What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-03-24 compared with 2022-04-04 · 440 added, 398 removed, 848 unchanged (50% of the section changed)

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Report of Independent Registered Public Accounting Firm (PCAOB ID Number 185 )

R eport of Predecessor Auditor (PCAOB ID Number 248)

Consolidated Balance Sheets

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors

UiPath, Inc.:

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheet of UiPath, Inc.

and subsidiaries (the Company) as of January 31, 2023, the related consolidated statements of operations, comprehensive loss, convertible preferred stock and stockholders’ equity (deficit), and cash flows for the year ended January 31, 2023, and the related notes (collectively, the consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of January 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of January 31, 2023, and the results of its operations and its cash flows for the year ended January 31, 2023, in conformity with U.S.

generally accepted accounting principles.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2023 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

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

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition - Assessment of Terms and Conditions in Certain Contracts

As discussed in Note 2 to the consolidated financial statements, the Company derives revenue primarily from term licenses, maintenance and support services, SaaS products, and professional services.

For contracts with multiple performance obligations, management allocates the transaction price of the contract to each performance obligation and recognizes revenue when, or as, a performance obligation is satisfied.

Management applies judgment in identifying and evaluating any terms and conditions in contracts that may impact revenue recognition.

For the year ended January 31, 2023, the Company recorded revenue of $1.06 billion.

We identified the assessment of terms and conditions in certain contracts as a critical audit matter.

Specifically, complex auditor judgement was required in assessing the Company’s identification and evaluation of terms and conditions in certain contracts because of the complex accounting guidance, primarily related to the sale of term licenses.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls within the related revenue recognition process, including a control related to the identification and evaluation of terms and conditions in certain contracts that impact revenue recognition.

For a selection of contracts, we assessed the terms and conditions in the contracts by examining the contracts and evaluating management’s determination of the impact of those terms and conditions on revenue recognition.

For each of these contracts selected, we also assessed the recorded revenue by determining the revenue to be recorded in the current period using the terms and conditions in the underlying contract and comparing it to the Company’s recorded balances.

We have served as the Company’s auditor since 2022.

New York, New York

March 24, 2023

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of UiPath, Inc.

(a Delaware corporation) and subsidiaries (the “Company”) as of January 31, 2022 and 2021, the related consolidated statements of operations, comprehensive loss, convertible preferred stock and stockholders’ equity, and cash flows for each of the three years in the period ended January 31, 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheet of UiPath, Inc.

(a Delaware corporation) and subsidiaries (the “Company”) as of January 31, 2022, the related consolidated statements of operations, comprehensive loss, convertible preferred stock and stockholders’ equity, and cash flows for each of the two years in the period ended January 31, 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2022, and the results of its operations and its cash flows for each of the two years in the period ended January 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for opinion

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/s/ GRANT THORNTON LLP

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

We served as the Company’s auditor from 2018 to 2022.

New York, New York

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Cash and cash equivalents $ 1,402,119 $ 1,768,723

Restricted cash — 7,000

Marketable securities 354,774 96,417

Accounts receivable, net of allowance for doubtful accounts of $ 2,566 and $ 2,879 , respectively

Accounts receivable, net of allowance for credit losses of $ 2,698 and $ 2,566 , respectively

374,217 251,988

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Total current assets 2,344,407 2,277,301

Restricted cash, non-current — 6,500

Marketable securities, non-current 2,942 19,523

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Goodwill 88,010 53,564

Deferred tax asset 10,628 8,118

Deferred tax assets 5,895 10,628

Other assets, non-current 45,706 25,534

Total assets $ 2,735,206 $ 2,572,450

LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ EQUITY (DEFICIT)

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

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Accrued expenses and other current liabilities 76,645 87,958

Accrued compensation and benefits 130,673 110,736

Accrued compensation and employee benefits 142,582 130,673

Deferred revenue 398,334 297,355

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Commitments and contingencies (Note 11)

Convertible preferred stock, $ 0.00001 par value per share, 0 and 297,973 shares authorized as of January 31, 2022 and 2021, respectively;

0 and 294,257 shares issued and outstanding as of January 31, 2022 and 2021, respectively

Stockholders’ equity (deficit):

Preferred stock, $ 0.00001 par value per share, 20,000 and 0 shares authorized as of January 31, 2022 and 2021, respectively;

0 shares issued and outstanding as of January 31, 2022 and 2021, respectively

Class A common stock, $ 0.00001 par value per share, 2,000,000 and 581,000 shares authorized as of January 31, 2022 and 2021, respectively;

458,773 and 75,177 shares issued and outstanding as of January 31, 2022 and 2021, respectively;

Class B common stock, $ 0.00001 par value per share, 115,741 shares authorized as of January 31, 2022 and 2021, respectively;

Stockholders’ equity:

Preferred stock, $ 0.00001 par value per share, 20,000 shares authorized as of January 31, 2023 and 2022;

0 shares issued and outstanding as of January 31, 2023 and 2022

Class A common stock, $ 0.00001 par value per share, 2,000,000 shares authorized as of January 31, 2023 and 2022;

474,160 and 458,773 shares issued and outstanding as of January 31, 2023 and 2022, respectively

Class B common stock, $ 0.00001 par value per share, 115,741 shares authorized as of January 31, 2023 and 2022;

82,453 shares issued and outstanding as of January 31, 2023 and 2022

Additional paid-in capital 3,736,838 3,406,959

Accumulated other comprehensive income (loss) 10,899 ( 12,521 )

Accumulated other comprehensive income 7,612 10,899

Accumulated deficit ( 1,824,298 ) ( 1,495,946 )

Total stockholders’ equity (deficit) 1,921,917 ( 803,704 )

Total liabilities, convertible preferred stock, and stockholders’ equity (deficit) $ 2,572,450 $ 866,461

Total stockholders’ equity 1,920,158 1,921,917

Total liabilities and stockholders’ equity $ 2,735,206 $ 2,572,450

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

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Interest income 27,955 3,551 1,152

Other (expense) income, net ( 13,488 ) 14,513 ( 6,597 )

Other income (expense), net 2,767 ( 13,488 ) 14,513

Loss before income taxes ( 317,561 ) ( 510,883 ) ( 94,658 )

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Net loss $ ( 328,352 ) $ ( 525,586 ) $ ( 92,393 )

Other comprehensive income (loss), net of tax:

Other comprehensive (loss) income, net of tax:

Unrealized loss on available-for-sale marketable

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Foreign currency translation adjustments ( 3,003 ) 23,738 ( 18,730 )

Other comprehensive income (loss) 23,420 ( 18,747 ) 5,174

Other comprehensive (loss) income ( 3,287 ) 23,420 ( 18,747 )

Comprehensive loss $ ( 331,639 ) $ ( 502,166 ) $ ( 111,140 )

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12,149 225,579 — — — — — — — —

Issuance of common stock upon exercise of stock options and vesting of restricted stock units — — 19,066 — — — 3,774 — — 3,774

Repurchase and retirement of common stock in connection with convertible preferred stock financing — — ( 4,651 ) — ( 5,172 ) — ( 28,541 ) — ( 36,418 ) ( 64,959 )

Stock-based compensation expense related to tender offer — — — — — — 48,260 — — 48,260

Stock-based compensation expense — — — — — — 26,116 — — 26,116

Other comprehensive income, net of tax — — — — — — — 5,174 — 5,174

Net loss — — — — — — — — ( 519,933 ) ( 519,933 )

Balance as of January 31, 2020 282,108 $ 996,389 41,883 $ — 115,741 $ 1 $ 72,229 $ 6,226 $ ( 877,967 ) $ ( 799,511 )

Issuance of convertible preferred stock, net of issuance costs of $ 324

12,149 225,579 — — — — — — — —

Issuance of common stock upon exercise of stock options and restricted stock awards — — 28,196 1 — — 20,518 — — 20,519

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Stock-based compensation expense related to common stock secondary transactions — — 5,088 — ( 5,088 ) — 4,983 — — 4,983

Stock-based compensation expense — — — — — — 81,072 — — 81,072

Stock-based compensation — — — — — — 81,072 — — 81,072

Other comprehensive loss, net of tax — — — — — — — ( 18,747 ) — ( 18,747 )

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Tax withholdings on settlement of restricted stock units — — ( 186 ) — — — ( 10,591 ) — — ( 10,591 )

Stock-based compensation expense — — — — — — 518,380 — — 518,380

Stock-based compensation — — — — — — 518,380 — — 518,380

Other comprehensive income, net of tax — — — — — — — 23,420 — 23,420

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Balance as of January 31, 2022 — $ — 458,773 $ 4 82,453 $ 1 $ 3,406,959 $ 10,899 $ ( 1,495,946 ) $ 1,921,917

Issuance of common stock upon exercise of stock options — — 4,770 — — — 8,245 — — 8,245

Vesting of early exercised stock options — — — — — — 1,357 — — 1,357

Issuance of common stock upon settlement of restricted stock units — — 13,644 1 — — — — — 1

Tax withholdings on settlement of restricted stock units — — ( 4,646 ) — — — ( 75,181 ) — — ( 75,181 )

Charitable donation of Class A common stock — — 300 — — — 5,499 — — 5,499

Shares issued in connection with business acquisition — — 570 — — — 2,965 — — 2,965

Issuance of common stock under the employee stock purchase plan — — 1,190 — — — 15,804 — — 15,804

Repurchase of unvested early exercised stock options — — ( 441 ) — — — — — — —

Stock-based compensation — — — — — — 371,190 — — 371,190

Other comprehensive loss, net of tax — — — — — — — ( 3,287 ) — ( 3,287 )

Net loss — — — — — — — — ( 328,352 ) ( 328,352 )

Balance as of January 31, 2023 — $ — 474,160 $ 5 82,453 $ 1 $ 3,736,838 $ 7,612 $ ( 1,824,298 ) $ 1,920,158

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

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Reversal of deferred contract acquisition costs and accrued sales commissions, net — — ( 9,229 )

Net amortization of premium on marketable securities 1,954 263 —

Impairment charges on assets — — 1,026

Net amortization on marketable securities ( 1,782 ) 1,954 263

Abandonment and impairment charges 2,881 — —

Stock-based compensation expense 369,840 515,583 86,167

Charitable donation of Class A common stock 5,499 — —

Amortization of operating lease right-of-use assets 11,675 8,875 7,266

Deferred income taxes ( 5,832 ) ( 7,587 ) ( 1,324 )

Other non-cash charges, net (1) 1,983 1,019 928

Provision for deferred income taxes 861 ( 5,832 ) ( 7,587 )

Other non-cash (credits) charges, net ( 2,465 ) 1,983 1,019

Changes in operating assets and liabilities:

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Accrued expenses and other liabilities ( 14,954 ) 45,729 6,122

Accrued compensation and benefits 24,038 49,924 17,735

Accrued compensation and employee benefits 15,086 24,038 49,924

Operating lease liabilities, net ( 3,307 ) ( 9,064 ) ( 8,080 )

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Capitalized software development costs — ( 2,950 ) ( 1,240 )

