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Item 8. Financial Statements and Supplementary Data

2022-06-21 compared with 2021-06-25 · 244 added, 301 removed, 927 unchanged (37% of the section changed)

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The following financial statements are filed as part of this Annual Report on Form 10-K:

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )

Financial Statements:

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Consolidated Statements of Comprehensive Loss

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

Consolidated Statements of Shareholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

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Report of Independent Registered Public Accounting Firm

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We have audited the accompanying consolidated balance sheets of Elastic N.V.

and its subsidiaries (the “Company”) as of April 30, 2021 and 2020, and the related consolidated statements of operations, of comprehensive loss, of redeemable convertible preference shares and shareholders’ equity (deficit), and of cash flows for each of the three years in the period ended April 30, 2021, including the related notes (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the “Company”) as of April 30, 2022 and 2021, and the related consolidated statements of operations, of comprehensive loss, of shareholders' equity and of cash flows for each of the three years in the period ended April 30, 2022, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of April 30, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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Critical Audit Matters

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We have served as the Company’s auditor since 2018.

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Consolidated Balance Sheets

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Deferred revenue, non-current 33,518 44,895

Long-term debt, net 566,520 —

Operating lease liabilities, non-current 16,482 19,649

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94,174,914 shares issued and outstanding as of April 30, 2022 and 90,533,985 shares issued and outstanding as of April 30, 2021

Treasury stock, 35,937 shares (repurchased at an average price of $ 10.30 per share)

Treasury stock

( 369 ) ( 369 )

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

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Consolidated Statements of Operations

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Operating loss ( 173,680 ) ( 129,478 ) ( 171,105 )

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

Other income (expense), net

Interest expense ( 20,716 ) ( 185 ) —

Other income (expense), net ( 3,393 ) 7,949 1,963

Loss before income taxes ( 197,789 ) ( 121,714 ) ( 169,142 )

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

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Consolidated Statements of Comprehensive Loss

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Net loss $ ( 203,848 ) $ ( 129,434 ) $ ( 167,174 )

Other comprehensive loss:

Other comprehensive income (loss):

Foreign currency translation adjustments ( 10,025 ) ( 6,728 ) 54

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

Consolidated Statements of Redeemable Convertible Preference Shares

and Shareholders’ Equity (Deficit)

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Consolidated Statements of Shareholders’ Equity

( in thousands, except share data )

Redeemable Convertible

Preference Shares Ordinary Shares Treasury

Ordinary Shares Treasury

Amount Additional

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Stockholders'

Equity (Deficit)

Shares Amount Shares Amount

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.

— — — 303 — ( 303 ) — — —

Conversion of redeemable convertible preference shares to ordinary shares upon initial public offering

( 28,939,466 ) ( 200,921 ) 28,939,466 289 — 200,632 — — 200,921

Issuance of ordinary shares upon initial public offering, net of underwriting discounts and issuance costs

— — 8,050,000 93 — 263,749 — — 263,842

Issuance of ordinary shares upon exercise of stock options

— — 3,117,320 33 — 18,519 — — 18,552

Issuance of ordinary shares upon subscription of restricted stock awards

— — 244,498 3 — ( 3 ) — — —

Vesting of early exercised stock options

— — — — — 1,019 — — 1,019

Vesting of ordinary shares subject to repurchase

— — — — — 449 — — 449

Repurchase of early exercised stock options

— — ( 43,630 ) — — — — — —

Ordinary shares issued in connection with the acquisition of Lambda Lab

— — 134,474 — — — — — —

Stock-based compensation

— — — — — 34,531 — — 34,531

— — — — — — — ( 102,303 ) ( 102,303 )

Foreign currency translation

— — — — — — ( 470 ) — ( 470 )

Shares Amount

Balances as of April 30, 2019 73,675,083 $ 754 $ ( 369 ) $ 581,135 $ ( 1,431 ) $ ( 317,077 ) $ 263,012

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

Fair value of replacement equity awards attributable to pre-acquisition service — — — 1,266 — — 1,266

Issuance of ordinary shares upon exercise of stock options 2,563,287 29 — 36,381 — — 36,410

Issuance of ordinary shares upon release of restricted stock units 1,077,642 13 — ( 13 ) — — —

Stock-based compensation — — — 140,799 — — 140,799

Net loss — — — — — ( 203,848 ) ( 203,848 )

Foreign currency translation — — — — ( 10,025 ) — ( 10,025 )

Balances as of April 30, 2022 94,174,914 $ 990 $ ( 369 ) $ 1,250,108 $ ( 18,130 ) $ ( 817,166 ) $ 415,433

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

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Consolidated Statements of Cash Flows

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Amortization of deferred contract acquisition costs 60,738 40,991 28,314

Amortization of debt issuance costs 803 — —

Non-cash operating lease cost 8,636 7,927 7,422

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Deferred income taxes ( 2,430 ) 33 ( 1,539 )

Foreign currency transaction gain ( 9,507 ) — —

Foreign currency transaction (gain) loss 1,984 ( 9,507 ) —

Other 98 ( 142 ) 1,123

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Cash flows from financing activities

Net proceeds from issuance of ordinary shares in initial public offering

Proceeds from the issuance of debt 575,000 — —

Proceeds from issuance of ordinary shares upon exercise of stock options

36,410 77,258 61,463

Repurchase of early exercised options — — ( 500 )

Payments of debt issuance costs ( 9,283 ) — —

Repayment of notes payable — — ( 90 )

Payment of deferred offering costs — — ( 5,672 )

Payment of withholding taxes related to acquisition expense settled in shares — — ( 2,834 )

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Supplemental disclosures of cash flow information

Cash paid for interest $ 12,995 $ — $ —

Cash paid (refunds) for income taxes, net $ 3,979 $ ( 423 ) $ 3,497

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Operating lease right-of-use assets for new lease obligations $ 8,992 $ 1,120 $ 12,332

Vesting of early exercised stock options $ — $ — $ 1,019

Acquisition-related indemnity holdback $ 6,000 $ — $ —

Vesting of shares subject to repurchase $ — $ — $ 2,730

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

Notes to Condensed Consolidated Financial Statements

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Notes to Consolidated Financial Statements

Organization and Description of Business

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Commitments and Contingencies

Redeemable Convertible Preference Shares

Ordinary Shares

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Segment Information

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Organization and Description of Business

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

Elastic is a search company.

It created the Elastic Stack, a powerful set of software products that ingest and store data from any source and in any format, and perform search, analysis, and visualization in milliseconds or less.

