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Item 8. Financial Statements and Supplementary Data

2023-06-16 compared with 2022-06-21 · 260 added, 338 removed, 833 unchanged (42% of the section changed)

Financial Statements and Supplementary Data

The supplementary financial information required by this Item 8, is included in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , under the caption “Quarterly Results of Operations Data,” which is incorporated herein by reference.

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

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Notes to Consolidated Financial Statements

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Report of Independent Registered Public Accounting Firm

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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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Restricted cash 2,473 2,688

Marketable securities 271,041 —

Accounts receivable, net of allowance for credit losses of $ 3,409 and $ 2,700 as of April 30, 2023 and April 30, 2022, respectively

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Total liabilities 1,344,585 1,227,498

Commitments and contingencies (Note 8 and 9)

Commitments and contingencies (Notes 8 and 9)

Shareholders’ equity:

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Total liabilities and shareholders’ equity $ 1,743,482 $ 1,642,931

$ 1,642,931 $ 973,172

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

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Consolidated Statements of Operations

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2023 2022 2021

License - self-managed $ 76,964 $ 67,994 $ 53,536

Subscription - self-managed and SaaS 721,806 499,345 338,634

Total subscription revenue 798,770 567,339 392,170

Professional services 63,604 41,150 35,450

Subscription $ 984,762 $ 798,770 $ 567,339

Services 84,227 63,604 41,150

Total revenue 1,068,989 862,374 608,489

Cost of revenue

Cost of license - self-managed 1,548 1,386 948

Cost of subscription - self-managed and SaaS 176,656 121,127 84,819

Total cost of revenue - subscription 178,204 122,513 85,767

Cost of professional services 53,990 38,541 36,923

Subscription 219,306 178,204 122,513

Services 77,320 53,990 38,541

Total cost of revenue 296,626 232,194 161,054

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General and administrative 143,247 123,441 103,833

Restructuring and other related charges 31,297 — —

Total operating expenses 991,535 803,860 576,913

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Loss before income taxes ( 216,877 ) ( 197,789 ) ( 121,714 )

Provision for (benefit from) income taxes 6,059 7,720 ( 1,968 )

Provision for income taxes 19,284 6,059 7,720

Net loss $ ( 236,161 ) $ ( 203,848 ) $ ( 129,434 )

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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 $ ( 236,161 ) $ ( 203,848 ) $ ( 129,434 )

Other comprehensive income (loss):

Other comprehensive loss:

Unrealized loss on available-for-sale securities ( 71 ) — —

Foreign currency translation adjustments ( 1,814 ) ( 10,025 ) ( 6,728 )

Other comprehensive income (loss) ( 10,025 ) ( 6,728 ) 54

Other comprehensive loss ( 1,885 ) ( 10,025 ) ( 6,728 )

Total comprehensive loss $ ( 238,046 ) $ ( 213,873 ) $ ( 136,162 )

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

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Consolidated Statements of Shareholders’ Equity

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Deficit Total

Stockholders'

Shareholders'

Shares Amount

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

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

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

6,815,098 77 — 61,386 — — 61,463

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

152,688 2 — — — — 2

Ordinary shares issued in connection with the acquisition of Endgame

1,983,663 21 — 167,316 — — 167,337

Ordinary shares issued in connection with the acquisition of Endgame held in escrow

235,031 2 — 19,824 — — 19,826

Assumption of stock option plan as consideration for acquisition of Endgame

— — — 9,309 — — 9,309

Repurchase of unvested RSAs

( 4,585 ) — — — — — —

Vesting of ordinary shares subject to repurchase

— — — 2,730 — — 2,730

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

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

— — — 57,088 — — 57,088

— — — — — ( 167,174 ) ( 167,174 )

Foreign currency translation

— — — — 54 — 54

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

Other comprehensive loss — — — — ( 6,728 ) — ( 6,728 )

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

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

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

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

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

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

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

Other comprehensive loss — — — — ( 10,025 ) — ( 10,025 )

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

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

Issuance of ordinary shares upon exercise of stock options 1,127,036 12 — 17,459 — — 17,471

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Net loss — — — — — ( 236,161 ) ( 236,161 )

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

Other comprehensive loss — — — — ( 1,885 ) — ( 1,885 )

Balances as of April 30, 2023 97,366,947 $ 1,024 $ ( 369 ) $ 1,471,584 $ ( 20,015 ) $ ( 1,053,327 ) $ 398,897

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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Net loss $ ( 236,161 ) $ ( 203,848 ) $ ( 129,434 )

Adjustments to reconcile net loss to cash used in operating activities:

Adjustments to reconcile net loss to cash provided by operating activities:

Depreciation and amortization 20,233 19,728 17,237

Amortization of premium and accretion of discount on marketable securities, net ( 772 ) — —

Amortization of deferred contract acquisition costs 68,900 60,738 40,991

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Non-cash operating lease cost 10,880 8,636 7,927

Asset impairment charges 6,242 — —

Stock-based compensation expense, net of amounts capitalized 204,039 140,612 93,680

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

Deferred income taxes ( 2,007 ) ( 2,430 ) 33

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Other 44 98 ( 142 )

Changes in operating assets and liabilities, net of impact of business acquisitions:

Changes in operating assets and liabilities:

Accounts receivable, net ( 46,353 ) ( 62,187 ) ( 24,037 )

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Deferred revenue 95,616 83,780 115,937

Net cash provided by (used in) operating activities 5,672 22,545 ( 30,564 )

Net cash provided by operating activities 35,662 5,672 22,545

Cash flows from investing activities

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Business acquisitions, net of cash acquired — ( 119,854 ) —

Purchases of marketable securities ( 270,268 ) — —

Capitalization of internal-use software — ( 4,932 ) ( 317 )

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

Repayment of notes payable — — ( 90 )

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

Net cash provided by financing activities 17,471 602,127 77,258

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Supplemental disclosures of non-cash investing and financing information

Purchases of property and equipment included in accounts payable $ 150 $ 10 $ 101

Property and equipment included in accounts payable $ 121 $ 150 $ 10

Operating lease right-of-use assets for new lease obligations $ 10,902 $ 8,992 $ 1,120

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

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

Issuance of ordinary shares for business acquisition $ — $ — $ 178,329

Assumption of stock option plan as consideration for business combination $ — $ — $ 9,309

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

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Notes to Consolidated Financial Statements

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Summary of Significant Accounting Policies

Revenue and Performance Obligations

Revenue and Remaining Performance Obligations

Fair Value Measurements

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Segment Information

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Restructuring and Other Related Charges

Organization and Description of Business

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

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.