Purchases of intangible assets ( 1,231 ) — —

Purchases of investments ( 1,500 ) — —

Other investing, net (1) 1,197 ( 2,731 ) —

Net cash used in investing activities ( 289,143 ) ( 35,442 ) ( 125,991 )

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Payments of tax withholdings on net settlement of equity awards ( 73,095 ) ( 10,467 ) —

Net receipts of tax withholdings on sell-to-cover equity award transactions 10,432 — —

Net (payments) receipts of tax withholdings on sell-to-cover equity award transactions ( 9,480 ) 10,432 —

Proceeds from employee stock purchase plan contributions 15,011 19,040 —

Repurchase and retirement of common stock — — ( 128,843 )

Repurchase of unvested early exercised stock options ( 1,493 ) — —

Proceeds from credit agreement — — 78,587

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Payment of deferred loan costs related to senior secured credit facility — — ( 808 )

Net cash provided by financing activities 1,469,673 250,418 457,765

Net cash (used in) provided by financing activities ( 60,669 ) 1,469,673 250,418

Effect of exchange rate changes ( 6,811 ) 18,265 ( 16,545 )

Net increase in cash, cash equivalents and restricted cash 1,397,533 137,059 62,013

Net (decrease) increase in cash, cash equivalents, and restricted cash ( 366,604 ) 1,397,533 137,059

Cash, cash equivalents, and restricted cash at beginning of period 1,768,723 371,190 234,131

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Stock-based compensation capitalized for software development $ — $ 4,487 $ 261

Value of shares issued in payment of business acquisition $ 30,467 $ — $ —

Deferred payments related to business acquisitions $ — $ — $ 18,591

Value of shares issued in payment of business acquisitions 2,965 30,467 —

Deferred consideration related to business acquisitions 11,433 — —

Reduction in accrued expenses and other liabilities for vesting of early exercised stock options 1,357 3,017 1,762

Tax withholdings on net settlement of restricted stock units, accrued and unpaid $ 270 $ — $ —

Tax withholdings on net settlement of restricted stock units, accrued but not yet paid 2,213 270 —

Property and equipment included in accounts payable 1,056 1,863 —

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1 Organization and Description of Business

(the “Company,” “we,” “us,” or “our”) was incorporated in Delaware in June 2015 and is headquartered in New York.

We offer an end-to-end automation platform which provides a range of robotic process automation (“RPA”) solutions via a suite of interrelated software offerings that allow our customers to discover automation opportunities and to build, manage, run, engage, measure, and govern automations across departments within an organization.

We derive revenue primarily from the sale of:

(1) software licenses for use of our proprietary software and related maintenance and support;

(2) the right to access certain software products we host (i.e., software as a service, or "SaaS");

(3) hybrid solutions (which are comprised of three performance obligations, consisting of a term license, maintenance and support, and SaaS);

and (4) professional services.

We have legal presence in 31 countries, with our principal operations in the United States ("U.S."), Romania, and Japan.

Initial Public Offering

On April 23, 2021, we completed our initial public offering (“IPO”), in which we issued and sold 13.0 million shares of our Class A common stock at a public offering price of $ 56.00 per share, including 3.6 million shares of Class A common stock pursuant to the exercise in full of the underwriters’ option to purchase additional shares.

We received net proceeds of $ 692.4 million after deducting underwriting discounts and commissions of $ 35.6 million.

In addition, the selling stockholders, named in our final prospectus that forms a part of the Registration Statement on Form S-1 (File No.

333-254738) for the IPO filed with the Securities and Exchange Commission (“SEC”) pursuant to Rule 424(b)(4) on April 21, 2021 (the “Final Prospectus”), sold an additional 14.5 million shares, for which we did not receive any proceeds.

In connection with the IPO, all shares of convertible preferred stock then outstanding automatically converted into an aggregate of 306.3 million shares of Class A common stock.

(the “Company,” “we,” “us,” or “our”) was incorporated in Delaware in June 2015 and is headquartered in New York, New York.

Our end-to-end automation platform, the UiPath Business Automation Platform, offers a robust set of capabilities that allows our customers to discover opportunities for automation, automate using a digital workforce that seamlessly collaborates with humans, and operate a mission critical automation program at scale.

We have legal presence in 32 countries, with our principal operations in the U.S.

, Romania, and Japan.

2 Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

The consolidated financial statements have been prepared in accordance with U.S.

GAAP and include the financial statements of UiPath, Inc.

and its wholly owned subsidiaries in which we hold a controlling financial interest or of which we are the primary beneficiary.

and its subsidiaries in which we hold a controlling financial interest.

Intercompany transactions and accounts have been eliminated in consolidation.

During the third quarter of fiscal 2022, maintenance and support revenue was renamed subscription services revenue, and services and other revenue was renamed professional services and other revenue.

We believe that the new captions, which have been applied retrospectively, better reflect the composition of the revenue streams included in these line items on the consolidated statements of operations.

Our fiscal year ends on January 31.

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On July 9, 2020, we effected a three -for-one stock split of our outstanding common stock and convertible preferred stock, without any change in the par value per share.

All information related to common stock, convertible

Notes to Consolidated Financial Statements

preferred stock, equity awards, and net loss per share presented in our consolidated financial statements and the accompanying notes reflects the impact of this stock split.

All information related to common stock, convertible preferred stock, equity awards, and net loss per share presented in our consolidated financial statements and the accompanying notes reflects the impact of this stock split.

Use of Estimates

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We evaluate estimates based on historical and anticipated results, trends, and various other assumptions.

Such estimates include, but are not limited to, certain aspects of revenue recognition, estimated expected period of benefit for deferred contract acquisition costs, allowance for doubtful accounts, fair value of financial assets and liabilities including accounting for and fair value of derivatives, fair value of acquired assets and assumed liabilities, useful lives of long-lived assets, capitalized software development costs, carrying value of operating lease right-of-use (“ROU”) assets, incremental borrowing rates for operating leases, amount of stock-based compensation expense including determination of fair value of common stock prior to the IPO, timing and amount of contingencies, uncertain tax positions, and valuation allowance for deferred income taxes.

Such estimates include, but are not limited to, certain aspects of revenue recognition, estimated expected period of benefit for deferred contract acquisition costs, allowance for credit losses, fair value of financial assets and liabilities, fair value of acquired assets and assumed liabilities, useful lives of long-lived assets, capitalized software development costs, carrying value of operating lease ROU assets and operating lease liabilities, incremental borrowing rates for operating leases, amount of stock-based compensation expense including determination of fair value of common stock prior to our IPO, timing and amount of contingencies, costs related to our restructuring actions, uncertain tax positions, and valuation allowance for deferred income taxes.

Actual results could differ from these estimates and assumptions.

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dollars using period-end exchange rates, while revenue and expenses are translated using the average monthly exchange rates.

Differences are included in stockholders’ equity (deficit) as a component of accumulated other comprehensive income (loss).

Financial assets and liabilities denominated in currencies other than the functional currency are recorded at the exchange rate at the time of the transaction and subsequent gains and losses related to changes in the foreign currency are included in other (expense) income, net in the consolidated statements of operations.

For fiscal years 2022, 2021 and 2020, we recognized transaction (losses) gains of $( 17.2 ) million, $ 22.4 million, and $( 6.5 ) million, respectively, excluding the impact of foreign currency forward contracts, which are discussed below.

Differences are included in stockholders’ equity as a component of accumulated other comprehensive income.

Financial assets and liabilities denominated in currencies other than the functional currency are recorded at the exchange rate at the time of the transaction and subsequent gains and losses related to changes in the foreign currency are included in other income (expense), net in the consolidated statements of operations.

For fiscal years 2023, 2022 and 2021, we

Notes to Consolidated Financial Statements

recognized transaction (losses) gains of $( 0.5 ) million, $( 17.2 ) million, and $ 22.4 million, respectively, excluding the impact of foreign currency forward contracts, which are discussed below.

Derivative Financial Instruments

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We account for our derivative instruments as either assets or liabilities and carry them at fair value.

These foreign currency contracts are not designated and do not qualify as hedging instruments, as defined by Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging .

These foreign currency contracts are not designated and do not qualify as hedging instruments, as defined by ASC 815, Derivatives and Hedging .

Our foreign currency forward contract was terminated on January 28, 2022.

As of January 31, 2022 and 2021, derivative financial instruments with a fair value totaling zero and $ 0.6 million were recorded in accrued expenses and other current liabilities in the consolidated balance sheets.

We record changes in the fair value of these derivatives as a component of other (expense) income, net in the consolidated statements of operations.

The notional amount of foreign currency forward contracts outstanding was zero and $ 138.6 million as of January 31, 2022 and 2021, respectively.

Net gains (losses) associated with foreign currency forward contracts were $ 8.3 million and $( 4.0 ) million for the fiscal years ended January 31, 2022 and 2021, respectively.

We did not have foreign currency forward contracts during fiscal year 2023.

We record changes in the fair value of these derivatives as a component of other income (expense), net in the consolidated statements of operations.

Net gains (losses) associated with foreign currency forward contracts were zero , $ 8.3 million and $( 4.0 ) million for fiscal years 2023, 2022 and 2021, respectively.

Concentration of Risks

Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents, marketable securities and accounts receivable.

We maintain our cash balance at financial institutions that management believes are high-credit, quality financial institutions, where deposits, at times, exceed the Federal Deposit Insurance Corporation (“FDIC”) limits.

As of January 31, 2022 and 2021, 96 % and 92 % of our cash, cash equivalents, and restricted cash were concentrated in the United States, European Union ("EU") countries, and Japan, respectively.

We extend differing levels of credit to customers based on creditworthiness, do not require collateral deposits, and when necessary maintain reserves for potential credit losses based upon the expected collectability of accounts

Notes to Consolidated Financial Statements

We maintain our cash balance at financial institutions that management believes are high-credit, quality financial institutions, where deposits exceed the FDIC limits.

As of January 31, 2023 and 2022, 98 % and 96 % of our cash and cash equivalents were concentrated in the U.

, EU countries, and Japan, respectively.

We manage credit risk related to our customers by performing periodic evaluations of creditworthiness and applying other credit risk monitoring procedures.

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We determine fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market.

When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

When considering market participant assumptions in fair value measurements, the fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

Level 1—Quoted prices in active markets for identical assets or liabilities that we can access at the measurement date.

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Financial instruments consist of cash equivalents, marketable securities, accounts receivable, derivative financial instruments, and accounts payable.

Marketable securities and derivative instruments are recorded at fair value.

Marketable securities and derivative instruments are recorded at fair

Notes to Consolidated Financial Statements

Cash equivalents, accounts receivable and accounts payable are recorded at their carrying value, which approximates fair value due to the short time to the expected receipt or payment date.

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We consider all highly liquid investments purchased with original maturity dates of three months or less to be cash equivalents.

Restricted Cash

Restricted cash represents cash on deposit for forward agreements and cash collateral for credit cards.

Marketable Securities

Our marketable securities consist of corporate bonds, municipal bonds, and commercial paper with original maturity dates of more than three months from the date of purchase.