It created the Elastic Stack, a powerful set of software products that ingest and store data from any source and in any format, and perform search, analysis, and visualization on that data.

Developers build on top of the Elastic Stack to apply the power of search to their data and solve business problems.

The Company also offers software solutions built on the Elastic Stack:

The Company offers three software solutions built into the Elastic Stack:

Enterprise Search, Observability, and Security.

The Elastic Stack and the Company’s solutions are designed to run in public or private clouds, in hybrid environments, or in traditional on-premises environments.

Initial Public Offering

In October 2018, the Company completed its initial public offering (“IPO”) in which it issued and sold 8,050,000 ordinary shares at an offering price of $ 36.00 per share, including 1,050,000 ordinary shares pursuant to the exercise in full of the underwriters’ option to purchase additional shares.

The Company received net proceeds of $ 263.8 million, after deducting underwriting discounts and commissions of $ 20.3 million and offering expenses of $ 5.7 million.

Immediately prior to the completion of the IPO, all 28,939,466 shares of the Company’s then-outstanding redeemable convertible preference shares automatically converted into 28,939,466 ordinary shares at their respective conversion ratios and the Company reclassified $ 200.6 million from temporary equity to additional paid-in capital and $ 0.3 million to ordinary shares on its consolidated balance sheet.

The Company’s articles of association designated and authorized the Company to issue 72 million ordinary shares with a par value of € 0.001 per share up until immediately prior to the completion of the IPO at which time the authorized ordinary shares increased to 165 million.

In addition, the par value of ordinary shares was changed from € 0.001 per share to € 0.01 per share as required by Dutch law at the time of the Company’s conversion into a Dutch public company with limited liability ( naamloze vennootschap ).

The Elastic Stack and the Company’s solutions are designed to run in public or private clouds, in hybrid environments, or in multi-cloud environments.

Summary of Significant Accounting Policies

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The Company’s fiscal year ends on April 30.

References to fiscal 2021, for example, refer to the fiscal year ended April 30, 2021.

References to fiscal 2022, for example, refer to the fiscal year ending April 30, 2022.

Use of Estimates and Judgments

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In March 2020, the World Health Organization declared the 2019 novel Coronavirus Disease (“COVID-19”) a pandemic.

The pandemic is expected to result in a global slowdown of economic activity that is likely to decrease demand for a broad variety of goods and services, including from the Company’s customers, while also disrupting sales channels and marketing activities for an unknown period of time.

The continuing COVID-19 pandemic has resulted in a global slowdown of economic activity and its impact has varied significantly across different industries with certain industries experiencing increased demand for their products and services, while others have struggled to maintain demand for their products and services consistent with historical levels.

The full extent to which COVID-19 may impact the Company’s financial condition or results of operations is uncertain.

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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.

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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, 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 the years ended April 30, 2022, 2021 and 2020, the Company recognized a re-measurement loss of $ 3.6 million, a gain of $ 7.7 million, and a loss of $ 2.2 million, respectively.

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

dollar, the Company uses the period-end exchange rates to translate assets and liabilities, the average monthly exchange rates to translate revenue and expenses, and historical exchange rates to translate shareholders’ equity (deficit), into U.S.

The Company records translation gains and losses in accumulated other comprehensive loss as a component of shareholders’ equity in the consolidated balance sheet.

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The carrying amount of the Company’s cash equivalents approximates fair value, due to the short maturities of these instruments.

Restricted cash represents cash on deposit with financial institutions in support of letters of credit in favor of certain landlords for non-cancelable lease agreements.

Our restricted cash consists primarily of cash deposits with financial institutions in support of letters of credit in favor of landlords for non-cancelable lease agreements.

Cash, cash equivalents, and restricted cash as reported in the Company’s consolidated statements of cash flows includes the aggregate amounts of cash and cash equivalents and the restricted cash as shown on the consolidated balance sheet.

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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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Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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The carrying values of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their respective fair values due to the short period of time to maturity, receipt or payment.

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Management performs ongoing credit evaluations of customers and maintains allowances for potential credit losses on customers’ accounts when deemed necessary.

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 represented 10% or more of net accounts receivable as of April 30, 2022 and 2021.

No customer accounted for more than 10% of the Company’s total revenue for the years ended April 30, 2022, 2021 and 2020.

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Costs incurred during the application development stage of the project are capitalized.

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.

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The Company also capitalizes qualifying implementation costs incurred in a hosting arrangement that is a service contract.

These costs are amortized on a straight-line basis over the expected life of the service contract, including consideration of the reasonably certain renewal periods, and are presented in the same income statement line items as the service for the related hosting arrangement.

The Company capitalized $ 5.1 million and $ 0.3 million of such costs in the years ended April 30, 2022 and 2021, respectively, and these costs are recorded in the other assets, non-current on the consolidated balance sheets.

Amortization expense for the fiscal year ended April 30, 2022 was $ 0.2 million.

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

Property and Equipment

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The right-of-use asset is initially measured as the present value of the lease payments, adjusted for initial direct costs, prepaid lease payments to lessors and lease incentives.

The Company has completed a number of acquisitions of other businesses in the past and may acquire additional businesses or technologies in the future.

The results of businesses acquired in a business combination are included in the Company’s consolidated financial statements from the date of acquisition.

The Company allocates the purchase price, which is the sum of the consideration provided and may consist of cash, equity or a combination of the two, in a business combination to the identifiable assets and liabilities of the acquired business at their acquisition date fair values.

When the Company acquires a business, the Company allocates the purchase price, which is the sum of the consideration provided and may consist of cash, equity or a combination of the two, in a business combination to the identifiable assets and liabilities of the acquired business at their estimated respective fair values.

The excess of the purchase price over the amount allocated to the identifiable assets and liabilities, if any, is recorded as goodwill.

Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenue and cash flows, discount rates and selection of comparable companies.

Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates, including, but not limited to, the selection of valuation methodologies, estimates of future revenue and cash flows, costs to rebuild developed technology, discount rates and selection of comparable companies.

The Company’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

During the measurement period, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill.

Upon the conclusion of the measurement period, any subsequent adjustments are recorded to other income, net in the consolidated statement of operations.

When the Company issues stock-based or cash awards to an acquired company’s shareholders, the Company evaluates whether the awards are consideration or compensation for post-acquisition services.

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If continued employment is required for vesting, the awards are treated as compensation for post- acquisition services and recognized as expense over the requisite service period.