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

Enterprise Search, Observability, and Security.

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 multi-cloud environments.

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The Company’s fiscal year ends on April 30.

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

References to fiscal 2023, for example, refer to the fiscal year ended April 30, 2023.

Use of Estimates and Judgments

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GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.

Such estimates include, but are not limited to, allocation of revenue between recognized and deferred amounts, deferred contract acquisition costs, allowance for credit losses, valuation of stock-based compensation, fair value of ordinary shares in periods prior to the Company’s initial public offering, fair value of acquired intangible assets and goodwill, useful lives of acquired intangible assets and property and equipment, whether an arrangement is or contains a lease, the discount rate used for operating leases and valuation allowance for deferred income taxes.

Such estimates include, but are not limited to, allocation of revenue between recognized and deferred amounts, deferred contract acquisition costs, allowance for credit losses, valuation of stock-based compensation, fair value of ordinary shares in periods prior to the Company’s initial public offering, fair value of acquired intangible assets and goodwill, useful lives of acquired intangible assets and property and equipment, whether an arrangement is or contains a lease, discount rate used for operating leases, and valuation allowance for deferred income taxes.

The Company bases these estimates on historical and anticipated results, trends and various other assumptions that it believes are reasonable under the circumstances, including assumptions as to future events.

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

The 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.

Estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require the exercise of judgment.

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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, 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 the years ended April 30, 2023, 2022 and 2021, the Company recognized a re-measurement loss of $ 0.4 million, a loss of $ 3.6 million, and a gain of $ 7.7 million, respectively.

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

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Comprehensive Loss

The Company’s comprehensive loss includes net loss and unrealized gains and losses on foreign currency translation adjustments.

The Company’s comprehensive loss includes net loss, unrealized gains and losses on available-for-sale debt securities, and foreign currency translation adjustments.

Cash, Cash Equivalents and Restricted Cash

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

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.

The Company’s 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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Cash, cash equivalents and restricted cash $ 646,640 $ 863,637

Short-Term Investments

Investments with an original maturity of three months or less at the date of purchase are considered cash equivalents, while all other investments are classified as short-term or long-term based on the nature of the investments, their maturities, and their availability for use in current operations.

Marketable Securities

The Company’s marketable securities consist of highly liquid investment-grade fixed-income securities.

The Company determines the appropriate classification of its investments at the time of purchase and reevaluates such designation at each balance sheet date.

Bank deposits with original maturities greater than three months but less than twelve months and are classified as short-term investments within current assets in the consolidated balance sheet.

The Company had no short-term investments as of April 30, 2022 and April 30, 2021.

The Company has classified and accounted for its marketable securities as available-for-sale securities as the Company may sell these securities at any time for use in its current operations or for other purposes, including prior to maturity.

As a result, the Company has classified its marketable securities within current assets on the consolidated balance sheets.

Available-for-sale securities are recorded at fair value each reporting period.

Premiums and discounts are amortized or accreted over the life of the related available-for-sale security as an adjustment to yield using the effective interest method.

Interest income is recognized when earned.

Unrealized gains and losses on these marketable securities are reported as a separate component of accumulated other comprehensive loss until realized.

Realized gains and losses are determined based on the specific identification method and are reported in other income (expense), net in the consolidated statements of operations.

The Company periodically evaluates its marketable securities to assess whether an investment’s fair value is less than its amortized cost basis and if the decline in the fair value is attributable to a credit loss.

Declines in fair value judged to be related to credit loss are reported in other income (expense), net in the consolidated statements of operations.

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash equivalents, accounts receivable, accounts payable, and accrued liabilities.

Cash equivalents are stated at amortized cost, which approximates fair value at the balance sheet dates, due to the short period of time to maturity.

Accounts receivable, accounts payable and accrued liabilities are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment date.

Assets and liabilities recorded at fair value on a recurring basis in the consolidated balance sheet consisting primarily of cash equivalents are categorized based upon the level of judgment associated with the inputs used to measure their fair values.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

The Company measures its financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value:

The Company follows ASC 820, Fair Value Measurements and Disclosures, with respect to assets and liabilities that are measured at fair value.

Under this standard, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date.

The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:

Observable inputs, such as unadjusted quoted prices in active markets for identical assets or liabilities at the measurement 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.

The Company’s financial instruments consist of cash equivalents, marketable securities, 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.

Marketable securities are recorded at fair value.

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.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash, cash equivalents, restricted cash, short-term investments, and accounts receivable.

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash, cash equivalents, restricted cash, marketable securities, and accounts receivable.

The primary focus of the Company’s investment strategy is to preserve capital and meet liquidity requirements.

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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, 2022 and 2021.

One customer, a channel partner, accounted for 12 % of net accounts receivable as of April 30, 2023.

No customer represented 10% or more of net accounts receivable as of April 30, 2022.

No customer accounted for more than 10% of the Company’s total revenue for the years ended April 30, 2023, 2022 and 2021.

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As of April 30, 2023 and 2022, the allowance for credit losses was $ 3.4 million and $ 2.7 million, respectively.

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

Activity related to the Company’s allowance for credit losses for the years ended April 30, 2023, 2022 and 2021 was as follows (in thousands):

Year Ended April 30,

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

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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.

The Company did not capitalize any costs during the year ended April 30, 2023 and capitalized $ 5.1 million of such costs in the year ended April 30, 2022, and these costs are recorded in other assets, non-current on the consolidated balance sheets.