Our marketable securities consist of corporate bonds, municipal bonds, agency bonds, treasury bills and commercial paper with original maturity dates of more than three months from the date of purchase.

We determine the appropriate classification of our marketable securities at the time of purchase and reevaluate such designation at each balance sheet date.

We have classified and accounted for our marketable securities as available-for-sale securities as we may sell these securities at any time for use in our current operations or for other purposes, even prior to maturity.

We classify our marketable securities as current or non-current assets in the consolidated balance sheets based on their stated maturity dates.

Notes to Consolidated Financial Statements

We have classified and accounted for our marketable securities as available-for-sale securities based on our intentions with regard to these instruments and we classify them as current or non-current assets in the consolidated balance sheets based on their stated maturity dates.

The fair value of available-for-sale marketable securities is remeasured each reporting period.

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Interest income is recognized when earned.

Unrealized gains and losses on marketable securities are reported as a separate component of accumulated other comprehensive income (loss) on the consolidated balance sheets until realized.

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

We periodically evaluate our marketable securities to assess whether those in unrealized loss positions are other-than-temporarily impaired.

Our assessment considers various factors, including the duration and extent to which the fair value has been less than the carrying value and our intent and ability to retain the marketable securities for a period of time sufficient to allow for any anticipated recovery in fair value.

If we determine that the decline in an investment’s fair value is other-than-temporary, the difference is recognized as an impairment loss in the consolidated statements of operations.

As of January 31, 2022, we have not recorded any other-than-temporary impairment charges related to our available-for-sale marketable securities.

Accounts Receivable, Net

Unrealized gains and losses on marketable securities are reported as a separate component of accumulated other comprehensive income on the consolidated balance sheets until realized.

We evaluate an available-for-sale debt security for impairment if the estimated fair value is below its amortized cost basis.

We consider our intent to sell the security or whether it is more likely than not that we will be required to sell the security before recovery of its amortized basis.

If either of these conditions exist, the debt security’s amortized cost basis is written down to fair value, with the change recognized in other income (expense), net in the consolidated statements of operations.

If neither of these conditions are present, we evaluate whether unrealized losses have resulted from a credit loss or other factors.

To determine whether a decline in value is related to credit loss, we evaluate, among other factors, the extent to which the fair value is less than the amortized cost basis and any adverse conditions specifically related to an issuer of a security or its industry.

Credit related unrealized losses are recognized as an allowance on the consolidated balance sheets with a corresponding charge to other income (expense), net in the consolidated statements of operations.

As of January 31, 2023, we have not recorded any allowance for credit losses related to our available-for-sale marketable securities.

Accounts Receivable and Allowance for Credit Losses

Accounts receivable consist of amounts billed and currently due from customers, which are subject to collection risk.

Our accounts receivable are reduced by an allowance for doubtful accounts.

Our accounts receivable are reduced by an allowance for credit losses.

This allowance contemplates estimated losses resulting from the inability of our customers to make required payments.

It is an estimate and is regularly evaluated for adequacy by taking into consideration a combination of factors such as past collection experience, credit quality of the customer, age of the receivable balance, and current economic conditions.

It is an estimate and is regularly evaluated for adequacy by taking into consideration a combination of factors such as historical write-off experience, credit quality of the customer, age of the receivable balance, current economic conditions and forecasts of future economic conditions, and projections of future collections.

We write off accounts receivable when they are determined to be uncollectible.

We have not experienced significant credit losses from accounts receivable.

The allowance for doubtful accounts was $ 2.6 million and $ 2.9 million as of January 31, 2022 and 2021, respectively.

Bad debt expense was $ 0.7 million, $ 2.2 million, and $ 0.9 million for fiscal years 2022, 2021, and 2020, respectively.

The allowance for credit losses was $ 2.7 million and $ 2.6 million as of January 31, 2023 and 2022, respectively.

Credit loss expense was $ 1.2 million, $ 0.7 million, and $ 2.2 million for fiscal years 2023, 2022, and 2021, respectively.

Notes to Consolidated Financial Statements

Property and Equipment, Net

Property and equipment are recorded at historical cost, less accumulated depreciation and amortization.

Property and equipment are recorded at historical cost, less accumulated depreciation.

Property and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets.

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Furniture and fixtures 2 to 9 years

Leasehold improvements Shorter of remaining lease term

or estimated useful life ( 1 to 7 years)

Leasehold improvements Shorter of remaining lease term or estimated useful life

( 1 to 15 years)

Internal-Use Software

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We evaluate our long-lived assets, including these capitalized costs, for indicators of possible impairment when events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable.

Costs incurred to develop our SaaS products are capitalized and amortized on a straight-line basis over the product’s estimated useful life of five years and are included in cost of subscription services revenue on the consolidated statements of operations.

Beginning in the fourth quarter of fiscal 2022, we began to broadly market on-premises versions of certain of our SaaS products, thereby establishing a pattern of marketing internal-use software and a rebuttable presumption that we intend to market any SaaS products we develop.

As a result, our ongoing and future SaaS projects must be accounted for under ASC 985-20, Costs of Software to be Sold, Leased or Marketed, which is discussed below under "Software Development Costs."

Costs previously capitalized under ASC 350-40 in connection with development of our SaaS products are amortized on a straight-line basis over the product’s estimated useful life of five years and are included in cost of subscription services revenue on the consolidated statements of operations.

Capitalized costs include salaries, benefits, and stock-based compensation charges for employees that are directly involved in developing our SaaS products.

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Gross capitalized internal-use software development costs were $ 7.5 million and $ 10.1 million as of January 31, 2023 and 2022, respectively.

Notes to Consolidated Financial Statements

expenses were $ 1.2 million, $ 0.5 million, and zero for fiscal years 2022, 2021, and 2020, respectively.

Amortization expense was $ 1.3 million, $ 1.2 million, and $ 0.5 million for fiscal years 2023, 2022, and 2021, respectively.

Accumulated amortization was $ 3.0 million and $ 1.7 million as of January 31, 2023 and 2022, respectively.

Beginning in the fourth quarter of fiscal 2022, we began to broadly market on-premises versions of certain of our SaaS products, thereby establishing a pattern of deciding to market internal-use software and a rebuttable presumption that we intend to market any SaaS products we develop.

Capitalized costs related to the implementation of cloud computing arrangements that are service contracts are amortized on a straight-line basis over the terms of the associated hosting arrangements and are recorded under operating expenses in the same line item on the consolidated statements of operations as the associated hosting arrangement fees.

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We account for costs incurred to develop software to be licensed in accordance with ASC 985-20, Costs of Software to be Sold, Leased or Marketed .

These costs include internal development costs and license fees paid to third parties for their software that is integrated into our products.

Beginning in the fourth quarter of fiscal year 2022, we also account for costs incurred to develop our SaaS products in accordance with ASC 985-20.

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Technological feasibility is established when the working model is complete.

Costs incurred subsequent to establishing technological feasibility are capitalized until the product is available for general release to customers, at which point they are amortized on a product-by-product basis.

Costs incurred subsequent to establishing

Notes to Consolidated Financial Statements

technological feasibility are capitalized until the product is available for general release to customers, at which point they are amortized on a product-by-product basis.

Management evaluates the useful life of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact their recoverability.

Our internal development costs are amortized over the estimated useful life of the software, which is five years , on a straight-line basis, and are included in cost of licenses revenue or cost of subscription services revenue in the consolidated statements of operations based on the nature of the underlying product.

Capitalized costs include salaries, benefits, and stock-based compensation charges for employees that are directly involved in developing our products.

Capitalized costs are included in other assets, non-current on the consolidated balance sheets.

These costs are amortized over the estimated useful life of the software, which is five years , on a straight-line basis, and are included in cost of licenses revenue or cost of subscription services revenue in the consolidated statements of operations based on the nature of the the underlying product.

Management evaluates the useful life of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

Gross capitalized software development costs were $ 4.3 million and $ 2.9 million as of January 31, 2022 and 2021, respectively, and amortization expense was $ 0.7 million, $ 0.5 million, and $ 0.2 million for fiscal years 2022, 2021 and 2020, respectively.

Gross capitalized software development costs were $ 4.3 million as of both January 31, 2023 and 2022, and amortization expense was $ 0.9 million, $ 0.7 million, and $ 0.5 million for fiscal years 2023, 2022 and 2021, respectively.

Accumulated amortization was $ 2.1 million and $ 1.2 million as of January 31, 2023 and 2022, respectively.

Capitalized license fees paid to third parties are amortized over the license term at the greater of a straight-line or a consumption basis and are included in cost of licenses revenue or cost of subscription services revenue in the consolidated statements of operations based on the nature of the underlying third-party product.

Capitalized costs are included in other assets, non-current on the consolidated balance sheets.

Gross capitalized license fees were $ 22.4 million and $ 16.3 million as of January 31, 2023 and 2022, respectively, and amortization expense was $ 7.3 million, $ 7.5 million, and $ 4.1 million for fiscal years 2023, 2022 and 2021, respectively.

Accumulated amortization was $ 17.6 million and $ 10.3 million as of January 31, 2023 and 2022, respectively.

We determine if an arrangement contains a lease at inception based on whether there is an identified asset and whether we control the use of the identified asset throughout the period of use.

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Options to renew or terminate the lease are recognized as part of our operating lease ROU assets and operating lease liabilities when it is reasonably certain the options will be exercised.

Notes to Consolidated Financial Statements

We do not allocate consideration between lease and non-lease components, such as maintenance costs, as we have elected to not separate lease and non-lease components for any leases within our existing classes of assets.

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Assets acquired and liabilities assumed in a business combination are recorded at their respective fair values at the date of the acquisition.

Determination of the fair value of assets acquired and liabilities assumed relies on management judgments and often involves the use of estimates and assumptions, including but not limited to assumptions about future cash inflows and outflows, discount rates, and lives of intangible and other assets.

Determination of the fair value of assets acquired and liabilities assumed relies on

Notes to Consolidated Financial Statements

management judgments and often involves the use of estimates and assumptions, including but not limited to assumptions about future cash inflows and outflows, discount rates, and lives of intangible and other assets.

Any excess of the purchase price over the fair value of the net assets acquired is recognized as goodwill.

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If the carrying amount of an asset or asset group exceeds the related undiscounted cash flows, it is considered to be impaired and an impairment charge is recognized for the amount by which the carrying value of the asset or asset group exceeds its fair value.

There were no events or changes in circumstances during fiscal years 2022 and 2021 which indicated possible impairment of our long-lived assets.

There were no events or changes in circumstances during fiscal years 2023 and 2022 which indicated potential impairment of our long-lived assets.

During fiscal year 2020, we concluded that the carrying values of long-lived assets related to our Houston office, including operating lease ROU assets, leasehold improvements, and furniture and fixtures, exceeded their estimated fair values as the result of a restructuring plan.

See Note 11 , Commitments and Contingencies —Workforce Restructuring, for further details on our workforce restructuring.

Notes to Consolidated Financial Statements

Deferred Offering Costs

Deferred offering costs consist primarily of accounting, legal, and other fees related to our IPO.

As of January 31, 2021, $ 1.5 million of deferred offering costs were capitalized within other assets, non-current in the consolidated balance sheets.

