensation expense of $ 40.0 million related to unvested stock options that the Company expects to recognize over a weighted-average period of 1.66 years.

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,

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-

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 —

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:

During the year ended April 30, 2021, the Company granted 1,965,644 RSUs at a weighted-average grant date fair value of $ 123.48 per unit.

During the year ended April 30, 2021, the Company cancelled 80,839 cash settled RSUs and contemporaneously granted 80,839 equity settled RSUs.

The modification of the awards and related change in the classification of awards from liability-classified to equity-classified was accounted for under the provisions of ASC 718 - Stock Compensation.

Prior to the conversion, the Company performed a final measurement of its stock-based compensation liability under the fair value method, which resulted in a non-cash stock-based compensation expense of $ 2.5 million.

Additionally, upon modification of the awards, the Company reclassified $ 2.7 million stock-based compensation liability to additional-paid in capital.

As of April 30, 2021, the Company had unrecognized stock-based compensation expense of $ 286.8 million related to RSUs that the Company expects to recognize over a weighted-average period of 3.04 years.

The following table summarizes RSU activity under the 2012 Plan:

Number of Awards Weighted-Average Grant Date Fair Value

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General and administrative 14,903 9,925 7,255

Stock-based compensation expense, net of amounts capitalized 93,680 60,007 39,942

Capitalized stock-based compensation expense 10 — —

Total stock-based compensation expense $ 93,690 $ 60,007 $ 39,942

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.

Net Loss Per Share Attributable to Ordinary Shareholders

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Net loss per share attributable to ordinary shareholders, basic and diluted $ ( 1.48 ) $ ( 2.12 ) $ ( 1.86 )

Since the Company is in a net loss position for all periods presented, basic net loss per share is the same as diluted net loss per share for all periods.

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:

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2021 2020 2019

Redeemable convertible preference shares — — 28,939,466

Stock options 7,611,016 15,260,506 22,866,438

2 unchanged sentences

Shares subject to repurchase — — 254,350

Early exercised stock options — — 148,630

Total 10,912,299 17,864,277 23,716,291

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Loss before income taxes $ ( 121,714 ) $ ( 169,142 ) $ ( 97,915 )

The components of the provision for income taxes were as follows (in thousands):

The components of the provision for (benefit from) income taxes were as follows (in thousands):

Year Ended April 30,

2 unchanged sentences

Foreign 3,896 ( 560 ) 912

Total current tax expense $ ( 42 ) $ 912 $ 3,731

Total current tax expense (income) $ 5,021 $ ( 42 ) $ 912

Dutch $ — $ — $ ( 233 )

Foreign 2,699 ( 1,926 ) 3,709

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

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):

Total deferred tax expense (income) 2,699 ( 1,926 ) 3,476

Total provision for (benefit from) income taxes $ 7,720 $ ( 1,968 ) $ 4,388

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, partially offset by a tax benefit from stock-based compensation.

A reconciliation of 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,

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Other 4,270 ( 3.4 ) % 1,101 ( 0.6 ) % 1,232 ( 1.2 ) %

Provision for income taxes $ ( 1,968 ) 1.2 % $ 4,388 ( 4.5 ) % $ 3,376 ( 6.8 ) %

Provision for (benefit from) income taxes $ 7,720 ( 6.3 ) % $ ( 1,968 ) 1.2 % $ 4,388 ( 4.5 ) %

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.

Deferred tax assets and liabilities 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.