To date, the assets acquired and liabilities assumed in the Company’s business combinations have primarily consisted of goodwill and finite-lived intangible assets, consisting primarily of developed technologies, in-process research & development, customer relationships and trade names.

The estimated fair values and useful lives of identifiable intangible assets are based on many factors, including estimates and assumptions of future operating performance and cash flows of the acquired business, the nature of the business acquired, and the specific characteristics of the identified intangible assets.

The estimates and assumptions used to determine the fair values and useful lives of identified intangible assets could change due to numerous factors, including market conditions, technological developments, economic conditions and competition.

In connection with determination of fair values, the Company may engage independent appraisal firms to assist with the valuation of intangible and certain tangible assets acquired and certain assumed obligations.

Acquisition-related transaction costs incurred by the Company are not included as a component of consideration transferred, but are accounted for as an operating expense in the period in which the costs are incurred.

The results of businesses acquired in a business combination are included in the Company’s consolidated financial statements from the date of acquisition.

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Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations accounted for using the acquisition method for accounting and is not amortized.

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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 goodwill will be impaired by the amount that the carrying amount exceeds the implied fair value.

There was no impairment of goodwill recorded for the years ended April 30, 2022, 2021 and 2020.

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If the estimated useful life assumption for any asset is changed, the remaining unamortized balance would be depreciated or amortized over the revised estimated useful life, on a prospective basis.

Deferred Offering Costs

Deferred offering costs were capitalized and consisted of fees and expenses incurred in connection with the sale of the Company’s ordinary shares in its IPO, including the legal, accounting, printing and other IPO-related costs.

Upon consummation of the IPO in October 2018, $ 0.2 million of previously deferred offering costs along with additional offering costs of $ 5.5 million were reclassified to shareholders’ equity and recorded against the proceeds from the offering.

Revenue Recognition

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The Company determines that it has a contract with a customer when the order form has been approved, each party’s rights regarding the products or services to be transferred can be identified, the payment terms for the services can be identified, the Company has determined the customer has the ability and intent to pay and the contract has commercial substance.

The Company applies judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s historical payment experience or, in the case of a new customer, credit, reputation and financial or other information pertaining to the customer.

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financial or other information pertaining to the customer.

At contract inception the Company evaluates whether two or more contracts should be combined and accounted for as a single contract and whether the combined or single contract includes more than one performance obligation.

The Company has concluded that its contracts with customers do not contain warranties that give rise to a separate performance obligation.

The Company has concluded that its contracts with customers generally do not contain warranties that give rise to a separate performance obligation.

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

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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.

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 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.

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Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised product or service to the customer.

Revenue for SaaS offerings that relate to a specified amount of services is recognized on a consumption basis as the customers utilize the services.

Revenue from SaaS offerings that are stand-ready arrangements is recognized ratably over the contract period as we satisfy the performance obligation.

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 as the Company satisfies the performance obligation.

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

Consulting services are generally time-based arrangements.

Revenue from professional services is recognized as these services are performed.

Revenue from professional services is recognized as these services are delivered.

The Company generates sales directly through its sales team and through its channel partners.

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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.

The Company records

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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.

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The Company determines whether costs should be deferred based on sales compensation plans, if the commissions are in fact incremental and would not have occurred absent the customer contract.

During the fiscal year ended April 30, 2020, the Company updated its sales commissions plan by incorporating different commission rates for contracts with new customers and incremental sales to existing customers, and subsequent subscription renewals.

Subsequent to this change, sales commissions for renewal of a subscription contract are not considered commensurate with the commissions paid for contracts with new customers and incremental sales to existing customers given the substantive difference in commission rates in proportion to their respective contract values.

Effective May 1, 2019, commissions paid for contracts with new customers and incremental sales to existing customers are amortized over an estimated period of benefit of five years while commissions paid for renewal contracts are amortized based on the pattern of the associated revenue recognition over the related contractual renewal period for the pool of renewal contracts.

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.

Commissions paid for contracts with new customers and incremental sales to existing customers are amortized over an estimated period of benefit of five years while commissions paid for renewal contracts are amortized based on the pattern of the associated revenue recognition over the related contractual renewal period for the pool of renewal contracts.

The Company determines the period of benefit for commissions paid for contracts with new customers and incremental sales to existing customers by taking into consideration its initial estimated customer life and the technological life of its software and related significant features.

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Research and development costs also include depreciation and allocated overhead.

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 are charged to operations as incurred and recorded in sales and marketing expense in the consolidated statement of operations.

Advertising costs were $ 19.7 million, $ 16.7 million and $ 7.7 million for the years ended April 30, 2022, 2021 and 2020 respectively.

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

Stock-Based Compensation

Compensation expense related to stock awards issued to employees, including stock options, restricted stock awards (“RSAs”), and restricted stock units (“RSUs”) is measured at the fair value on the date of the grant and recognized over the requisite service period.

Compensation expense related to stock awards issued to employees, including stock options and restricted stock units (“RSUs”) is measured at the fair value on the date of the grant and recognized over the requisite service period.

The fair value of stock options is estimated on the date of the grant using the Black-Scholes option-pricing model.

The fair value of RSAs and RSUs is estimated on the date of the grant based on the fair value of the Company’s underlying ordinary shares.

The fair value of RSUs is estimated on the date of the grant based on the fair value of the Company’s underlying ordinary shares.

Compensation expense for stock options and RSUs is recognized on a straight-line basis over the requisite service period.

Compensation expense for RSAs is amortized on a graded basis over the requisite service period as long as the underlying performance condition is probable to occur.

RSAs issued 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 was recorded over their remaining requisite service periods.

The Company recognizes forfeitures as they occur.

Debt Issuance Costs

Costs incurred in connection with the issuance of debt are deferred and amortized as interest expense over the term of the related debt using the effective interest method.

To the extent that the debt is outstanding, these amounts are reflected in the consolidated balance sheets as direct deductions from the carrying amount of the outstanding borrowings.

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Net Loss per Share Attributable to Ordinary Shareholders

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Diluted net loss per share is computed by giving effect to all potentially dilutive ordinary share equivalents outstanding for the period, including stock options and restricted stock units.

Prior to the completion of the IPO in October 2018, the Company calculated basic and diluted net loss per share attributable to ordinary shareholders in conformity with the two-class method required for companies with participating securities.

The Company considered all series of redeemable convertible preference shares and early exercised stock options to be participating securities as the holders were entitled to receive non-cumulative dividends on a pari passu basis in the event that a dividend was paid on ordinary shares.