Upon consummation of the IPO, $ 4.5 million of deferred offering costs were reclassified into stockholders’ equity as an offset to IPO proceeds.

Deferred offering costs were paid in full as of the end of the second fiscal quarter of 2022.

Revenue Recognition

We derive revenue from the sale of:

(1) software licenses for use of our proprietary software and related maintenance and support;

(2) the right to access certain software products we host (i.e., SaaS);

and (3) professional services.

For certain of our products that are available both on-premise and via SaaS, we sell a single offering that allows customers the choice of either deployment option throughout the term of contract.

These Flex Offerings are comprised of three types of performance obligations:

term license, maintenance and support, and SaaS.

In accordance with ASC 606, Revenue from Contracts with Customers , revenue is recognized when or as a customer obtains control of the promised goods and services.

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Determination of the transaction price;

Notes to Consolidated Financial Statements

Allocation of the transaction price to the performance obligations in the contract;

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Our significant performance obligations and our application of ASC 606 to each of those performance obligations are discussed in further detail below.

We primarily sell term licenses (including the term license portion of hybrid offerings), which provide customers the right to use software for a specified period of time (i.e.

on a subscription basis), and perpetual licenses, which provide customers the right to use software for an indefinite period of time.

For both types of licenses, revenue is recognized at the point in time at which the customer is able to use and benefit from the software, which is generally upon delivery to the customer or upon commencement of the renewal term.

Payment terms and conditions vary by contract type, although terms generally require payment within 30 to 60 days of the invoice date.

In certain arrangements, we receive payment from a customer either before or after the performance obligation has been satisfied;

however, our contracts do not contain a significant financing component.

The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to receive financing from our customers or to provide customers with financing.

We apply the practical expedient in ASC 606 and do not evaluate payment terms of one year or less for the existence of a significant financing component.

Revenue is recorded net of sales tax.

We generally do not offer a right of refund in our contracts.

We primarily sell term licenses (including the term license portion of Flex Offerings), which provide customers the right to use software for a specified period of time.

Revenue for licenses is recognized at the point in time at which the customer is able to use and benefit from the software, which is generally upon delivery to the customer or upon commencement of the renewal term.

For licenses revenue, we generally invoice when the license(s) are provided or annually at contract anniversary.

Subscription Services

We generate subscription services revenue through the provision of maintenance and support services, which include technical support and unspecified updates and upgrades on a when-and-if-available basis for both term and perpetual license arrangements.

Maintenance and support for perpetual licenses is renewable, generally on an annual basis, at the option of the customer.

Maintenance and support services represent stand-ready obligations for which revenue is recognized ratably over the term of the arrangements.

For maintenance and support, we generally invoice when the associated license(s) are provided and upon renewals.

Subscription services revenue also includes revenue from our SaaS products, including those sold as a component of our hybrid offerings, for which customers do not have the contractual right to take possession of the underlying software without significant penalty, or for which it is not feasible for the customer to run the software on their own hardware or contract with a third party to host the software.

SaaS products are stand-ready obligations to provide access to our products, and the related revenue is recognized on a ratable basis over the contractual period of the arrangement, as control of the services is transferred to the customer.

We generate subscription services revenue through the provision of:

(1) maintenance and support, which include technical support and unspecified updates and upgrades on a when-and-if-available basis for our licenses, and (2) SaaS products, including those sold as part of our Flex Offerings.

Maintenance and support represent stand-ready obligations for which revenue is recognized ratably over the term of the arrangements.

For maintenance and support, we generally invoice when the associated license(s) are provided or annually at contract anniversary.

Customers do not have the contractual right to take possession of the software underlying our SaaS products.

Therefore, SaaS products are stand-ready obligations to provide access to our products, and the related revenue is recognized ratably over the contractual term of the arrangement, as control of the services is transferred to the customer.

We generally invoice for our SaaS products when the customer is provided access and may begin using the SaaS products or annually at contract anniversary.

Notes to Consolidated Financial Statements

Professional Services and Other

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Our professional services contracts are structured on a time and materials or fixed price basis, and the related revenue is recognized as the services are rendered.

We use a cost-based input method as the measure of progress toward satisfying the performance obligation.

For professional services, we invoice as the services are provided or in advance.

Material Rights

Contracts with customers may include material rights, which are also performance obligations.

Material rights primarily arise when the contract gives the customer the right to renew or to receive products or services at a greater discount in the future.

The revenue associated with material rights is recognized at the earlier of the time of exercise or expiration of the customer’s rights.

Contracts with Multiple Performance Obligations

Most of our contracts with customers contain multiple performance obligations.

The transaction price is allocated to the separate performance obligations on a relative standalone selling price ("SSP") basis.

When possible, we determine SSP by reference to observable prices of our products and services in standalone sales.

When we do not have such observable prices, we maximize the use of observable inputs when estimating the SSP;

such observable inputs include historical contract pricing, list prices, and industry pricing data available to the public.

Our SSP reflects the amount we would charge for each performance obligation if it were sold separately in a standalone sale to similar customers in similar circumstances in similar geographies.

The transaction price is allocated to the separate performance obligations on a relative SSP basis.

Whenever possible, we allocate the transaction price based on observable SSP, which is the price of the same good or service in standalone sales to similar customers in similar circumstances.

If observable SSP is not available, we estimate the SSP using data that may include historical prices, discounting practices, list prices, cost data, and other observable inputs.

Our SSP reflects the amount we would charge for each performance obligation if it were sold separately in standalone sales to similar customers in similar circumstances in similar geographies.

Notes to Consolidated Financial Statements

Consideration Payable to Customers

From time to time, we enter into arrangements wherein we sell our products and services to a customer or partner while also having made commitments to purchase products or services from that customer or partner or make investments to enable that customer or partner to create or enhance their RPA practice.

These commitments are treated as consideration payable to a customer, and therefore as a reduction to the transaction price, when it is determined that the payment is not in exchange for a distinct good or service that is priced at fair market value.

Modifications

We may modify contracts to offer customers additional products or services.

The additional products and services will generally be considered distinct from those products or services transferred to the customer before the modification.

We frequently modify contracts to offer customers additional products or services.

The additional products and services are generally determined to be distinct from those products or services transferred to the customer before the modification.

We evaluate whether the price for the additional products and services reflects the SSP in order to determine the appropriate modification model to apply.

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If the price does not reflect SSP, we account for the modification as the termination of the existing contract and the creation of a new contract.

Payment terms and conditions vary by contract type, although terms generally require payment within 30 to 60 days of the invoice date.

In certain arrangements, we receive payment from a customer either before or after the performance obligation has been satisfied;

however, our contracts do not contain a significant financing component.

We apply the practical expedient in ASC 606 and do not evaluate payment terms of one year or less for the existence of a significant financing component.

Revenue is recorded net of sales tax.

We generally do not offer a right of refund in our contracts.

Contract Balances

Contract assets consist of unbilled accounts receivable related to goods or services that have been transferred to customers but whose payment is contingent upon a future event.

Contract assets consist of unbilled accounts receivable related to goods or services that have been transferred to customers but whose payment is contingent upon future performance.

Contract liabilities consist of deferred revenue.

Revenue is deferred when we invoice in advance of performance under a contract.

Often, certain performance obligations under a contract will be in a contract asset position while other performance obligations under the same contract are in a contract liability position.

Contract assets and liabilities pertaining to the same contract are netted in the consolidated balance sheets.

Deferred Contract Acquisition Costs

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would not have occurred absent the customer contract).

Notes to Consolidated Financial Statements

Under our current sales compensation plan, commissions for renewals of subscription contracts are not commensurate with the commissions paid on the initial contract.

We allocate deferred contract acquisition costs to performance obligations in proportion to the transaction price allocated to each performance obligation and amortize the costs accordingly.

Commissions allocated to licenses and license renewals are expensed at the time the corresponding licenses revenue is recognized.

Commissions allocated to subscription services are capitalized and amortized on a straight-line basis over a period of five years for initial contracts, reflecting our estimate of the expected period that we will benefit from those commissions.

We determine the period of benefit by taking into consideration the length of our customer contracts, retention rate, the technology lifecycle, and other factors.

Commissions paid on renewal contracts that are allocated to subscription services are capitalized and amortized over the renewal term.

We apply the practical expedient in ASC 340-40, Other Assets and Deferred Costs to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less.

We allocate the cost of commissions in proportion to the allocation of transaction price of license and maintenance performance obligations, including assumed renewals.

Commissions allocated to the license and license renewal components are expensed at the time the license revenue is recognized.

Commissions allocated to maintenance are capitalized and amortized on a straight-line basis over a period of five years for initial contracts, reflecting our estimate of the expected period that we will benefit from those commissions.

Commissions paid on renewal contracts that are allocated to maintenance are capitalized and amortized over the renewal term.

We periodically review deferred contract acquisition costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit.

There were no impairment losses recorded for fiscal years 2022, 2021, and 2020, respectively.

At the end of fiscal year 2021, we approved a new sales incentive plan for fiscal year 2022, under which sales commissions for renewal of a subscription contract are not commensurate with the commissions paid on the initial contract.

Under the new sales incentive plan, we defer incremental commissions related to initial contracts and amortize such costs over the expected period of benefit, which we determined to be five years .

We determined the period of benefit by taking into consideration the length of our customer contracts, retention rate, the technology lifecycle, and other factors.

This change was accounted for as a change in accounting estimate, the impact of which was $ 9.2 million, resulting from the reversal of accrued sales commission of $ 14.6 million partially offset by the reversal of deferred contract acquisition cost of $ 5.4 million.

During fiscal years 2021 and 2020, sales commissions for renewal of a subscription contract were commensurate with the sales commissions paid for the acquisition of the initial subscription contract because there was minimal to no difference in sales commission rates between new and renewal contracts.

There were no impairment losses recorded for fiscal years 2023, 2022, and 2021.

During fiscal year 2021, sales commissions for renewal of a subscription contract were commensurate with the sales commissions paid for the acquisition of the initial subscription contract because there was minimal to no difference in sales commission rates between new and renewal contracts.

Sales commissions paid upon the initial acquisition of a contract were amortized over the contract term, while sales commissions paid related to renewal contracts were amortized over the renewal term.

The change to the sales compensation plan for fiscal 2022 was accounted for as a change in accounting estimate, of which the impact to fiscal year 2021 was $ 9.2 million, resulting

Notes to Consolidated Financial Statements

from the reversal of accrued sales commission of $ 14.6 million partially offset by the reversal of deferred contract acquisition cost of $ 5.4 million.

Cost of Revenue

Cost of licenses revenue consists of all direct costs to deliver our licenses to customers, amortization of software development costs related to our licenses, direct costs related to third-party software resales, and amortization of acquired developed technology.

Cost of licenses revenue consists of all direct costs to deliver our licenses to customers, amortization of software development costs related to our licenses, and amortization of acquired developed technology.

Subscription Services

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Cost of professional services and other revenue also includes third-party consulting services and allocated overhead.

Overhead is allocated to cost of professional services and other revenue based on applicable headcount.