Amortization expense for the fiscal years ended April 30, 2023 and 2022 was $ 1.2 million and $ 0.2 million, respectively.

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

Property and Equipment

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The Company accounts for lease components and non-lease components as a single lease component.

Leases with an initial term of twelve months or less are classified as short-term leases and therefore are not recognized on the consolidated balance sheets and are expensed on a straight-line basis within the consolidated statement of operations.

The lease liability is initially measured as the present value of the remaining lease payments over the lease term.

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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 such review indicates that the carrying amount of long-lived assets is not recoverable, the carrying amount of such assets is reduced to fair value.

During the year ended April 30, 2023, the Company recorded asset impairment charges comprising impairment of operating lease right-of-use assets and the associated furniture, equipment, and leasehold improvements of $ 5.1 million and $ 1.1 million, respectively, for exited leased office spaces associated with the Company’s restructuring plan.

See Note 16 for further details.

The Company determined that there were no events or changes in circumstances that indicated that its long-lived assets were impaired during the years ended April 30, 2022 and 2021.

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Revenue Recognition

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

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

Under ASC Topic 606, Revenue from Contracts with Customers, the Company recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services.

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

Under ASC 606, Revenue from Contracts with Customers, the Company recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services.

The Company’s contracts include varying terms and conditions, and identifying and evaluating the impact of these terms and conditions on revenue recognition requires significant judgment.

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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

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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.

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Performance obligations promised in a contract are identified based on the products and services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the products or services either on their own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the products and services is separately identifiable from other promises in the contract.

The Company’s self-managed subscriptions include both license providing the right to use proprietary features in its software, as well as an obligation to provide support (on both open source and proprietary features) and maintenance.

The Company’s self-managed subscriptions include both a license providing the right to use proprietary features in its software, as well as an obligation to provide support (on both open source and proprietary features) and maintenance.

The Company’s SaaS products provide access to hosted software as well as support, which the Company considers to be a single performance obligation.

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(iii) determination of the transaction price;

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

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

Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur.

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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 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.

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

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

There is typically more than one SSP for individual products and services due to the stratification of those products and services by quantity, term of the subscription, sales channel and other circumstances.

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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.

Revenue from SaaS offerings that are stand-ready arrangements is recognized ratably over the contract period as the Company satisfies 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.

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

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

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

Revenue from 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

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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.

The Company records unbilled accounts receivable related to revenue recognized in excess of amounts invoiced as the Company has an unconditional right to invoice and receive payment in the future related to those fulfilled obligations.

Contract liabilities consist of deferred revenue which is recognized over the contractual period.

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

Commissions paid on professional services are typically amortized in accordance with the associated revenue as the commissions paid on new and renewal professional services are commensurate with each other.

Commissions paid on services are typically amortized in accordance with the associated revenue as the commissions paid on new and renewal services are commensurate with each other.

Amortization of deferred contract acquisition costs is recognized in sales and marketing expense in the consolidated statement of operations.

The Company periodically reviews the carrying amount of deferred contract acquisition costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit of these deferred costs.

Further disclosures with respect to the Company’s deferred contract acquisition costs are also included in Note 6, Balance Sheet Components.

Cost of Revenue

Cost of revenue consists primarily of costs related to providing subscription and professional services to the Company’s customers, including personnel costs (salaries, bonuses and benefits, and stock-based compensation) and related expenses for customer support and services personnel, as well as cloud infrastructure costs, third-party expenses, depreciation of fixed assets, amortization associated with acquired intangible assets, and allocated overhead.

Cost of revenue consists primarily of costs related to providing subscriptions and services to the Company’s customers, including personnel costs (salaries, bonuses and benefits, and stock-based compensation) and related expenses for customer support and services personnel, as well as cloud infrastructure costs, third-party expenses, depreciation of fixed assets, amortization associated with acquired intangible assets, and allocated overhead.

Research and Development

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Stock-Based Compensation

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.

Compensation expense related to stock awards issued to employees, including stock options and restricted stock units (“RSU”), 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 and purchase rights issued to employees under the 2022 Employee Stock Purchase Plan (“2022 ESPP”) is estimated on the date of the grant using the Black-Scholes option-pricing model.

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.

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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

The Company calculates basic net loss per share by dividing the net loss by the weighted-average number of ordinary shares outstanding during the period, less shares subject to repurchase.

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

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

Treasury Shares

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As such, the Company has determined that it operates in one operating and one reportable segment.

The Company presents financial information about its operating segment and geographical areas in Note 15 to the consolidated financial statements.

The Company presents financial information about its operating segment and geographical areas in Note 15.

The Company is subject to income taxes in the Netherlands and numerous foreign jurisdictions.

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The Company has assessed its income tax positions and recorded tax benefits for all years subject to examination, based upon the Company’s evaluation of the facts, circumstances and information available at each period end.

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

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.

For those tax positions where the Company has determined there is a greater than 50 % 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 50% likelihood that a tax benefit will be sustained, no tax benefit has been recognized.

Although the Company believes that it has adequately reserved for its uncertain tax positions, the Company can provide no assurance that the final tax outcome of these matters will not be materially different.

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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 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.

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

T a b l e o f C o ntents

Income Taxes:

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes , eliminating certain exceptions to the general principles in ASC 740 related to intra-period tax allocation, deferred tax liability and general methodology for calculating income taxes.

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

The 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:

In May 2021, the FASB issued ASU No.

In May 2021, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

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

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

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

Early adoption is permitted, including in interim periods.

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

Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU No.

2021-04”) , which clarifies the accounting for modifications or exchanges of a freestanding equity-classified written call option that is not within the scope of another topic.

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

The Company adopted ASU No.

2021-04 on May 1, 2022.

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

New Accounting Pronouncements Not Yet Adopted

Acquisitions:

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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.

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 606 to recognize contract assets and contract liabilities as if they had originated the contracts.

If the acquiree prepared its financial statements in accordance with U.S.