Under the two-class method, the net loss attributable to ordinary shareholders was not allocated to the redeemable convertible preference shares and early exercised stock options as the holders of redeemable convertible preference shares and early exercised stock options did not have a contractual obligation to share in losses.

Under the two-class method, basic net loss per share attributable to ordinary shareholders was calculated by dividing the net loss by the weighted-average number of ordinary shares outstanding during the period, less shares subject to repurchase.

Diluted net loss per share attributable to ordinary shareholders was computed by giving effect to all potentially dilutive ordinary shares outstanding for the period.

For purposes of this calculation, redeemable convertible preference shares, stock options to acquire ordinary shares, contingently issuable shares, and early exercised stock options were considered potentially dilutive ordinary shares, but had been excluded from the calculation of diluted net loss per share attributable to ordinary shareholders as their effect was antidilutive.

Upon completion of the IPO, all shares of redeemable convertible preference shares then outstanding were automatically converted into an equivalent number of shares of ordinary shares on a one-to-one basis and their carrying amount reclassified into shareholders’ deficit.

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

Treasury Shares

Ordinary shares of the Company that are repurchased are recorded as treasury shares at cost and are included as a component of shareholders’ equity.

As of April 30, 2022 and 2021, the Company had 35,937 treasury shares that were repurchased at an average price of $ 10.30 per share.

Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”).

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These foreign jurisdictions may have different statutory rates than the Netherlands.

The Company records a provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method.

The Company records a provision for (benefit from) income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method.

Under this method, the Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and the tax basis of assets and liabilities, as well as for operating losses and tax credit carryforwards.

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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.

be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information.

For those tax positions where the Company has determined there is a greater than fifty percent likelihood that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit that may potentially be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information.

For those income tax positions where it is determined there is less than fifty percent likelihood that a tax benefit will be sustained, no tax benefit has been recognized.

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The Company makes adjustments to its reserves when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate.

To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made.

To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for (benefit from) income taxes in the period in which such determination is made.

Customer Deposits

Certain of the Company’s contracts, acquired via the Endgame, Inc.

(“Endgame”) acquisition, allow for termination at the customer’s convenience, or the Company may receive prepayments on master sales agreements.

Certain of the Company’s contracts allow for termination at the customer’s convenience, or the Company may receive prepayments on master sales agreements.

In these cases, the Company does not consider a contract to exist past the term in which enforceable rights and obligations exist.

Amounts received related to these agreements are classified outside of deferred revenue in the consolidated balance sheet, and these amounts do not represent contract balances.

As of April 30, 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.

The Company had $ 3.9 million and $ 3.2 million of customer deposits included in accrued expenses and other liabilities as of April 30, 2022 and 2021, respectively.

Recently Adopted Accounting Pronouncements

Credit Losses:

In June 2016, the FASB issued ASU No.

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

Measurement of Credit Losses on Financial Instruments , and has since issued various amendments including ASU No.

2018-19, ASU No.

2019-4, and ASU No.

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 :

In January 2017, the FASB issued ASU No.

2017-4, Intangibles— Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment .

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.

The new guidance requires an entity to compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value.

Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable.

The 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:

Notes to Financial Statements .

The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption.

All other amendments should be applied retrospectively to all periods presented upon their effective date.

The 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 :

In August 2018, the FASB issued ASU No.

2018-15, Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing

Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license).

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

The 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

T a b l e o f C o ntents

Income Taxes:

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Additionally, the ASU makes other changes for matters such as franchise taxes that are partially based on income, transactions with a government that result in a step up in the tax basis of goodwill, separate financial statements of legal entities that are not subject to tax, and enacted changes in tax laws in interim periods.

The new guidance becomes effective for the Company for the fiscal year ending April 30, 2022.

Early adoption is permitted.

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

The Company adopted ASU No.2019-12 on May 1, 2021.

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

New Accounting Pronouncements Not Yet Adopted

Equity Awards:

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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.

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

Acquisitions:

In October 2021, the FASB issued ASU No.

2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , improving consistency in accounting for acquired revenue contracts with customers in a business combination by requiring that acquirers apply ASC Topic 606 to recognize contract assets and contract liabilities as if it had originated the contracts.

If the acquiree prepared its financial statements in accordance with GAAP, the resulting acquired contract assets and liabilities should generally be consistent with acquiree’s financial statements.

The new guidance becomes effective for the Company for the fiscal year ending April 30, 2024.

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.

Revenue and Remaining Performance Obligations

Disaggregation of Revenue

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Revenue Amount % of

Self-managed subscription $ 401,020 66 % $ 299,880 70 % $ 202,419 74 %

License 67,994 11 % 53,536 12 % 39,474 14 %

Subscription 333,026 55 % 246,344 58 % 162,945 60 %

SaaS 166,319 27 % 92,290 22 % 45,835 17 %

Elastic Cloud $ 298,615 35 % $ 166,319 27 % $ 92,290 22 %

Other subscription 500,155 58 % 401,020 66 % 299,880 70 %

Total subscription revenue 798,770 93 % 567,339 93 % 392,170 92 %

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Total revenue $ 862,374 100 % $ 608,489 100 % $ 427,620 100 %

During fiscal 2022, the Company updated its disaggregation of revenue breakdown to present revenue by product category.

The prior period presentation for the years ended April 30, 2021 and 2020, has been updated to conform to the current year presentation.

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.

As of April 30, 2022, the Company had $ 932.3 million of remaining performance obligations.

As of April 30, 2022, the Company expects to recognize approximately 87 % of its remaining performance obligations as revenue over the next 24 months and the remainder thereafter.

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Fair Value Measurements

Financial Assets

The Company measures financial assets and liabilities that are measured at fair value on a recurring basis at each reporting period using a fair value hierarchy that prioritizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value.

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Money market funds $ 175,007 $ — $ — $ 175,007

Money market funds consist of cash equivalents with remaining maturities of three months or less at the date of purchase.

The Company considers all highly liquid investments, including money market funds with an original maturity of three months or less at the date of purchase, to be cash equivalents.

The Company uses quoted prices in active markets for identical assets to determine the fair value of its Level 1 investments in money market funds.

Financial Liabilities

In July 2021, the Company issued $ 575.0 million aggregate principal amount of 4.125 % Senior Notes due July 15, 2029 (the “Senior Notes”) in a private placement.