We recognize these expenses as they are incurred.

Notes to Consolidated Financial Statements

Sales and Marketing

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Research and Development

Research and development expenses consist primarily of personnel-related expenses, including salaries and bonuses, stock-based compensation expense, and employee benefits costs, for our research and development employees.

Research and development expenditures are expensed as incurred.

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The fair value of each stock option is determined using the Black-Scholes pricing model.

The fair value of each restricted stock unit (“RSU”) and restricted stock award (“RSA”) is determined based on the fair value of our Class A common stock on the grant date.

The fair value of employee stock purchase plan awards is determined using the Black-Scholes pricing model.

The fair value of each RSU and RSA is determined based on the fair value of our Class A common stock on the grant date.

The fair value of ESPP awards is determined using the Black-Scholes pricing model.

Notes to Consolidated Financial Statements

Stock-based compensation expense is included in cost of revenue and operating expenses within our consolidated statements of operations based on the expense classification of the individual earning the award.

The fair value of awards with only service-based vesting conditions is recognized as expense over the requisite service period on a straight-line basis.

The fair value of awards that contain both service-based and performance-based vesting conditions, such as RSUs that were granted under the UiPath, Inc.

2018 Stock Plan (the “2018 Plan”) before our IPO, are recognized as expense using the accelerated attribution method once it is probable that the performance condition will be met.

The fair value of employee stock purchase plan awards is recognized over the relevant offering period on a straight-line basis.

The fair value of awards that contain both service-based and performance-based vesting conditions, such as RSUs that were granted under the 2018 Plan before our IPO, are expensed using the accelerated attribution method once it is probable that the performance condition will be met.

The fair value of ESPP awards is recognized over the relevant offering period on a straight-line basis.

We account for forfeitures as they occur.

Pursuant to ASC 740, Income Taxes , we account for our income taxes using the asset and liability method, whereby deferred tax assets and liabilities are recognized based on temporary differences between the bases used for financial reporting and income tax reporting purposes.

Pursuant to ASC 740, Income Taxes , we account for our income taxes using the asset and liability method, whereby DTAs and DTLs are recognized based on temporary differences between the bases used for financial reporting and income tax reporting purposes.

Deferred income taxes are provided based on the enacted tax rates and laws that will be in effect at the time such temporary differences are expected to reverse.

A valuation allowance is provided for deferred tax assets if it is more likely than not that we will not realize those tax assets through future operations.

A valuation allowance is provided for DTAs if it is more likely than not that we will not realize those tax assets through future operations.

ASC 740 prescribes a two-step approach to recognizing and measuring uncertain tax positions:

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We consider many factors when evaluating and estimating tax positions and tax benefits, which may require periodic adjustments, and which may not accurately reflect actual outcomes.

Notes to Consolidated Financial Statements

We recognize any interest and penalties related to uncertain tax positions as a component of provision for (benefit from) income taxes in the consolidated statements of operations.

Net Loss Per Share Attributable to Common Stockholders

We compute net loss per share using the two-class method.

The two-class method requires income available to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed.

We consider our convertible preferred stock and unvested awards under our equity incentive plans to be participating securities, as holders of such securities have non-forfeitable dividend rights in the event of our declaration of a dividend for shares of common stock.

These participating securities do not contractually require the holders of such shares to participate in our losses.

As such, net loss for the periods presented was not allocated to our participating securities.

Basic and diluted net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period.

Net loss is allocated between Class A and Class B common stock based on the weighted-average shares outstanding for each class.

In the case of net income, diluted net income per share would be calculated by giving effect to all potentially dilutive securities outstanding for the period using the treasury stock method or the if-converted method based on the nature of such securities.

In the case of net loss, diluted net loss per share is the same as basic net loss per share because potentially dilutive common stock equivalents are anti-dilutive when in a net loss position.

All potentially dilutive common stock equivalents, consisting of convertible preferred stock and unvested awards and unexercised options under our equity incentive plans, were anti-dilutive in fiscal years 2022, 2021, and 2020, as we were in a net loss position for these periods.

Diluted net loss per share is the same as basic net loss per share because potentially dilutive common stock equivalents are anti-dilutive when in a net loss position.

In a period of net income, diluted net income per share would be calculated by giving effect to all potentially dilutive securities outstanding for the period (including unvested RSUs and unexercised stock options under our equity incentive plans, outstanding purchase periods under our ESPP, unvested restricted stock awards and early exercised options subject to repurchase, and returnable common stock issued in connection with business acquisitions) using the treasury stock method.

For past periods in which our convertible preferred stock was outstanding, we computed net income or loss per share using the two-class method.

We considered our convertible preferred stock to be a participating security, as holders had non-forfeitable dividend rights in the event of our declaration of a dividend for shares of common stock.

Our convertible preferred stock did not contractually require holders to participate in our losses.

As such, net loss for the relevant periods presented was not allocated to our convertible preferred stock.

All potentially dilutive common stock equivalents were anti-dilutive in fiscal years 2023, 2022, and 2021, as we were in a net loss position for these periods.

Geographic Information

We operate as one segment, as our chief executive officer (“CEO”), who is our chief operating decision maker, allocates resources and assesses performance based upon financial information at the consolidated level.

We operate as one segment.

In May 2022, we adopted a Co-CEO model.

Our Co-CEOs act together as our chief operating decision makers, and allocate resources and assess performance based upon financial information at the consolidated level.

Notes to Consolidated Financial Statements

The following table presents our long-lived assets other than financial instruments, net of accumulated depreciation and amortization, by geographic region (in thousands):

As of January 31,

United States $ 155,780 $ 51,817

$ 212,727 $ 155,780

Romania 74,994 66,558

United Kingdom (1) 47,370 115

Netherlands 29,800 35,132

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Total long-lived assets $ 386,357 $ 274,126

Refer to Note 3 , Revenue Recognition for disclosure of revenue by geographical region.

(1) Prior period amounts have been expanded to conform to current period presentation

Variable Interest Entity

When we make an initial investment in or establish other variable interests in an entity, we determine whether that entity is considered a variable interest entity ("VIE"), and, if so, whether we are the primary beneficiary of that VIE.

When we make an initial investment in or establish other variable interests in an entity, we determine whether that entity is considered a VIE , and, if so, whether we are the primary beneficiary of that VIE.

The primary beneficiary of a VIE is a party that meets both of the following criteria:

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If we are not the primary beneficiary of a VIE, we account for the investment or other variable interests in that VIE in accordance with the applicable accounting guidance.

Notes to Consolidated Financial Statements

During the third quarter of fiscal 2022, we entered into an agreement whereby we have acquired a variable interest in a special purpose limited liability company (the "LLC") owned by our CEO, that owns a specific aircraft.

During the third quarter of fiscal 2022, we entered into an agreement whereby we have acquired a variable interest in a special purpose LLC owned by our Co-CEO Daniel Dines, that owns a specific aircraft.

This arrangement allows us to use the aircraft, when available, for business purposes in the course of our normal operations at rates that approximate the cost of operating the aircraft but that do not exceed current market rates.

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Recently Adopted Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

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

2020-06 simplifies accounting for convertible instruments by removing certain separation models required under current U.S.

2020-06 also removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, and it revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share for convertible instruments by using the if-converted method.

We early adopted ASU No.

2020-06 on a retrospective basis on February 1, 2021, and the adoption did not have a material impact on our consolidated financial statements.

Recently Issued Accounting Pronouncements

In October 2021, the FASB issued ASU No.

2021-08, Business Combinations (Topic 805)—Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , to amend the current accounting guidance in ASC 805 to require entities to apply ASC 606 to recognize and measure contract assets and contract liabilities acquired in a business combination.

2021-08 is effective for us beginning February 1, 2024, with early adoption permitted.

We plan to early adopt this guidance effective February 1, 2022 and do not expect the adoption to have a material impact on our consolidated financial statements.

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes , which is intended to simplify various aspects related to accounting for income taxes.

2019-12 removes certain exceptions associated with (1) intraperiod tax allocations, (2) recognition of deferred tax liabilities for equity method investments of foreign subsidiaries, and (3) the calculation of income taxes in an interim period when in a loss position within the framework of ASC 740.

2019-12 also clarifies and amends existing guidance to improve consistent application.

2019-12 will be effective for us beginning February 1, 2022, and for interim periods in fiscal years beginning February 1, 2023.

We do not expect the adoption to have a material impact on our consolidated financial statements.

In June 2016, the FASB issued ASU No.

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

Measurement of Credit Losses on Financial Instruments , to amend the current accounting guidance that requires the measurement of all expected losses to be based on historical experience, current conditions, and reasonable and supportable forecasts.

For trade receivables, contract assets, and other financial instruments, we will be required to use a forward-looking expected loss model that reflects probable losses rather than the incurred loss model for recognizing credit losses.

2016-13 will be effective for us beginning February 1, 2023.

Early adoption is permitted.

We are currently evaluating the impact of this pronouncement on our consolidated financial statements.

Measurement of Credit Losses on Financial Instruments , to amend previous accounting guidance that required the measurement of all expected losses to be based on historical experience, current conditions, and reasonable and supportable forecasts.

For trade receivables, contract assets, and other financial instruments, the new guidance requires us to use a forward-looking expected loss model that reflects probable losses, rather than the incurred loss model, for recognizing credit losses.

We adopted ASU No.

2016-13 and all subsequent amendments on a modified retrospective basis on February 1, 2022, and the adoption did not have a material impact on our consolidated financial statements.

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes , which is intended to simplify various aspects related to accounting for income taxes.

2019-12 removes certain exceptions associated with (1) intraperiod tax allocations, (2) recognition of DTLs for equity method investments of foreign subsidiaries, and (3) the calculation of income taxes in an interim period when in a loss position within the framework of ASC 740.

2019-12 also clarifies and amends existing guidance to encourage consistent application.

We adopted the applicable provisions of ASU No.

Notes to Consolidated Financial Statements

modified retrospective basis on February 1, 2022, and the adoption did not have a material impact on our consolidated financial statements.

In October 2021, the FASB issued ASU No.

We early adopted ASU No.

2021-08 on a prospective basis on February 1, 2022, and the adoption did not have a material impact on our consolidated financial statements.

3 Revenue Recognition

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Total revenue $ 1,058,581 100 % $ 892,252 100 % $ 607,643 100 %

(1) Revenue from the United States and Japan, respectively, represented 43 % and 11 %, 39 % and 14 %, and 34 % and 17 % of our total revenue for fiscal years 2022, 2021, and 2020, respectively.

(1) Revenue from the U.S.

represented 46 %, 43 % and 39 % of our total revenues for fiscal years 2023, 2022, and 2021, respectively.

(2) Revenue from Japan represented 10 %, 11 % and 14 % of our total revenues for fiscal years 2023, 2022, and 2021, respectively.

Contract Balances

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Total contract assets $ 75,783 $ 77,561

Notes to Consolidated Financial Statements

Year Ended January 31,

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Total deferred revenue $ 520,031 $ 366,020

Notes to Consolidated Financial Statements

Remaining Performance Obligations

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As of January 31, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 894.0 million , which consists of both billed consideration in the amount of $ 520.0 million and unbilled consideration in the amount of $ 374.0 million that we expect to recognize as revenue.