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

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

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Other subscription 560,709 52 % 500,155 58 % 401,020 66 %

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

Professional services 63,604 7 % 41,150 7 % 35,450 8 %

Total subscription 984,762 92 % 798,770 93 % 567,339 93 %

Services 84,227 8 % 63,604 7 % 41,150 7 %

Total revenue $ 1,068,989 100 % $ 862,374 100 % $ 608,489 100 %

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.

For the years ended April 30, 2023 and 2022, license revenue from the Company’s other subscription revenue was less than 10% of total revenue.

For the year ended April 30, 2021, license revenue from the Company’s other subscription revenue was 11 % of total revenue.

Remaining Performance Obligations

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

As of April 30, 2023, the Company had $ 1.103 billion of remaining performance obligations.

As of April 30, 2023, the Company expects to recognize approximately 88 % of its remaining performance obligations as revenue over the next 24 months and the remainder thereafter.

T a b l e o f C o ntents

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.

A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The following table summarizes assets that are measured at fair value on a recurring basis as of April 30, 2023 (in thousands):

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Money market funds $ 194,261 $ — $ — $ 194,261

agency securities — 27,406 — 27,406

Certificates of deposit

— 21,750 — 21,750

Commercial paper — 60,750 — 60,750

Total included in cash and cash equivalents 194,261 109,906 — 304,167

Marketable Securities:

Certificates of deposit — 31,645 — 31,645

Commercial paper — 33,735 — 33,735

treasury securities 47,627 — — 47,627

Corporate debt securities

— 118,228 — 118,228

agency bonds — 39,806 — 39,806

Total marketable securities 47,627 223,414 — 271,041

Total financial assets $ 241,888 $ 333,320 $ — $ 575,208

The following table summarizes assets that are measured at fair value on a recurring basis as of April 30, 2022 (in thousands):

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Money market funds $ 559,462 $ — $ — $ 559,462

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.

For the years ended April 30, 2023, 2022, and 2021, interest income from the Company’s cash and cash equivalents and marketable securities was $ 17.7 million, $ 0.2 million, and $ 0.3 million, respectively, and is included in other income (expense), net in the consolidated statement of operations.

As of April 30, 2023, net unrealized losses on the marketable securities were immaterial.

The fluctuations in market interest rates impact the unrealized losses or gains on these securities.

As of April 30, 2023, the contractual maturities of the Company’s available-for-sale debt securities, excluding those securities classified within cash and cash equivalents on the consolidated balance sheet, did not exceed 36 months.

The fair values of available-for-sale securities, by remaining contractual maturity, are as follows (in thousands):

April 30, 2023

Due within 1 year $ 168,264

Due between 1 year and 3 years 102,777

Total marketable securities $ 271,041

Financial Liabilities

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(“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.

The purchase consideration includes an amount of $ 13.4 million held in an indemnity escrow fund, which was released on the 18-month anniversary of 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.

Approximately $ 6.6 million of the fair value of replacement equity awards was allocated to post-acquisition services that is being 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 upon completion of the underlying required service period, has been excluded from the purchase consideration.

This amount is being 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 total 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.

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(“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.

The purchase consideration includes an amount of $ 5.4 million held in an indemnity escrow for the build.security acquisition, which was released on the 12-month anniversary of the closing of such acquisition, and $ 6.0 million held back by the Company for indemnity for the Optimyze acquisition, which will be released upon the 18-month anniversary of such acquisition.

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 total 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.

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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

Endgame, Inc.

On October 8, 2019, the Company acquired all outstanding shares of Endgame, a security company offering endpoint protection technology, for a total acquisition price of $ 234.0 million.

Elastic paid the purchase price through (i) the issuance of 2,218,694 ordinary shares in respect of Endgame’s outstanding capital stock, warrants, convertible notes, and certain retention awards, (ii) the cash repayment of Endgame’s outstanding indebtedness of $ 20.4 million, (iii) the assumption of Endgame’s outstanding stock options, (iv) a $ 0.4 million cash deposit to an expense fund for the fees and expenses of the representative and agent of Endgame securityholders, (v) the cash payment of Endgame’s transaction expenses of $ 5.9 million, and (vi) the cash payment of withholding taxes related to acquisition expense settled in shares of $ 2.8 million.

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

For purposes of determining the total acquisition price of $ 234.0 million, the Company used the ordinary share price of $ 89.3836 which was determined on the basis of the volume weighted average price per share rounded to four decimal places for the twenty (20) consecutive trading days ending with the complete trading day ending five (5) trading days prior to the date upon which the acquisition was consummated.

The fair value of the shares transferred as consideration was $ 84.12 per share and was determined on the basis of the closing stock price of the Company’s ordinary shares on the date of acquisition.

The fair value of the assumed stock options was determined by using a Black-Scholes option pricing model with the applicable assumptions as of the acquisition date.

The stock options assumed on the acquisition date will continue to vest as the Endgame employees provide services in the post-acquisition period.

The fair value of these awards will be recorded as share-based compensation expense over the respective vesting period of each stock option.

The acquisition was accounted for as a business combination and the total purchase price was allocated to the net tangible and intangible assets and liabilities based on their respective fair values on the acquisition date and the excess was recorded as goodwill.

The following table summarizes the components of the U.S.

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

T a b l e o f C o ntents

Cash paid $ 26,633

Ordinary shares 178,331

Assumption of stock option plan 9,309

Total consideration $ 214,273

The above U.S.

GAAP purchase price consideration does not include ordinary shares of Elastic issued as part of acceleration of equity awards and participation in the retention bonus pool.

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

Cash and cash equivalents $ 2,220

Restricted cash 40

Accounts receivable 2,661

Prepaid and other current assets 549

Operating lease right-of-use assets 4,363

Property and equipment 503

Intangible assets 53,800

Other assets 58

Goodwill 178,764

Accounts payable ( 1,112 )

Accrued expenses and other current liabilities ( 3,035 )

Accrued compensation and benefits ( 5,042 )

Operating lease liabilities, current ( 981 )

Deferred revenue, current ( 3,532 )

Deferred revenue, non-current ( 2,661 )

Operating lease liabilities, non-current ( 3,551 )

Other liabilities, non-current ( 8,771 )

Total purchase consideration $ 214,273

Identifiable intangible assets include (in thousands):

Total Useful life

Developed technology $ 32,700 5

Customer relationships 19,200 4

Trade name 1,900 4

Intangible assets $ 53,800

Developed technology consists of software products and security platform developed by Endgame.