Based on the trading prices of the Senior Notes, the fair value of the Senior Notes as of April 30, 2022 was approximately $ 502.2 million.

While the Senior Notes are recorded at cost, the fair value of the Senior Notes was determined based on quoted prices in markets that are not active;

accordingly, the Senior Notes are categorized as Level 2 for purposes of the fair value measurement hierarchy.

Fiscal 2022 Acquisitions

cmdWatch Security Inc.

On September 17, 2021, the Company acquired 100 % of the share capital of cmdWatch Security Inc.

(“Cmd”) for a total purchase consideration of $ 77.8 million.

The purchase consideration includes an amount of $ 13.4 million which is being held in an indemnity escrow fund for 18 months after the acquisition close date.

Pursuant to the merger agreement, Cmd’s vested stock options were paid in cash and unvested stock options held by Cmd employees were assumed by the Company.

The fair value of the replacement equity awards associated with pre-acquisition service period of $ 4.3 million, consisting of $ 3.0 million paid in cash to vested option holders and $ 1.3 million of non-cash consideration, was included in the total purchase consideration.

Approximately $ 6.6 million of the fair value of replacement equity awards was allocated to post-acquisition services that will be recognized as stock-based compensation expense over the remaining service period and was excluded from the total purchase consideration.

Additionally, an amount of $ 6.5 million for post-combination services, which is payable at future dates upon completion of the underlying required service period, has been excluded from the purchase consideration.

This amount will be recorded as a post-combination expense over the requisite service period.

The acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations, and accordingly, the total purchase consideration was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date.

The total preliminary purchase price allocated to developed technology and goodwill was $ 15.5 million and $ 58.7 million, respectively.

The fair value assigned to developed technology was determined using the cost to recreate approach.

The developed technology asset is being amortized on a straight-line basis over the useful life of 5 years, which approximates the pattern in which the developed technology is utilized.

T a b l e o f C o ntents

Goodwill resulted primarily from the expectation of enhancing the Company's current security solutions and is not deductible for income tax purposes.

Cmd has been included in the Company’s consolidated results of operations since the acquisition date.

Pro forma and historical results of operations for this acquisition have not been presented because they were not material to the consolidated results of operations.

Other Acquisitions

On September 2, 2021 and November 1, 2021, the Company acquired 100 % of the share capital of Build Security Ltd.

(“build.security”) and Optimyze.cloud Inc.

(“Optimyze”), respectively, for a combined total purchase consideration of $ 57.2 million.

The purchase consideration includes an amount of $ 5.4 million held in Indemnity escrow and $ 6.0 million held back by the Company for indemnity and will be released upon the 18 -month anniversary of the respective acquisitions.

These acquisitions were accounted for as business combinations.

The total preliminary purchase price allocated to developed technology and goodwill was $ 9.8 million and $ 46.7 million, respectively.

The developed technology intangible assets from these acquisitions are being amortized on a straight-line basis over a useful life of 5 years which approximates the pattern in which the respective developed technologies are utilized.

Goodwill resulted primarily from the expectation of enhancing the Company's current security solutions and the value of the acquired workforce.

This goodwill is not deductible for income tax purposes.

Build.security and Optimyze have been included in the Company’s consolidated results of operations since their respective acquisition dates.

Pro forma and historical results of operations for these acquisitions have not been presented because they were not material to the consolidated results of operations.

Excluded from the combined purchase consideration from these two acquisitions is an amount of $ 6.3 million, payable in equal installments at the first and the second anniversary of each of the acquisitions, to certain employees of build.security and Optimyze.

These amounts are for post-combination services and will be recorded as a post-combination expense over the requisite service periods.

The purchase price allocation for the acquisitions is preliminary and is based on the best estimates of management.

The Company continues to collect information with regard to its estimates and assumptions, primarily related to intangible assets and certain tax-related, contingent liability and working capital items.

The Company will record adjustments to the fair value of the assets acquired, liabilities assumed and goodwill within the 12 month measurement period, if necessary.

Fiscal 2020 Acquisition

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

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Cash paid $ 26,633

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Identifiable intangible assets include (in thousands):

Total Useful life (in years)

Total Useful life

Developed technology $ 32,700 5

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

The fair value assigned to developed technology was determined primarily using the multi-period excess earnings model, which estimates the revenue and cash flows derived from the asset and then deducts portions of the cash flow that can

be attributed to supporting assets otherwise recognized.

Management applied significant judgment in estimating the fair value of the developed technology intangible asset, which involved the use of significant estimates related to the revenue growth rate assumption for both existing and any future product offerings.

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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.

T a b l e o f C o ntents

Recognized goodwill of $ 178.8 million is not deductible for tax purposes and is primarily attributed to planned growth in new markets, synergies arising from the acquisition and the value of the acquired workforce.

Net tangible assets and liabilities assumed were valued at their respective carrying amounts as of the acquisition date, as the Company believes that these amounts approximate their current fair values.

Endgame has been included in the Company’s consolidated results of operations since the acquisition date.

Endgame was included in the Company’s consolidated results of operations since the acquisition date.

Endgame’s results were immaterial to the Company’s consolidated results for the year ended April 30, 2020.

The following unaudited pro forma condensed consolidated financial information gives effect to the acquisition of Endgame as if it were consummated on May 1, 2018, including pro forma adjustments related to the valuation and allocation of the purchase price, primarily amortization of acquired intangible assets and deferred revenue fair value adjustments;

share-based compensation expense;

alignment of accounting policies;

the impact of applying ASC Topic 606, Revenue From Contracts With Customers, to Endgame’s historical financial statements;

and direct transaction costs reflected in the historical financial statements.

This data is presented for informational purposes only and is not intended to represent or be indicative of the results of operations that would have been reported had the acquisition occurred on May 1, 2018.

It should not be taken as representative of future results of operations of the combined company (in thousands).

Year Ended April 30,

Pro forma revenue (1) $ 435,234 $ 285,917

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

(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.

Non-recurring acquisition costs incurred by Endgame of $ 1.5 million are also reflected in the pro forma net loss presented above for the year ended April 30, 2019.

Fiscal 2019 Acquisition

Lambda Lab Corp.

In July 2018, the Company acquired 100 % of the share capital of Lambda Lab Corp.

(“Lambda Lab”), a privately held company headquartered in the United States.

Lambda Lab was a code search company whose product was built on top of Elasticsearch and focused on building semantic understanding of code, exposed through powerful search features.

Purchase consideration for the acquisition was $ 2.0 million in cash.