We expect to recognize 62 % of our remaining performance obligations as revenue in fiscal year 2023, and the remainder thereafter.

We expect to recognize 63 % of our remaining performance obligations as revenue in the next twelve months , and the remainder thereafter.

Deferred Contract Acquisition Costs

Our deferred contract acquisition costs are comprised of sales commissions that represent incremental costs to obtain customer contracts, and are determined based on sales compensation plans.

The following table represents a rollforward of our deferred contract acquisition costs (in thousands):

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Amortization of deferred contract acquisition costs ( 59,826 ) ( 39,257 )

Reversal of deferred contract acquisition costs due to change in sales incentive plan — ( 5,426 )

Translation adjustments ( 1,730 ) ( 4,005 )

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Total deferred contract acquisition costs $ 187,503 $ 130,150

Notes to Consolidated Financial Statements

4 Marketable Securities

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Commercial paper $ 62,470 $ — $ — $ 62,470

Treasury bills (1)

234,848 — ( 308 ) 234,540

Corporate bonds 46,684 — ( 198 ) 46,486

Municipal bonds 6,374 — ( 66 ) 6,308

Agency bonds 7,959 — ( 47 ) 7,912

Total marketable securities $ 358,335 $ — $ ( 619 ) $ 357,716

(1) Treasury bills with both amortized cost and estimated fair value of $ 10.0 million are included in cash and cash equivalents due to their original maturity of three months or less.

As of January 31, 2022

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Corporate bonds 91,735 — ( 303 ) 91,432

Municipal bonds 9,197 — ( 32 ) 9,165

Total marketable securities $ 116,275 $ — $ ( 335 ) $ 115,940

As of January 31, 2022, $ 19.5 million of our marketable securities had remaining contractual maturities of one year or more, and the remainder had contractual maturities of less than one year.

As of January 31, 2021 , the contractual maturities of our marketable securities were all less than one year.

Based on the available evidence, we concluded that the gross unrealized losses on the marketable securities as of January 31, 2022 and 2021 are temporary in nature.

To determine whether a decline in value is other-than temporary, we evaluate, among other factors, the duration and extent to which the fair value has been less than the carrying value and our intent and

As of January 31, 2023 and 2022, $ 2.9 million and $ 19.5 million, respectively, of our marketable securities had remaining contractual maturities of one year or more, and the remainder had contractual maturities of less than one year.

As of January 31, 2023 and 2022, $ 3.5 million and zero , respectively, of interest receivable was included in prepaid expenses and other current assets on the consolidated balance sheets.

The Company did not recognize an allowance for credit losses against interest receivable as of January 31, 2023.

Unrealized losses during the period are a result of changes in market conditions.

We do not believe that any unrealized losses are attributable to credit-related factors based on our evaluation of available evidence.

To determine whether a decline in value is related to credit loss, we evaluate, among other factors:

the extent to which the fair value is less than the amortized cost basis and any adverse conditions specifically related to an issuer of a security or its industry.

Notes to Consolidated Financial Statements

ability to retain the marketable securities for a period of time sufficient to allow for any anticipated recovery in fair value.

5 Fair Value Measurement

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Financial Assets:

Money market $ 1,056,555 $ — $ — $ 1,056,555

Money market funds $ 319,801 $ — $ — $ 319,801

Treasury bills 9,968 — — 9,968

Total cash equivalents 329,769 — — 329,769

Commercial paper — 62,470 — 62,470

Treasury bills 234,540 — — 234,540

Corporate bonds — 46,486 — 46,486

Municipal bonds — 6,308 — 6,308

Agency bonds 7,912 — — 7,912

Total marketable securities 242,452 115,264 — 357,716

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Financial Assets:

Money market $ 198,523 $ — $ — $ 198,523

Commercial paper — 19,999 — 19,999

Corporate bonds — 1,477 — 1,477

Money market funds $ 1,056,555 $ — $ — $ 1,056,555

Total cash equivalents 1,056,555 — — 1,056,555

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Corporate bonds — 91,432 — 91,432

Municipal bonds — 9,165 — 9,165

Total marketable securities — 115,940 — 115,940

Total $ 1,056,555 $ 115,940 $ — $ 1,172,495

Financial Liabilities:

Foreign currency derivative $ — $ 571 $ — $ 571

Total $ — $ 571 $ — $ 571

Our cash equivalents are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets.

We classify commercial paper, corporate bonds, and municipal bonds within Level 2 because they are valued using inputs other than quoted prices which are directly or indirectly observable in the market, including readily-available pricing sources for the identical underlying security which may not be actively traded.

Our derivative financial instruments consist of foreign currency forward contracts and are carried at fair value based on significant observable inputs.

As such, they are classified within Level 2 of the fair value hierarchy.

Our money market funds, treasury bills and agency bonds are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets.

We classify commercial paper, corporate bonds, and municipal bonds as Level 2 because they are valued using inputs other than quoted prices which are directly or indirectly observable in the market, including readily-available pricing sources for the identical underlying security which may not be actively traded.

None of our financial instruments were classified as Level 3 as of January 31, 2023 and 2022.

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Fiscal Year 2023 Acquisitions

Cloud Elements

On March 19, 2021, we acquired all of the outstanding capital stock of Cloud Elements Inc.

(“Cloud Elements”), the provider of an API integration platform for SaaS application providers and the digital enterprise.

The acquisition of Cloud Elements brings technology and an experienced team which we believe will accelerate our technology roadmap in areas such as native integrations and system event automation triggers.

On July 29, 2022, we acquired all of the outstanding capital stock of Re:infer , a natural language processing company focused on unstructured documents and communications.

Re:infer uses machine learning technology to mine context from communication messages and transform them into actionable data.

With this acquisition, we gained technology and an experienced team which we believe will accelerate our technology roadmap, expand the breadth of our current AI-powered automation capabilities, and unlock new automation opportunities for our customers.

The Re:infer acquisition was accounted for as a business combination.

Notes to Consolidated Financial Statements

The total purchase consideration for the acquisition of Cloud Elements was $ 36.1 million, which consisted of the following (in thousands):

Fair value of common stock 30,467

The total purchase consideration for the acquisition of Re:infer was $ 44.6 million, consisting of the following:

Cash paid at closing $ 30,117

Fair value of Class A common stock issued at closing ( 0.2 million shares)

Loan note to be paid on first anniversary of closing (included in accrued expenses and other current liabilities) 5,863

Loan note to be paid on second anniversary of closing (included in other liabilities, non-current) 5,570

Working capital adjustment 66

Total $ 44,581

At closing, we also issued an additional 0.4 million shares of Class A common stock that will be released to sellers in equal installments on the first, second, and third anniversaries of the closing date, subject to certain employment-related clawback provisions.

The aggregate fair value of these shares totaled $ 7.6 million and will be expensed as compensation for post-acquisition services over the three years following the acquisition date.

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

March 19, 2021

Accounts receivable 743

Other assets 1,996

July 29, 2022

Net tangible assets $ 300

Intangible assets 13,100

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Total assets acquired 47,751

Total liabilities assumed ( 5,660 )

Deferred tax liabilities assumed ( 3,170 )

Total $ 44,581

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Customer relationships 3,100 3.0

Trade name 100 3.0

Total $ 13,100

The acquisition of Cloud Elements generated $ 27.7 million in goodwill due to the synergies expected and the skilled workforce acquired.

The acquisition of Re:infer generated goodwill of $ 34.4 million representing expected synergies and acquired skilled workforce.

None of this goodwill is deductible for tax purposes.

We incurred transaction costs in connection with the Cloud Elements acquisition of $ 1.1 million.

Of these transaction costs, $ 0.9 million was included in general and administrative expenses in the consolidated statement of operations for fiscal year 2022, and the remainder was recognized in fiscal year 2021.

During fiscal year 2023, we incurred transaction costs in connection with the Re:infer acquisition of $ 1.1 million, which are included in general and administrative expenses in the consolidated statements of operations.

Fiscal Year 2022 Acquisitions

On May 22, 2019, we acquired StepShot OÜ, a leading provider of process documentation software, for $ 1.0 million in cash and $ 1.0 million in deferred consideration which was paid in May 2020.

The acquisition allows us to accelerate customers’ automation journeys by enabling them to quickly and easily record, document, and share processes as well as automate key steps in robot creation.

We recorded goodwill of $ 1.1 million, none of which is deductible for tax purposes, and the transaction costs incurred in connection with the acquisition were immaterial.

On October 3, 2019, we acquired 100 % of the share capital of ProcessGold AG, a leading process mining vendor based in the Netherlands.

The total consideration was $ 35.2 million and consisted of $ 18.0 million in cash paid at closing and $ 17.2 million paid within a year thereafter.

Such amount was held back as security for potential claims under warranties and specific indemnities.

In October 2020, the final payment, adjusted for currency

Cloud Elements

On March 19, 2021, we acquired all of the outstanding capital stock of Cloud Elements , the provider of an API integration platform for SaaS application providers and the digital enterprise.

The acquisition of Cloud Elements brought technology and an experienced team which we believe accelerates our technology roadmap in areas such as native integrations and system event automation triggers.

The Cloud Elements acquisition was accounted for as a business combination.

Notes to Consolidated Financial Statements

movements, of $ 18.7 million was made.

Through this acquisition, we expect to offer customers a solution that brings together both process mining and RPA capabilities.

The following table summarizes the allocation of the purchase price (in thousands):

The total purchase consideration for the acquisition of Cloud Elements was $ 36.1 million, which consisted of the following (in thousands):

Fair value of common stock 30,467

Total $ 36,127

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

March 19, 2021

Accounts receivable 743

Other assets 1,996

Intangible assets 11,200

Goodwill 27,686

Other assets 2,286

Total assets acquired 41,787

Liabilities assumed ( 2,559 )

Total liabilities assumed ( 5,660 )

Total $ 36,127

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Customer relationships 4,500 3.0

Trade names and trademarks 66 3.0

Trade name 100 3.0

Total $ 11,200

Goodwill generated was primarily attributable to the assembled workforce and expanded market opportunities gained in this transaction.

The acquisition of Cloud Elements generated $ 27.7 million in goodwill due to the synergies expected and the skilled workforce acquired.

None of this goodwill is deductible for tax purposes.

Transaction costs associated with the acquisition were $ 0.6 million and are recorded in general and administrative expenses in the consolidated statement of operations for fiscal year 2020.

We incurred transaction costs in connection with the Cloud Elements acquisition of $ 1.1 million.

Of these transaction costs, $ 0.9 million was included in general and administrative expenses in the consolidated statement of operations for fiscal year 2022 , and the remainder was recognized in fiscal year 2021.