Customer relationships consists of contracts with platform users that purchase Endgame’s products and services that carry distinct value.

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

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

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

The fair value of the Company’s customer relationships was determined using the income approach, which discounts expected future cash flows to present value using estimates and assumptions related to revenue and customer growth rate as determined by management.

The fair value assigned to trade name was determined using the relief from royalty method, where the owner of the asset realizes a benefit from owning the intangible asset rather than paying a rental or royalty rate for use of the asset.

The acquired intangible assets are being amortized on a straight-line basis over their respective useful lives, which approximates the pattern in which these assets are utilized.

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 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.

Balance Sheet Components

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The cost and accumulated depreciation of property and equipment were as follows (in thousands):

As of April 30,

Useful Life (in years) 2022 2021

Useful Life (in years) As of

April 30, 2023 As of

April 30, 2022

Leasehold improvements Lesser of estimated useful life or remaining lease term $ 10,081 $ 10,863

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Depreciation expense related to property and equipment was $ 3.6 million, $ 3.9 million, and $ 3.1 million for the years ended April 30, 2023, 2022 and 2021, respectively.

During the year ended April 30, 2023, the Company recorded asset impairment charges related to the exit from leased office space which included $ 1.1 million of furniture, equipment, and leasehold improvements.

See Note 16 for further details.

Intangible Assets, Net

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Total $ 45,800

T a b l e o f C o ntents

Amortization expense for the intangible assets for the years ended April 30, 2023, 2022, and 2021 was as follows (in thousands):

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2023 2022 2021

Cost of revenue—cost of license—self-managed $ 1,548 $ 1,386 $ 948

Cost of revenue—cost of subscription—self-managed and SaaS 8,955 7,051 5,820

Cost of revenue – subscription $ 11,781 $ 10,503 $ 8,437

Sales and marketing 4,887 5,280 5,730

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Balance as of April 30, 2021 $ 198,851

Addition from acquisitions 105,428

Foreign currency translation adjustment ( 373 )

Balance as of April 30, 2022 303,906

Addition from acquisitions 105,428

Foreign currency translation adjustment ( 264 )

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Accrued expenses and other liabilities consisted of the following (in thousands):

As of April 30,

April 30, 2023 As of

April 30, 2022

Accrued expenses $ 24,163 $ 24,066

Income taxes payable 9,738 4,286

Value added taxes payable 9,403 8,926

Accrued interest 6,918 6,918

Income taxes payable 4,286 1,596

Other 13,310 9,734

Total accrued expenses and other liabilities $ 63,532 $ 53,930

T a b l e o f C o ntents

Accrued Compensation and Benefits

Accrued compensation and benefits consisted of the following (in thousands):

As of April 30,

April 30, 2023 As of

April 30, 2022

Accrued vacation $ 30,026 $ 27,280

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The following table provides information about unbilled accounts receivable, deferred contract acquisition costs, and deferred revenue from contracts with customers (in thousands):

As of April 30,

April 30, 2023 As of

April 30, 2022

Unbilled accounts receivable, included in accounts receivable, net $ 2,159 $ 9,244

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Deferred revenue $ 562,952 $ 465,294

Significant changes in the unbilled accounts receivable and the deferred revenue balances were as follows (in thousands):

Unbilled Accounts Receivable

Year Ended April 30,

2022 2021 2020

Beginning balance $ 5,204 $ 2,622 $ 1,710

Amounts transferred to accounts receivable from unbilled accounts receivable presented at the beginning of the period

( 5,204 ) ( 2,622 ) ( 1,710 )

Revenue recognized during the period in excess of invoices issued 9,244 5,204 2,622

Ending balance $ 9,244 $ 5,204 $ 2,622

Deferred Revenue

Year Ended April 30,

2022 2021 2020

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

Increases due to invoices issued, excluding amounts recognized as

revenue during the period 421,552 364,093 242,136

Amounts transferred to deferred revenue from accrued expenses and other

liabilities upon entering into contracts with customers, net of revenue

recognized during the period — 5,424 —

Increase from acquisitions, net of revenue recognized 439 — 6,192

Revenue recognized that was included in deferred revenue balance at

beginning of period ( 354,397 ) ( 231,519 ) ( 159,292 )

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

T a b l e o f C o ntents

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, 2023, 2022, and 2021.

Deferred Revenue

The following table summarizes the deferred revenue activity (in thousands):

Year Ended April 30,

2023 2022 2021

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

Increases due to invoices issued, excluding amounts recognized as revenue during the period 527,620 421,552 364,093

Amounts transferred to deferred revenue from accrued expenses and other liabilities upon entering into contracts with customers, net of revenue recognized during the period 707 — 5,424

Increase from acquisitions, net of revenue recognized — 439 —

Revenue recognized that was included in deferred revenue balance at beginning of period ( 430,669 ) ( 354,397 ) ( 231,519 )

Ending balance $ 562,952 $ 465,294 $ 397,700

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.

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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;

The Indenture contains 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;

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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.

Certain of these covenants will not apply during any period in which the Senior 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:

As of April 30, 2023, the Company was in compliance with all of its covenants under the Indenture.

The net carrying amount of the Senior Notes was as follows (in thousands):

April 30, 2023 As of

April 30, 2022

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Net carrying amount $ 567,543 $ 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

The following table sets forth the interest expense recognized related to the Senior Notes (in thousands):

Year Ended April 30,

Contractual interest expense $ 23,719 $ 19,370

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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):

The table below reflects the Company’s future minimum purchase obligations relating to non-cancelable agreements for cloud hosting as of April 30, 2023 (in thousands):

Years Ending April 30, Purchase Obligations

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The Company accrues estimates for resolution of legal and other contingencies when losses are probable and reasonably estimable.