Excluded from the purchase consideration were 134,474 ordinary shares of $ 2.2 million issued to certain employees of Lambda Lab.

These shares were subject to repurchase and were contingent upon these employees’ continued employment with the Company.

As of April 30, 2020, no shares were subject to repurchase and all stock-based compensation expense had been recognized.

During the years ended April 30, 2020 and 2019, the Company recorded stock-based compensation expense of $ 0.9 million and $ 1.4 million, respectively.

The following table summarizes the components of the Lambda Lab purchase price and the preliminary allocation of the purchase price at fair value (in thousands):

Cash paid $ 1,997

Developed technology $ 1,339

Trade name 15

Goodwill 1,038

Net liabilities acquired ( 395 )

Total purchase consideration $ 1,997

The amount allocated to developed technology was $ 1.3 million.

The acquired developed technology is being amortized on a straight-line basis over four years , which approximates the pattern in which these assets are utilized.

Goodwill of $ 1.0 million, none of which is deductible for tax purposes, was recorded in connection with the Lambda Lab acquisition, which is primarily attributed to synergies arising from the acquisition and the value of the acquired workforce.

Acquisition costs of $ 0.2 million were charged to general and administrative expenses in the consolidated statement of operations for the year ended April 30, 2019.

Lambda Lab has been included in the Company’s consolidated results of operations since the acquisition date.

Fair Value of Ordinary Shares Used for Purchase Consideration

The fair value of the ordinary shares issued as part of the consideration paid for the acquisitions prior to the Company’s IPO was determined by the Company’s board of directors based on numerous subjective and objective factors, including, but not limited to, a contemporaneous valuation performed by an independent third-party valuation firm.

Because the Company was not publicly traded at the time the acquisitions were completed, the Company’s board of directors considered valuations of comparable companies, sales of redeemable convertible preference shares, sales of ordinary shares to unrelated third parties, operating and financial performance, the lack of liquidity of the Company’s ordinary shares, and general and industry-specific economic outlook, among other factors.

Balance Sheet Components

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):

As of April 30,

Prepaid hosting costs $ 11,122 $ 12,228

Prepaid value added taxes 9,408 5,167

Prepaid software subscription costs 5,636 3,104

Deposits 2,410 1,857

Prepaid taxes 1,694 3,612

Other 6,732 6,655

Total prepaid expenses and other current assets $ 37,002 $ 32,623

Property and Equipment, Net

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

Foreign currency translation adjustment ( 2 )

Total $ 36,286

T a b l e o f C o ntents

Amortization expense for the intangible assets for the years ended April 30, 2022, 2021 and 2020 was as follows (in thousands):

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Balance as of April 30, 2020 $ 197,877

Addition from acquisition 178,764

Foreign currency translation adjustment 974

Balance as of April 30, 2021 198,851

Addition from acquisitions 105,428

Foreign currency translation adjustment ( 373 )

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Value added taxes payable 8,926 8,493

Accrued interest 6,918 —

Income taxes payable 4,286 1,596

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Total accrued expenses and other liabilities $ 53,930 $ 28,909

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Accrued Compensation and Benefits

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Ending balance $ 465,294 $ 397,700 $ 259,702

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Deferred Contract Acquisition Costs

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The Company did no t recognize any impairment of deferred contract acquisition costs during the years ended April 30, 2022, 2021 and 2020.

In July 2021, the Company issued $ 575.0 million aggregate principal amount of 4.125 % Senior Notes due July 15, 2029 in a private placement.

Interest on the Senior Notes is payable semi-annually in arrears on January 15 and July 15 of each year, commencing on January 15, 2022.

The Company received net proceeds from the offering of the Senior Notes of $ 565.7 million after deducting underwriting commissions of $ 7.2 million and incurred additional issuance costs of $ 2.1 million.

Total debt issuance costs of $ 9.3 million are being amortized to interest expense using the effective interest method over the term of the Senior Notes.

The Company may redeem the Senior Notes, in whole or in part, at any time prior to July 15, 2024 at a price equal to 100 % of the principal amount thereof plus a “make-whole” premium and accrued and unpaid interest, if any.

The Company may at its election redeem all or a part of the Senior Notes on or after July 15, 2024, on any one or more occasions, at the redemption prices set forth in the indenture governing the Senior Notes (the “Indenture”), plus, in each case, accrued and unpaid interest thereon, if any, to, but excluding, the applicable redemption date.

In addition, at any time prior to July 15, 2024, the Company may on any one or more occasions redeem up to 40 % of the aggregate principal amount of the Senior Notes outstanding under the Indenture with the net cash proceeds of one or more equity offerings at a redemption price equal to 104.125 % of the principal amount of the Senior Notes then outstanding, plus accrued and unpaid interest thereon, if any, to, but excluding, the applicable redemption date.

The Company may also at its election redeem the Senior Notes in whole, but not in part, at a price equal to 100 % of the principal amount thereof plus accrued and unpaid interest, if any, if certain changes in tax law occur as set forth in the Indenture.

If the Company experiences a change of control triggering event (as defined in the Indenture), the Company must offer to repurchase the Senior Notes at a repurchase price equal to 101 % of the principal amount of the Senior Notes to be repurchased, plus accrued and unpaid interest, if any, to the repurchase date.

The indenture governing the Senior Notes contain covenants limiting the Company’s ability and the ability of certain subsidiaries to create liens on certain assets to secure debt;

grant a subsidiary guarantee of certain debt without also providing a guarantee of the Senior Notes;

and consolidate or merge with or into, or sell or otherwise dispose of all or substantially all of its assets to, another person.

These covenants are subject to a number of limitations and exceptions.

Certain of these covenants will not apply during any period in which the notes are rated investment grade by Moody’s Investors Service, Inc.

and Standard & Poor’s Ratings Services.

As of April 30, 2022, the Company was in compliance with all of its financial covenants under the Indenture associated with the Senior Notes.

The net carrying amount of the Senior Notes was as follows:

April 30, 2022

Principal $ 575,000

Unamortized debt issuance costs ( 8,480 )

Net carrying amount $ 566,520

The following table sets forth the interest expense recognized related to the Senior Notes:

T a b l e o f C o ntents

April 30, 2022

Contractual interest expense $ 19,370

Amortization of debt issuance costs 803

Total interest expense related to the Senior Notes $ 20,173

Commitments and Contingencies

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):

Cloud Hosting Commitments

The table below reflects the Company’s future minimum purchase obligations relating to non-cancellable agreements for cloud hosting as of April 30, 2022 (in thousands):

Years Ending April 30, Purchase Obligations

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Total $ 415,713

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.