7 Intangible Assets and Goodwill

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Developed technology $ 28,517 $ ( 11,095 ) $ 17,422 3.5

Trade names and trademarks 274 ( 185 ) 89 1.9

Customer relationships 8,174 ( 3,601 ) 4,573 2.0

Trade names and trademarks 272 ( 233 ) 39 1.2

Other intangibles 1,231 ( 255 ) 976 7.7

Total $ 38,194 $ ( 15,184 ) $ 23,010

Notes to Consolidated Financial Statements

Intangible assets, net consisted of the following as of January 31, 2022 (dollars in thousands):

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Developed technology $ 18,627 $ ( 6,584 ) $ 12,043 3.4

Trade names and trademarks 66 ( 24 ) 42 1.8

Customer relationships 5,010 ( 1,479 ) 3,531 2.2

Trade names and trademarks 274 ( 185 ) 89 1.9

Other intangibles 1,231 ( 77 ) 1,154 8.3

Total $ 25,142 $ ( 8,325 ) $ 16,817

Notes to Consolidated Financial Statements

We record amortization expense associated with acquired developed technology in cost of licenses revenue and cost of subscription services revenue, trade names and trademarks in sales and marketing expense, customer relationships in sales and marketing expense, and other intangibles in general and administrative expense in the consolidated statements of operations.

Amortization expense of intangible assets were $ 5.1 million, $ 2.6 million and $ 0.7 million for fiscal years 2022, 2021, and 2020, respectively.

The expected future amortization expenses related to intangible assets as of January 31, 2022 were as follows (in thousands):

Amortization expense of intangible assets was $ 6.9 million , $ 5.1 million and $ 2.6 million for fiscal years 2023, 2022, and 2021, respectively.

The expected future amortization expense related to intangible assets as of January 31, 2023 was as follows (in thousands):

Year Ended January 31,

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Balance as of January 31, 2021

Acquisition of Cloud Elements 27,686

Effect of foreign currency translation ( 2,181 )

Balance as of January 31, 2022

Acquisition of Cloud Elements 27,686

Acquisition of Re:infer 34,351

Effect of foreign currency translation 95

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Our operating lease arrangements do not contain any material restrictive covenants or residual value guarantees.

On September 24, 2021, we entered into an agreement of lease for office space on the 60th floor of One Vanderbilt Avenue, New York, New York, to serve as our new corporate headquarters.

The initial term of the lease extends through March 31, 2038.

Annual rent of approximately $ 4.0 million is payable on a monthly basis beginning in March 2023, and is subject to escalation every five years thereafter.

Notes to Consolidated Financial Statements

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Sublease income (1)

( 2,129 ) ( 355 ) —

Total lease cost $ 16,859 $ 13,489 $ 16,854

(1) Included in other (expense) income, net in the consolidated statements of operations

(1) Included in other income (expense), net in the consolidated statements of operations

Supplemental balance sheet information related to leases is as follows (in thousands):

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Year Ended January 31,

2024 $ 11,950

Thereafter 48,728

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As of January 31,

Prepaid expenses $ 29,451 $ 21,302

Value-added taxes receivable 3,313 7,178

Other receivables 6,762 4,002

Supplier advances 15,890 17,270

Prepaid expenses and service credits (1) $ 67,794 $ 45,341

Other current assets (1) 26,356 10,075

Prepaid expenses and other current assets $ 94,150 $ 55,416

(1) Prior period amounts have been combined to conform to current presentation

Property and Equipment, Net

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Furniture and fixtures 6,485 4,875

Other 2,552 177

Construction in progress 2,419 2,552

Property and equipment, gross 56,976 39,243

accumulated depreciation and amortization ( 22,067 ) ( 18,064 )

accumulated depreciation ( 27,931 ) ( 22,067 )

Property and equipment, net $ 29,045 $ 17,176

Depreciation and amortization expense was $ 6.8 million, $ 8.4 million, and $ 7.6 million for fiscal years 2022, 2021, and 2020, respectively.

Depreciation expense was $ 8.6 million , $ 6.8 million, and $ 8.4 million for fiscal years 2023, 2022, and 2021, respectively.

Notes to Consolidated Financial Statements

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Operating lease liabilities, current 6,997 1,552

Deferred consideration for business acquisition, current 5,863 —

Other 14,462 9,197

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10 Credit Facility

On October 30, 2020, we entered into a Senior Secured Credit Facility (the “Credit Facility”) with HSBC Ventures USA Inc., Silicon Valley Bank, Sumitomo Mitsui Banking Corporation, and Mizuho Bank, LTD.

On October 30, 2020, we entered into the Credit Facility with HSBC Ventures USA Inc., Silicon Valley Bank, Sumitomo Mitsui Banking Corporation, and Mizuho Bank, LTD.

The Credit Facility replaced the two-year $ 100.0 million senior secured revolving credit agreement described in the Final Prospectus, which was repaid in full in July 2020.

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The Credit Facility is subject to customary fees for loan facilities of this type, including ongoing commitment fees at a rate of 0.25 % per annum on the daily amount available to be drawn.

As of January 31, 2022 and 2021, there were no amounts outstanding and we were in compliance with all covenants under the Credit Facility.

As of January 31, 2023 and 2022, there were no amounts outstanding under the Credit Facility.

11 Commitments and Contingencies

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Indemnification

In the ordinary course of business, we may provide indemnification of varying scope and terms to customers, vendors, investors, directors, and officers with respect to certain matters, including, but not limited to, losses arising out of our breach of such agreements, services to be provided by us, or from intellectual property infringement claims made by third parties.

In the ordinary course of business, we may provide indemnification of varying scope and terms to customers, vendors, directors, and officers with respect to certain matters, including, but not limited to, losses arising out of our breach of such agreements, services to be provided by us, or from intellectual property infringement claims made by third parties.

Notes to Consolidated Financial Statements

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As of January 31, 2023 and 2022, we have not accrued a liability for these indemnification arrangements because the likelihood of incurring a payment obligation, if any, in connection with these indemnification arrangements was remote.

Defined Contribution Plans

We sponsor defined contribution plans for qualifying employees, including a 401(k) plan in the United States to which we make matching contributions.

We make matching contributions of 50 % of participating employee contributions.

Our total matching contributions to our 401(k) Plan during fiscal years 2022, 2021, and 2020 were $ 8.1 million, $ 5.1 million and $ 5.5 million, respectively.

From time to time, we may be involved in lawsuits, claims, investigations, and proceedings, consisting of intellectual property, commercial, employment, and other matters, which arise in the ordinary course of business.

In accordance with ASC 450, Contingencies , we make a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

We are not presently a party to any litigation the outcome of which, we believe, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, cash flows or financial condition.

We warrant to customers that our platform will operate substantially in accordance with its specifications.

Historically, no significant costs have been incurred related to product warranties.

Based on such historical experience, the probability of incurring such costs in the future is deemed remote.

As such, no accruals for product warranty costs have been made.

Fiscal Year 2020 Workforce Restructuring

On October 24, 2019, we announced a restructuring plan focused on reducing our global workforce across all functional areas of our operations.

We implemented this restructuring plan through the end of fiscal year 2020 and incurred one-time employee and non-employee termination benefits of $ 9.9 million relating to workforce reductions.

Of these termination benefits, $ 9.3 million were paid in fiscal year 2020 and $ 0.6 million were paid in fiscal year 2021.

Workforce Restructuring

On June 24, 2022, our board of directors approved restructuring actions to manage our operating expenses by reducing our global workforce by approximately 5 %.

The workforce reduction aimed to simplify our go-to-market approach and improve sales productivity.

In connection with these workforce reductions, we also ceased use of our office in Brooklyn, NY.

On November 10, 2022, our board of directors approved further restructuring actions to reduce our global workforce across functions by an additional 6 %.

We substantially completed these actions and recognized related restructuring costs, consisting predominantly of employee termination benefits and contractual changes, during fiscal year 2023, with any remaining activities expected to be completed by the second quarter of fiscal year 2024.

We incurred $ 23.4 million of exp ense related to our restructuring actions for fiscal year 2023, of which $ 22.3 million relates to employee termination benefits and the remainder relates to lease abandonment costs.

The following table shows the total amount incurred during fiscal year 2023 and the liability, which is recorded in accrued compensation and employee benefits in the consolidated balance sheets, for restructuring-related costs as of January 31, 2023 (in thousands):

Accrued restructuring costs as of January 31, 2022 $ —

Restructuring costs incurred during fiscal year 2023

Amount paid during fiscal year 2023

Write-off of assets associated with Brooklyn office ( 218 )

Accrued restructuring costs as of January 31, 2023

The following table shows the restructuring charges incurred during fiscal year 2023 (in thousands):

January 31, 2020

Employee Termination Benefits Lease Exit Costs Total Restructuring Costs

Cost of subscription services revenue $ 76 $ 106 $ 182

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Total $ 22,266 $ 1,180 $ 23,446

Additionally, we concluded as a result of the restructuring plan that the carrying amount of our Houston office, including operating lease ROU assets, leasehold improvements, and furniture and fixtures, exceeded its estimated fair value.

We recorded an impairment loss of $ 1.0 million in general and administrative expenses in the consolidated statements of operations for fiscal year 2020.

Defined Contribution Plans

We sponsor retirement plans for qualifying employees, including a 401(k) plan in the U.S.

and defined contribution plans in certain other countries, to which we make matching contributions.

Our total matching contributions to all defined contribution plans during fiscal years 2023, 2022, and 2021 were $ 14.5 million , $ 10.4 million and $ 5.1 million, respectively.

In accordance with ASC 450, Contingencies , we make a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

Notes to Consolidated Financial Statements

financial condition.

We have determined that the existence of a material loss is neither probable nor reasonably possible.

We warrant to customers that our platform will operate substantially in accordance with its specifications.

Historically, no significant costs have been incurred related to product warranties.

Based on such historical experience, the probability of incurring such costs in the future is deemed remote.

As such, no accruals for product warranty costs have been made.

Non-Cancelable Purchase Obligations

In the normal course of business, we enter into non-cancelable purchase commitments with various parties for mainly hosting services and software products and services.

In January 2022, we made commitments to purchase cloud infrastructure services from a third-party vendor in anticipation of requiring specialized infrastructure for a future solution offering.

In the normal course of business, we enter into non-cancelable purchase commitments with various parties, mainly for hosting services and software products and services.

During fiscal year 2023, we made commitments to purchase $ 138.1 million of cloud infrastructure services from a third-party vendor and $ 82.5 million of service credits toward products and services from strategic alliance partners, which together constitute the majority of the increase in our non-cancelable purchase commitments during the fiscal year.

As of January 31, 2023, we had outstanding non-cancelable purchase obligations with a term of 12 months or longer as follows (in thousands):

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Total $ 214,654

Other Commitments

Certain executives’ employment agreements contain provisions providing for severance upon termination.

Due to the growth in the fair value of our common stock combined with the timing between when certain employees began employment with us and the date that their stock options were granted, the actual exercise price of the grants made to certain employees was higher than the price in effect at the time of their hire.

In order to compensate these individuals for the increased exercise price, we have granted long-term incentive awards consisting of cash payments equal to the difference between the exercise price in effect at the hire date of these employees and the actual granted exercise price multiplied by the number of shares of common stock subject to the stock options granted.