Deferred tax assets are reduced by a valuation allowance where management has concluded it is more likely than not that the deferred tax assets will not 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):

Significant components of the Company’s deferred tax assets and liabilities are summarized as follows (in thousands):

As of April 30,

3 unchanged sentences

Deferred revenue 4,609 3,876

Intangibles/assets — 2,321

Stock-based compensation 11,614 7,203

Research and development credits 22,988 15,333

Lease liabilities 4,956 6,616

Other 3,156 2,961

3 unchanged sentences

Deferred tax liabilities:

Accrued compensation $ ( 41 ) $ —

Deferred contract acquisition costs ( 13,173 ) ( 8,423 )

Intangible assets ( 8,191 ) ( 8,841 )

Deferred revenue — ( 858 )

Right of use assets ( 4,523 ) ( 5,695 )

Other — ( 218 )

Gross deferred tax liabilities ( 25,928 ) ( 23,177 )

Net deferred tax assets (liabilities) $ ( 489 ) $ ( 1,971 )

Net deferred tax liabilities $ ( 2,918 ) $ ( 489 )

The deferred tax assets and liabilities disclosure at April 30, 2020 has been adjusted to reflect the deferred tax right-of-use asset and related deferred lease liability recognized in accordance with ASC 842.

The valuation allowance for deferred tax assets as of April 30, 2021 and 2020 was $ 409.8 million and $ 225.2 million, respectively.

1 unchanged sentence

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,

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.

The valuation allowance in the Netherlands, the United States and the United Kingdom jurisdictions increased by $ 61.0 million, $ 113.1 million and $ 10.5 million, respectively, during the year ended April 30, 2021 and $ 35.3 million, $ 94.5 million and $ 3.1 million, respectively, for the year ended April 30, 2020.

The valuation allowance for the Dutch deferred tax assets as of April 30, 2021 and 2020 was $ 149.4 million and $ 88.4 million, respectively, the valuation allowance for the United States deferred tax assets as of April 30, 2021 and 2020 was $ 246.0 million and $ 132.9 million, respectively, and the valuation allowance for the United Kingdom deferred tax assets as of April 30, 2021 and April 30, 2020 was $ 14.4 million and $ 3.9 million, respectively.

As of April 30, 2021, the Company had net operating loss (“NOL”) carryforwards for Dutch, United States (Federal and State) and United Kingdom income tax purposes of $ 589.8 million, $ 936.1 million, $ 642.0 million and $ 56.0 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 $ 15.9 million, $ 4.3 million and $ 0.5 million respectively, which begin to expire April 30, 2030, April 30, 2022, and April 30, 2037, respectively.

Research and development tax credit carryforwards related to the UK of $ 0.6 million have an indefinite life.

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.

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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.

Due to significant losses in the year ended April 30, 2019, and as a result of the CARES Act, the Company has filed amended returns 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 in the year ended April 30, 2020.

Uncertain Tax Positions

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Balance as of end of year $ 13,656 $ 9,706 $ 3,870

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.

Approximately $ 0.4 million of the increase in fiscal 2021 for tax positions taken in prior periods is due to the filing of tax returns during the current fiscal year.

Approximately $ 3.5 million of the increase in tax positions related to the current period is from the research and development tax credits generated for fiscal 2021.

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.

During each of the years ended April 30, 2021, 2020 and 2019 the Company recognized less than $ 0.1 million of interest and penalties.

The amount of accrued interest and penalties recorded on the consolidated balance sheet as of April 30, 2021 and 2020 was $ 0.1 million and $ 0.2 million, respectively.

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

During the fiscal year, the Company closed its income tax and VAT audit with the Dutch tax authority for the tax years ended April 30, 2015 to April 30, 2017 and its income tax and VAT audit with the German tax authority for the tax years ended April 30, 2016 to April 30, 2018.

There were no material adjustments as a result of these audit settlements.

The Company is currently under examination with the Internal Revenue Service for foreign withholding taxes for the calendar year 2018.

The Company does not anticipate any significant increases or decreases in its uncertain tax positions within the next twelve months.

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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 $ 1.8 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.

The Company is subject to Global Intangible Low Taxed Income (“GILTI”).

Due to the Company’s net operating loss, GILTI provision was $ 1.0 million, zero and $ 0.5 million and did not have a material impact on the Company’s results for the years ended April 30, 2021, 2020 and 2019, respectively.

Employee Benefit Plans

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data