Other Purchase Commitments

The Company has future purchase obligations related to subscription software and sales and marketing contracts.

As of April 30, 2022, the Company had purchase commitments of $ 36.2 million related to these contracts, primarily due within the next twelve months.

Letters of Credit

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The Company maintains commercial general liability insurance and product liability insurance to offset certain of the Company’s potential liabilities under these indemnification provisions.

In addition, the Company indemnifies its officers, directors and certain key employees while they are serving in good faith in their respective capacities.

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In addition, the Company indemnifies its officers, directors and certain key employees against certain liabilities that may arise as a result of their affiliation with the Company.

To date, there have been no claims under any indemnification provisions.

Redeemable Convertible Preference Shares

The Company previously issued redeemable convertible preference shares in one or more series, each with such designations, rights, qualifications, limitations, and restrictions.

Immediately prior to the completion of the IPO, all shares of redeemable convertible preference shares then outstanding were automatically converted into an equivalent number of ordinary

shares on a one -to-one basis and their carrying amount reclassified into shareholders’ equity.

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

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.

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

The Company does not have any finance leases.

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

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Total lease cost $ 13,199 $ 11,671

Lease term and discount rate information as of April 30, 2021 are summarized as follows:

Lease term and discount rate information are summarized as follows:

April 30, 2022

Weighted average remaining lease term (years) 2.95

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Years Ending April 30,

2023 $ 11,595

Total minimum lease payments 29,830

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Ordinary Shares

In addition, the par value per ordinary share was changed from € 0.001 per share to € 0.01 per share as required by Dutch law at the time of the Company’s conversion into a Dutch public company with limited liability ( naamloze vennootschap ).

The Company’s articles of association designated and authorized the Company to issue 165 million ordinary shares at a par value per ordinary share of € 0.01 per share.

Each holder of ordinary shares has the right to one vote per ordinary share .

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No dividends have been declared by the Company’s board of directors from inception through the year ended April 30, 2022.

T a b l e o f C o ntents

Ordinary Shares Reserved for Issuance

The Company had reserved shares of ordinary shares for issuance as follows:

The Company had reserved ordinary shares for issuance as follows:

As of April 30,

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27,584,356 26,650,118

Early Exercised Options

Certain ordinary share option holders have the right to exercise unvested options, subject to a repurchase right held by the Company at the original exercise price, in the event of voluntary or involuntary termination of employment of the shareholder.

As of April 30, 2021 and 2020, there were no unvested ordinary shares that had been early exercised and were subject to repurchase.

The proceeds related to unvested ordinary shares are recorded as liabilities until the stock vests, at which point they are transferred to additional paid-in capital.

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

Convertible Preference Shares

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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, 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.

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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.

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.

Refresh grants of stock options to existing employees generally vest monthly over four years subject to the employees’ continued service to the Company.

RSUs granted prior to December 8, 2021 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 36 months, subject to the employee’s continued service to the Company.

RSUs granted prior to December 8, 2021 to existing employees generally vest semi-annually over a period of four years , subject to the employee’s continued service to the Company.

RSUs granted to both new and existing employees on and after December 8, 2021 generally vest quarterly 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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Stock options, RSAs and RSUs that are canceled under certain conditions become available for future grant or sale under the 2012 Plan unless the 2012 Plan is terminated.

The equity awards available for grant for the periods presented were as follows:

The equity awards available for grant were as follows:

Year Ended April 30,

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RSUs cancelled 715,870 440,278

RSAs repurchased — 4,585

Shares withheld for taxes 356 —

Available at end of period 17,647,684 15,737,819

Endgame Stock Incentive Plan Assumed in Acquisition

Stock Incentive Plans Assumed in Acquisitions

In connection with its acquisition of Endgame, the Company assumed all in-the-money stock options issued under Endgame’s Amended and Restated 2010 Stock Incentive Plan that were outstanding on the date of acquisition.

In connection

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with its acquisitions of Cmd and build.security, the Company assumed certain unvested stock options issued under the Cmd Stock Option Plan and Build 2020 Share Incentive Plan that were outstanding on the date of the respective acquisition.

The assumed stock options will continue to be outstanding and will be governed by the provisions of their respective plan and are included in the stock option activity table below.

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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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Stock options granted 495,460 $ 94.46

Stock options assumed in acquisitions 63,846 $ 10.20

Stock options exercised ( 2,563,287 ) $ 14.18

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Aggregate intrinsic value represents the difference between the exercise price of the stock options to purchase ordinary shares and the fair value of the Company’s ordinary shares.

The weighted-average grant-date fair value per share of stock options assumed related to the Cmd and build.security acquisitions was $ 122.13 for the year ended April 30, 2022.

The weighted-average grant-date fair value per share of stock options granted was $ 52.43 and $ 80.01 for the years ended April 30, 2022 and 2021, respectively.

As of April 30, 2022, the Company had unrecognized stock-based compensation expense of $ 46.0 million related to unvested stock options that the Company expects to recognize over a weighted-average period of 2.16 years.

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:

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Outstanding and unvested at April 30, 2022 4,717,548 $ 108.44

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

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, 2022, the Company had unrecognized stock-based compensation expense of $ 459.1 million related to RSUs that the Company expects to recognize over a weighted-average period of 2.77 years.

Determination of Fair Value

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The Company uses the Black-Scholes option pricing model to calculate the fair value of stock options, which requires the use of assumptions including actual and projected employee stock option exercise behaviors, expected price volatility of the Company’s ordinary shares, the risk-free interest rate and expected dividends.

Each of these inputs is subjective and generally requires significant judgment to determine.

Fair Value of Ordinary Shares:

Subsequent to the IPO on October 8, 2018, the fair value of the underlying ordinary shares is determined by the closing price, on the date of the grant, of the Company’s ordinary shares, which are traded publicly on the New York Stock Exchange.

Prior to the IPO, the fair value of ordinary shares underlying the stock awards had historically been determined by the board of directors, with input from the Company’s management.

The board of directors previously determined the fair value of the ordinary shares at the time of grant of the awards by considering a number of objective and subjective factors, including valuations of comparable companies, sales of redeemable convertible preference shares, sales of ordinary shares to unrelated third parties, operating and financial performance, the lack of liquidity of the Company’s ordinary shares, and general and industry-specific economic outlook.