Although the results of litigation and claims are inherently unpredictable, the Company does not believe that there were any matters under litigation or claims with a reasonable possibility of the Company incurring a material loss as of April 30, 2022.

Indemnification

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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.

T a b l e o f C o ntents

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.

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

Gain Contingencies

From time to time the Company may realize a gain contingency, although recognition will not occur until cash is received or the gain is deemed as realizable.

During the year ended April 30, 2023, the Company received a favorable settlement from a legal claim and recognized a gain of $ 10.4 million included in other income (expense), net in the accompanying consolidated statements of operations.

The Company’s leases are composed of corporate office spaces under non-cancelable operating lease agreements that expire at various dates through fiscal 2029.

The Company does not have any finance leases.

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April 30, 2023

Weighted average remaining lease term (years) 2.95

Weighted average remaining lease term (in years) 2.62

Weighted average discount rate 4.92 %

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2024 $ 13,103

Thereafter 280

Total minimum lease payments 28,403

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Operating lease liabilities, non-current $ 13,942

Future minimum lease payments as of April 30, 2023 include future cash payments on leases with corresponding right-of-use assets which were written down for impairment due to facilities-related cost optimization actions during the year ended April 30, 2023.

During the year ended April 30, 2023, the Company recorded an impairment charge of $ 5.1 million related to the exit from leased office spaces.

See Note 16 for further details.

Ordinary Shares

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

The holders of ordinary shares are also entitled to receive dividends whenever funds are legally available and when declared by the board of directors, subject to the prior rights of holders of all classes of shares outstanding having priority rights to dividends.

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

T a b l e o f C o ntents

The holders of ordinary shares are also entitled to receive dividends whenever funds are legally available and when declared by the Company’s board of directors, subject to the prior rights of holders of all classes of shares outstanding having priority rights to dividends.

No dividends have been declared by the board of directors from inception through April 30, 2023.

Ordinary Shares Reserved for Issuance

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7,494,399 4,717,548

Remaining shares available for future issuance under the 2012 Plan

Available for future grants

17,564,133 17,647,684

Available for employee stock purchases 6,000,000 —

Total ordinary shares reserved

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Equity Incentive Plans

2022 Employee Stock Purchase Plan

In August 2022, the Company’s board of directors adopted and, in October 2022, the Company’s shareholders approved the 2022 Employee Stock Purchase Plan (“2022 ESPP”).

During the year ended April 30, 2023, the Company reserved 6.0 million of the Company’s ordinary shares for future purchase and issuance under the 2022 ESPP.

The 2022 ESPP allows eligible employees to acquire ordinary shares of the Company at a discount at periodic intervals through accumulated payroll deductions.

Eligible employees purchase ordinary shares of the Company during a purchase period at 85 % of the market value of the Company’s ordinary shares at either the beginning or end of an offering period, whichever is lower.

Offering periods under the 2022 ESPP are approximately six months long and begin on each of March 16 or September 16 or the next trading day thereafter.

The first offering period under the 2022 ESPP began on March 16, 2023 and will end on September 15, 2023.

The fair value of 2022 ESPP offering which began during the year ended April 30, 2023 was estimated on the offering date using the Black-Scholes option pricing model with the following assumptions:

April 30, 2023

Expected term (in years) 0.5

Expected stock price volatility 64.0 %

Risk-free interest rate 4.9 %

Dividend yield — %

2012 Stock Option Plan

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 and further amended in December 2021 (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.

The Company’s board of directors, compensation committee or a duly authorized committee determines the vesting schedule for all equity-based awards.

Stock options granted to new employees under the 2012 Plan generally vest over four years with 25 % of the option shares vesting one year from the vesting commencement date and then ratably over the following 36 months subject to the employees’ continued service to the Company.

Refresh grants 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.

Under the 2012 Plan, the board of directors, the compensation committee, as administrator of the 2012 Plan, and any other duly authorized committee may grant stock options and other equity-based awards, such as Restricted Stock Awards (“RSA”) or Restricted Stock Units (“RSU”), to eligible employees, directors, and consultants to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to employees, directors and consultants, and to promote the success of the Company’s business.

The Company’s board of directors, compensation committee or other duly authorized committee determines the vesting schedule for all equity-based awards.

Stock options and RSUs granted to employees generally vest over four years , subject to the employees’ continued service to the Company.

The Company’s compensation committee may explicitly deviate from the general vesting schedules in its approval of an equity-based award, as it may deem appropriate.

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Options granted ( 94,105 ) ( 495,460 )

Options cancelled 386,656 890,561

Options canceled 143,656 386,656

RSUs granted ( 6,105,614 ) ( 3,224,256 )

RSUs cancelled 715,870 440,278

RSUs canceled 1,263,099 715,870

Shares withheld for taxes 667 356

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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.

In connection with acquisitions completed in prior years, the Company assumed certain unvested stock options that were outstanding on the date of the respective acquisitions.

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

Stock Options

The following table summarizes stock option activity (in thousands, except share and per share data):

The following table summarizes stock option activity:

Stock Options Outstanding

Stock Options

(in thousands)

Balance as of April 30, 2021 7,611,016 $ 20.34 6.66 $ 768,517

Stock options granted 495,460 $ 94.46

Stock options assumed in acquisitions 63,846 $ 10.20

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

Stock options cancelled ( 890,561 ) $ 18.15

Stock options assumed in acquisition cancelled ( 1,782 ) $ 72.75

Stock options canceled ( 386,656 ) $ 32.04

Stock options assumed in acquisition canceled ( 1,255 ) $ 40.35

Balance as of April 30, 2022 5,219,124 $ 29.41 6.22 $ 266,021

Stock options granted 94,105 $ 82.24

Stock options assumed in acquisitions 63,846 $ 10.20

Stock options exercised ( 1,127,036 ) $ 15.55

Stock options cancelled ( 386,656 ) $ 32.04

Stock options assumed in acquisition cancelled ( 1,255 ) $ 40.35

Stock options canceled ( 143,656 ) $ 78.69

Stock options assumed in acquisition canceled ( 4,299 ) $ 47.63

Balance as of April 30, 2023 4,038,238 $ 32.74 5.35 $ 134,778

Exercisable as of April 30, 2023 3,425,478 $ 24.70 4.93 $ 128,503

Stock options exercisable include 16,667 stock options that were unvested as of April 30, 2022.