Subsequent to the IPO, the fair value of the underlying ordinary shares is determined by the closing price, on the date of the grant, of the Company’s ordinary shares, which are traded publicly on the New York Stock Exchange.

Expected Term:

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Dividend yield 0 % 0 % 0 %

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Stock-Based Compensation Expense

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Contingently issuable shares — — 235,031

Shares subject to repurchase — — 254,350

Total 9,936,672 10,912,299 17,864,277

The Company is incorporated in the Netherlands but operates in various countries with differing tax laws and rates.

The geographical breakdown of income (loss) before provision for income taxes is summarized as follows (in thousands):

The geographical breakdown of income (loss) before provision for (benefit from) income taxes is summarized as follows (in thousands):

Year Ended April 30,

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Loss before income taxes $ ( 197,789 ) $ ( 121,714 ) $ ( 169,142 )

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

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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):

A reconciliation of income taxes at the statutory income tax rate to the provision for (benefit from) 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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Management makes estimates and judgments about future taxable income based on assumptions that are consistent with the Company’s plans and estimates.

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

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Right of use assets ( 4,673 ) ( 4,523 )

Other — ( 218 )

Gross deferred tax liabilities ( 28,669 ) ( 25,928 )

Net deferred tax liabilities $ ( 2,361 ) $ ( 2,918 )

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, 2022 and 2021 was $ 499.0 million and $ 409.8 million, respectively.

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The valuation allowance for the Dutch deferred tax assets as of April 30, 2022 and 2021 was $ 203.2 million and $ 149.4 million, respectively, the valuation allowance for the United States deferred tax assets as of April 30, 2022 and 2021 was $ 276.3 million and $ 246.0 million, respectively, and the valuation allowance for the United Kingdom deferred tax assets as of April 30, 2022 and April 30, 2021 was $ 19.5 million and $ 14.4 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.

As of April 30, 2022, the Company had net operating loss (“NOL”) carryforwards for Dutch, United States (Federal and State, respectively) and United Kingdom income tax purposes of $ 758.4 million, $ 1,002.5 million, $ 651.8 million and $ 67.5 million, respectively, which begin to expire in the year ending, April 30, 2031 and April 30, 2025 in the United States (Federal and State, respectively), with Dutch and United Kingdom losses being carried forward indefinitely.

The Company also has research and development tax credit carryforwards for United States (Federal and State, respectively) and Canada, income tax purposes of $ 20.0 million, $ 5.3 million and $ 0.7 million respectively, which begin to expire April 30, 2033, April 30, 2023, and April 30, 2039, 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.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (the “CARES Act”) Act was signed into United States law.

The Act provides emergency assistance, opportunities for additional liquidity and other government programs to support individuals, families and businesses affected by the 2020 coronavirus pandemic, in part through amending United States tax law.

Previously limited to 80% of taxable income by the TCJA, section 172(a), the CARES Act removes the limitation and grants taxpayers a five-year carryback period for NOLs arising in tax years beginning after December 31, 2017 and before January 1, 2021.

Due to significant losses in the year ended April 30, 2019, and as a result of the CARES Act, the Company 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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Although the Company believes that it has adequately reserved for its uncertain tax positions, the Company can provide no assurance that the final tax outcome of these matters will not be materially different.

As the Company expands, it will face increased complexity, and the Company’s unrecognized tax benefits may increase in the future.

As the Company expands, it

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will face increased complexity, and the Company’s unrecognized tax benefits may increase in the future.

The Company makes adjustments to its reserves when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate.

The Company had unrecognized tax benefits of $ 16.6 million as of April 30, 2022, of which none would impact the effective tax rate before consideration of any valuation allowance.

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

Increase related to tax positions taken in prior periods 432 2,283 240

Increase (decrease) related to tax positions taken in prior periods ( 1,029 ) 432 2,283

Increase related to tax positions taken in the current period 3,995 3,518 3,553

Balance as of end of year $ 16,622 $ 13,656 $ 9,706

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.

Approximately $ 1.0 million of the decrease in fiscal 2022 for tax positions taken in prior periods is due to the filing of tax returns during the current fiscal year and lapse of statute of limitations.

Approximately $ 4.0 million of the increase in tax positions related to the current period is primarily from the research and development tax credits generated for fiscal 2022.

The Company’s policy is to recognize penalties and interests accrued on any unrecognized tax benefits as a component of income tax expense.

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

For the years ended April 30, 2022, 2021 and 2020 the Company recognized interest and penalties of $ 0.3 million, less than $0.1 million and less than $0.1 million, respectively.

The amount of accrued interest and penalties recorded on the consolidated balance sheet as of April 30, 2022 and 2021 was $ 0.3 million and $ 0.1 million, respectively.

The Company is subject to periodic examination of income tax returns by various domestic and international tax authorities.

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.

During the fiscal year, the Company was not subject to any new audits.

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

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The Company’s tax filings for fiscal years starting with the year ended April 30, 2017 remain open in various tax jurisdictions.

If the examinations are resolved unfavorably, there is a possibility they may have a material negative impact on its results of operations.

Dutch income taxes and non-Dutch withholding taxes associated with the repatriation of earnings or for temporary differences related to investments in non-Dutch subsidiaries, excluding the U.S subsidiaries, have not been provided for, as the Company intends to reinvest the earnings of such subsidiaries indefinitely or the Company has concluded that an immaterial additional tax liability would arise on the distribution of such earnings.

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withholding taxes in regard to such repatriations are being recorded due to the Dutch participation exemption provisions and exemption from withholding taxes under the income tax treaty between the Netherlands and the United States.

At April 30, 2021, there were cumulative earnings of $ 75.1 million, from the non-U.S.

As of April 30, 2022, there were cumulative earnings of $ 104.8 million, from the non-U.S.

subsidiaries.

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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.

Due to the Company’s net operating loss, GILTI provision was zero , $ 1.0 million and zero for the years ended April 30, 2022, 2021 and 2020, respectively.

The GILTI provision did not have a material impact on the Company’s results for any of the years presented.

Employee Benefit Plans

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The Company also has defined-contribution plans in certain other countries for which the Company recorded $ 7.2 million, $ 5.1 million and $ 3.6 million of expense during the years ended April 30, 2022, 2021 and 2020, respectively.

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Segment Information

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United States $ 22,112 $ 23,443

The Netherlands 2,975 3,529

United Kingdom 4,478 7,151

India 3,407 —

Rest of world 2,647 3,751

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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