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.

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

The weighted-average grant-date fair value per share of stock options granted was $ 48.56 and $ 52.43 for the years ended April 30, 2023 and 2022, respectively.

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.

As of April 30, 2023, the Company had unrecognized stock-based compensation expense of $ 28.1 million related to unvested stock options that the Company expects to recognize over a weighted-average period of 1.99 years.

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RSUs released ( 1,092,121 ) $ 96.65

RSUs cancelled ( 440,278 ) $ 73.31

RSUs canceled ( 715,870 ) $ 106.34

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

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RSUs released ( 2,065,664 ) $ 94.01

RSUs cancelled ( 715,870 ) $ 106.34

RSUs canceled ( 1,263,099 ) $ 99.51

Outstanding and unvested at April 30, 2023 7,494,399 $ 74.52

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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.

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, 2023, the Company had unrecognized stock-based compensation expense of $ 514.9 million related to RSUs that the Company expects to recognize over a weighted-average period of 3.09 years.

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59.6 % - 60.2 %

62.6 % - 63.9 %

Risk-free interest rate 3.1 % - 3.4 %

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Dividend yield — % — % — %

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Stock-Based Compensation Expense

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2023 2022 2021

Cost of revenue—cost of subscription—self-managed and SaaS $ 8,368 $ 7,105 $ 4,147

Cost of revenue—professional services 6,463 4,824 2,980

Cost of revenue

Subscription $ 8,308 $ 8,368 $ 7,105

Services 9,435 6,463 4,824

Research and development 80,170 59,911 35,267

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RSUs 7,494,399 4,717,548 3,301,283

Contingently issuable shares — — 235,031

Employee stock purchase plan 197,077 — —

Total 11,729,714 9,936,672 10,912,299

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 (benefit from) income taxes is summarized as follows (in thousands):

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

Year Ended April 30,

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Loss before income taxes $ ( 216,877 ) $ ( 197,789 ) $ ( 121,714 )

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

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

Year Ended April 30,

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Foreign 17,042 6,892 3,896

Total current tax expense (income) $ 9,079 $ 5,021 $ ( 42 )

Total current tax expense 19,952 9,079 5,021

Dutch ( 71 ) ( 105 ) —

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Total deferred tax expense (income) ( 668 ) ( 3,020 ) 2,699

Total provision for (benefit from) income taxes $ 6,059 $ 7,720 $ ( 1,968 )

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 (benefit from) income taxes included in the consolidated statement of operations is as follows (in thousands, except for rates):

Total provision for income taxes $ 19,284 $ 6,059 $ 7,720

The Company’s effective tax rate substantially differed from the Dutch statutory tax rate of 25.8% primarily due to the valuation allowance for the Netherlands, United States and United Kingdom deferred tax assets.

A reconciliation of income taxes at the statutory income tax rate to the provision for income taxes included in the consolidated statement of operations is as follows (in thousands, except for rates):

Year Ended April 30,

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Stock-based compensation 5,018 ( 2.3 ) % ( 31,372 ) 15.9 % ( 100,931 ) 82.9 %

Research and development credits ( 10,834 ) 5.5 % ( 11,020 ) 9.0 % ( 7,771 ) 4.6 %

Tax credits ( 7,349 ) 3.4 % ( 10,834 ) 5.5 % ( 11,020 ) 9.0 %

Change in valuation allowance 69,271 ( 31.9 ) % 91,841 ( 46.4 ) % 146,571 ( 120.4 ) %

Deferred tax asset revaluation 6 — % ( 302 ) 0.2 % ( 256 ) 0.2 %

Foreign withholding taxes 3,201 ( 1.5 ) % 1,773 ( 0.9 ) % 1,307 ( 1.1 ) %

Other 6,396 ( 3.0 ) % 6,598 ( 3.5 ) % 2,963 ( 2.3 ) %

Provision for (benefit from) income taxes $ 6,059 ( 3.1 ) % $ 7,720 ( 6.3 ) % $ ( 1,968 ) 1.2 %

Provision for income taxes $ 19,284 ( 8.9 ) % $ 6,059 ( 3.1 ) % $ 7,720 ( 6.3 ) %

Deferred Income Taxes

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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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Stock-based compensation 13,950 12,063

Research and development credits 28,467 22,988

Tax credits 28,048 28,467

Disallowed interest expense 10,546 4,723

Lease liabilities 4,320 5,139

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Deferred tax liabilities:

Accrued compensation $ — $ ( 41 )

Deferred contract acquisition costs ( 27,988 ) ( 17,244 )

4 unchanged sentences

The valuation allowance for deferred tax assets as of April 30, 2023 and 2022 was $ 575.6 million and $ 499.0 million, respectively.

As the Company has generated losses since inception in the Netherlands and California (United States) jurisdictions, management maintains a full valuation allowance against the net deferred tax assets in these jurisdictions.

As the Company has generated losses since inception in the Netherlands, management maintains a full valuation allowance against the net deferred tax assets in this jurisdiction.

In addition, the United States and the United Kingdom jurisdictions are anticipated to have cumulative losses for the foreseeable future and, as such, a valuation allowance has been established for these regions.

The valuation allowance in the Netherlands, the United States and the United Kingdom jurisdictions increased by $ 53.8 million, $ 30.3 million and $ 5.1 million, respectively, during the year ended April 30, 2022 and $ 61.0 million, $ 113.1 million and $ 10.5 million, respectively, for the year ended April 30, 2021.

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, 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 valuation allowance in the Netherlands and United Kingdom increased by $ 80.1 million and less than $ 0.1 million, respectively, for the year ended April 30, 2023 and $ 53.8 million and $ 5.1 million, respectively, for the year ended April 30, 2022.

The valuation allowance in the United States decreased by $ 3.6 million for the year ended April 30, 2023 and increased by $ 30.3 million for the year ended April 30, 2022.

The valuation allowance for the Netherlands deferred tax assets as of April 30, 2023 and 2022 was $ 283.3 million and $ 203.2 million, respectively, the valuation allowance for the United States deferred tax assets as of April 30, 2023 and 2022 was $ 272.7 million and $ 276.3 million, respectively, and the valuation allowance for the United Kingdom deferred tax assets as of both April 30, 2023 and April 30, 2022 was $ 19.5 million.

To the extent sufficient positive evidence becomes available, the Company may release all or a portion of the valuation allowance in one or more future periods.

A release of the valuation allowance, if any, would result in the recognition of certain deferred tax assets and a material income tax benefit for the period in which such release is recorded.

As of April 30, 2023, the Company had net operating loss (“NOL”) carryforwards for Netherlands, United States (federal and state, respectively) and United Kingdom income tax purposes of $ 1.0 billion, $ 973.4 million, $ 665.0 million and $ 74.5 million, respectively, which begin to expire in the years ending April 30, 2033 and April 30, 2024 in the United States (federal and state, respectively), with Netherlands 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 $ 20.4 million, $ 5.8 million and $ 0.6 million, respectively, which begin to expire April 30, 2033, April 30, 2024, and April 30, 2040, 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.

4 unchanged sentences

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.

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

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

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

The Company had unrecognized tax benefits of $ 18.2 million as of April 30, 2023, of which none would impact the effective tax rate before consideration of any valuation allowance.

The activity within the Company’s unrecognized gross tax benefits is summarized as follows (in thousands):

The activity within the Company’s unrecognized tax benefits is summarized as follows (in thousands):

As of April 30,

4 unchanged sentences

Balance as of end of year $ 18,157 $ 16,622 $ 13,656

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.

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.

Approximately $0.5 million of the decrease for the year ended April 30, 2023 for tax positions taken in prior periods is due to the filing of tax returns during such fiscal year and lapse of statute of limitations.

The other approximately $0.5 million of the decrease is due to the audit settlement noted below.

Approximately $2.0 million of the increase in tax positions related to the current period is primarily from the research and development tax credits generated for the year ended April 30, 2023 and $0.6 million is associated with acquisition-related tax structuring.

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

For the years ended April 30, 2023, 2022 and 2021 the Company recognized interest and penalties of $ 0.2 million, $ 0.3 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, 2023 and 2022 was $ 0.2 million and $ 0.3 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 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.

During the year ended April 30, 2023, the Company was not subject to any new audits.

The Company settled an examination with the Internal Revenue Service for foreign withholding taxes and related interest for the calendar year 2017.

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

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Earnings from the Company’s U.S.

subsidiaries are being treated as being currently repatriated back to the Netherlands though no Dutch income taxes nor U.S.

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

subsidiaries are treated as being currently repatriated back to the Netherlands, even though no Dutch income taxes nor U.S.

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

As of April 30, 2023, there were cumulative earnings of $ 146.3 million from the non-U.S.

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If such earnings were to be repatriated, they would be exempt from taxation in the Netherlands and the amount of dividend withholding taxes from such foreign jurisdictions would be $ 3.1 million, due to the various income tax treaties between the Netherlands and the respective foreign jurisdictions.

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

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

The Company has a defined-contribution plan in the U.S.

intended to qualify under Section 401 of the Internal Revenue Code (the “401(k) Plan”).

The Company has a defined-contribution plan in the United States intended to qualify under Section 401 of the Internal Revenue Code (the “401(k) Plan”).

The Company has contracted with a third-party provider to act as a custodian and trustee, and to process and maintain the records of participant data.

Substantially all the expenses incurred for administering the 401(k) Plan are paid by the Company.

This 401(k) Plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis The Company makes contributions to the 401(k) Plan up to 6 % of the participating employee’s W-2 earnings and wages.

The 401(k) Plan covers substantially all U.S.

employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis.

The Company makes contributions to the 401(k) Plan up to 6 % of the participating employee’s W-2 earnings and wages.

The Company recorded $ 17.9 million, $ 15.2 million, and $ 11.4 million of expense related to the 401(k) Plan during the years ended April 30, 2023, 2022, and 2021, respectively.

The Company also has defined-contribution plans in certain other countries for which the Company recorded $ 9.4 million, $ 7.2 million, and $ 5.1 million of expense during the years ended April 30, 2023, 2022, and 2021, respectively.

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Segment Information

The following table summarizes the Company’s total revenue by geographic area based on the billing address of the customers (in thousands):

The following table summarizes the Company’s total revenue by geographic area based on the location of customers (in thousands):

Year Ended April 30,

7 unchanged sentences

United States $ 13,476 $ 22,112

The Netherlands 4,597 1,728

United Kingdom 2,797 4,478

2 unchanged sentences

Total long-lived assets $ 25,089 $ 32,644

Restructuring and Other Related Charges

On November 30, 2022, the Company announced and began implementing a plan to align its investments more closely with its strategic priorities by reducing the Company’s workforce by approximately 13 % and implementing certain facilities-related cost optimization actions.

For the year ended April 30, 2023, the Company recorded employee-related severance and other termination benefits of approximately $ 23.3 million and facilities-related charges of approximately $ 6.2 million.

Asset impairment charges include impairment of operating lease right-of-use assets, and the associated furniture, equipment, and leasehold improvements of $ 5.1 million and $ 1.1 million, respectively, for the exited leased office spaces.

The restructuring plan is expected to be substantially completed by the end of the first quarter of fiscal 2024.

The following table presents the total amount incurred and the liability, which is recorded in accrued compensation and employee benefits in the consolidated balance sheet, for restructuring-related employee termination benefits as of April 30, 2023 (in thousands):

April 30, 2023

Beginning balance $ —

Incurred during the period 23,264

Paid during the period ( 22,789 )

Foreign currency translation adjustment 263

Ending balance $ 738

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

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