We have recorded $ 0.8 million and $ 0.9 million within accrued expenses and other current liabilities on the consolidated balance sheets and have additional unrecorded commitments to these employees of $ 1.6 million and $ 3.4 million as of January 31, 2022 and 2021 , respectively.

Notes to Consolidated Financial Statements

12 Convertible Preferred Stock and Stockholders' Equity (Deficit)

Convertible Preferred Stock

No convertible preferred stock was outstanding as of January 31, 2022.

No convertible preferred stock was outstanding as of January 31, 2023 and 2022.

Convertible preferred stock consisted of the following as of January 31, 2021 (in thousands except per share amounts):

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Total 297,973 294,257 $ 1,221,968 $ 1,223,936

Notes to Consolidated Financial Statements

In February 2021, we issued to certain investors approximately 12.0 million shares of Series F convertible preferred stock at a purchase price of $ 62.28 per share, for an aggregate purchase price of $ 750.0 million.

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Accordingly, the convertible preferred stock was presented outside of permanent equity in the mezzanine section of the consolidated balance sheets as of January 31, 2021.

Each share of convertible preferred stock was convertible at the option of the holder without payment of additional consideration at any time into Class A common stock at a rate determined by dividing the original issue price applicable to a series of convertible preferred stock by the conversion price applicable to such series of convertible preferred stock (the “Conversion Rate”).

Each share of convertible preferred stock was convertible at the option of the holder without payment of additional consideration at any time into Class A common stock at the relevant Conversion Rate for the series.

The initial conversion price per share for each series of convertible preferred stock was equal to the original issue price for such series (i.e., 1 :1 conversion).

Notes to Consolidated Financial Statements

Each share of convertible preferred stock was to automatically convert into shares of Class A common stock at the then applicable Conversion Rate upon the earlier to occur of (a) our sale of Class A common stock in an IPO, the price of which is at least equal to the original issue price per share for the Series D convertible preferred stock, and that results in at least $ 75 million of proceeds in the aggregate (net of underwriting discounts and commissions) (a “Qualified Public Offering”), ( b) the date specified by vote or written consent of the preferred majority, or (c) the business day immediately prior to the first trading day with respect to our initial listing of Class A common stock for trading on the Nasdaq Stock Market, the New York Stock Exchange or another exchange or marketplace approved by our board of directors.

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Each share of Class B common stock will convert automatically into Class A common stock, on a one -to-one basis, upon certain circumstances, including:

(1) the sale or transfer of such share of Class B common stock (except under certain circumstances described in the amended and restated certificate of incorporation), (2) a date fixed by the board of directors that is no less than 120 days and no more than 180 days following the date that the number of shares of Class B common stock outstanding is less than 20 % of the number of shares of Class B common stock outstanding immediately prior to the completion of the IPO, or (3) six months after the death or incapacity of Daniel Dines.

Notes to Consolidated Financial Statements

common stock outstanding immediately prior to the completion of the IPO, or (3) six months after the death or incapacity of Daniel Dines.

The Class A common stock is entitled to one vote per share and the Class B common stock is entitled to thirty-five votes per share.

We have reserved 2.8 million shares of our Class A common stock to fund our social impact and environmental, social, and governance initiatives.

Repurchase and Retirement of Common Stock

During fiscal year 2020, in connection with the closing of the sale of the Series D convertible preferred stock, we repurchased from certain employees shares of our Class A and Class B common stock at the original Series D convertible preferred stock issuance price, for an aggregate of $ 128.8 million.

This repurchase was financed by the aforementioned sale of Series D convertible preferred stock, and we recorded stock-based compensation expense for the excess of the selling price per share paid to our employees over the then-assessed fair market value of the common stock.

The repurchased shares were immediately retired.

Tender Offer Transactions

During fiscal year 2020, certain investors made a tender offer to purchase shares of Class A common stock from certain of our employees.

We recognized stock-based compensation expense of $ 48.3 million in connection with these transactions, related to the excess of the selling price per share paid to the applicable employees over the then-assessed fair market value of the purchased shares.

At IPO, we reserved 2.8 million shares of our Class A common stock to fund our social impact and environmental, social, and governance initiatives.

During fiscal year 2023 , we contributed 0.3 million shares of our Class A common stock to a donor-advised fund in connection with our Pledge 1% commitment.

The aggregate fair value of the shares on the contribution date of $ 5.5 million was recorded within general and administrative expense in the consolidated statements of operations.

Secondary Transactions

During fiscal year 2021, certain of our employees sold shares of our Class A and Class B common stock to new and existing investors.

We recognized $ 5.0 million in stock-based compensation expense as a result of these transactions related to the excess of the selling price per share paid to the applicable employees over the then-

Notes to Consolidated Financial Statements

assessed fair market value of the purchased shares.

We recognized $ 5.0 million in stock-based compensation expense as a result of these transactions related to the excess of the selling price per share paid to the applicable employees over the then-assessed fair market value of the purchased shares.

Shares of Class B common stock sold in such secondary transactions each converted into one share of our Class A common stock at closing.

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Changes in the components of accumulated other comprehensive income (loss) were as follows during the periods presented (in thousands):

Foreign Currency Translation Adjustments Unrealized Gain (Loss) on Marketable Securities Accumulated Other Comprehensive Income (Loss)

Balance as of January 31, 2020 $ 6,226 $ — $ 6,226

Other comprehensive loss, net of tax ( 18,730 ) ( 17 ) ( 18,747 )

Foreign Currency Translation Adjustments Unrealized Loss on Marketable Securities Accumulated Other Comprehensive Income (Loss)

Balance as of January 31, 2021 $ ( 12,504 ) $ ( 17 ) $ ( 12,521 )

1 unchanged sentence

Balance as of January 31, 2022 $ 11,234 $ ( 335 ) $ 10,899

Other comprehensive loss, net of tax ( 3,003 ) ( 284 ) ( 3,287 )

Balance as of January 31, 2023 $ 8,231 $ ( 619 ) $ 7,612

13 Equity Incentive Plans and Stock-Based Compensation

2021 Stock Plan

In April 2021, prior to and in connection with the IPO, we adopted our 2021 Stock Plan (the "2021 Plan"), which provides for grants of incentive stock options, nonstatutory stock options, stock appreciation rights, RSAs, RSUs, performance awards, and other forms of awards.

We have reserved 118.8 million shares of our Class A common stock to be issued under the 2021 Plan.

In April 2021, prior to and in connection with the IPO , we adopted the 2021 P lan , which provides for grants of incentive stock options, nonstatutory stock options, stock appreciation rights, RSAs , RSUs , performance awards, and other forms of awards.

As of January 31, 2023, w e have reserved 145.9 million shares of our Class A common stock to be issued under the 2021 Plan.

In addition, the number of shares of our Class A common stock reserved for issuance under the 2021 Plan will automatically increase on February 1 of each year for a period of 10 years, beginning on February 1, 2022 and continuing through February 1, 2031, in an amount equal to (1) 5 % of the total number of shares of our common stock (both Class A and Class B) outstanding on the preceding January 31, or (2) a lesser number of shares determined by our board of directors no later than the February 1 increase.

Notes to Consolidated Financial Statements

2021 Employee Stock Purchase Plan

In April 2021, prior to and in connection with the IPO, we adopted our 2021 Employee Stock Purchase Plan (the “ESPP”).

The ESPP authorizes the issuance of 10.5 million shares of our Class A common stock under purchase rights granted to our employees or to employees of any of our designated affiliates.

In April 2021, prior to and in connection with the IPO, we adopted the ESPP .

As of January 31, 2023, t he ESPP authorizes the issuance of 15.9 million shares of our Class A common stock under purchase rights granted to our employees or to employees of any of our designated affiliates.

The number of shares of our Class A common stock reserved for issuance will automatically increase on February 1 of each year for a period of 10 years, beginning on February 1, 2022 and continuing through February 1, 2031, by the lesser of (1) 1 % of the total number of shares of our common stock (both Class A and Class B) outstanding on the preceding January 31;

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The plan allows participants to purchase shares at the lesser of (a) 85 % of the fair market value our Class A common stock as of the commencement of the offering period, and (b) 85 % of the fair market value of our Class A common stock on the corresponding purchase date.

Notes to Consolidated Financial Statements

Prior Stock Plans

In June 2015, we adopted our 2015 Stock Plan (the “2015 Plan”).

In June 2015, we adopted the 2015 Plan .

The 2015 Plan was terminated in June 2018 in connection with the adoption of the 2018 Plan .

Accordingly, no shares are available for future issuances under the 2015 Plan following the adoption of the 2018 Plan.

Accordingly, no shares are available for future issuance under the 2015 Plan following the adoption of the 2018 Plan.

In June 2018, we adopted the 2018 Plan, which provided for grants of stock-based awards, including RSUs, RSAs, and stock options.

The 2018 Plan was terminated in April 2021 in connection with the adoption of the 2021 Plan.

Accordingly, no shares are available for future issuances under the 2018 Plan following the adoption of the 2021 Plan.

Accordingly, no shares are available for future issuance under the 2018 Plan following the adoption of the 2021 Plan.

Outstanding Equity Awards

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The intrinsic value of stock options exercised during fiscal years 2023, 2022, and 2021 was $ 83.6 million, $ 557.5 million, and $ 839.0 million, respectively.

During fiscal years 2022, 2021, and 2020, our compensation committee approved modifications to allow acceleration of the service-based vesting condition of certain employee stock options upon termination.

These modifications resulted in accelerated vesting of 0.2 million, 0.3 million and 0.1 million shares of Class A common stock subject to outstanding stock options, and incremental compensation expense of $ 2.9 million, $ 4.6 million, and $ 0.1 million was recognized during fiscal years 2022, 2021, and 2020, respectively.

In July 2020, we repriced 4.6 million stock options which had been issued in fiscal years 2021 and 2020 after the Series D convertible preferred stock financing closing date.

In conjunction with the modification of these stock options, we recognized incremental compensation expense of approximately $ 1.6 million.

Expense related to vested shares of $ 0.9 million was expensed on the repricing date and the remaining amount of $ 0.7 million related to unvested shares was amortized over the remaining vesting period of such options.

As of January 31, 2023, unrecognized compensation expense associated with unvested stock options granted and outstanding was $ 122.9 million, to be recognized over a weighted-average remaining period of 2.7 years.

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2023 2022 2021

Weighted-Average Range Range Range

Weighted-Average Weighted-Average Range

Expected term (years) 5.9 6.1 5.0 – 6.1

Expected volatility 60.6 % 57.2 % 60.0 % – 61.1 %

60.0 % – 61.1 %

40.0 % – 68.0 %

Risk-free interest rate 3.5 % 1.4 % 0.2 % – 0.7 %

0.2 % – 0.7 %

1.3 % – 2.9 %

Expected dividend yield 0.0 % 0.0 % 0.0 %

During fiscal years 2023, 2022, and 2021, our compensation committee approved modifications to allow acceleration of the service-based vesting condition of certain employee stock options upon termination.

These modifications, which were considered improbable-to-probable (Type 3) modifications under ASC 718, resulted in accelerated vesting of 0.3 million, 0.2 million and 0.3 million shares of Class A common stock subject to outstanding stock options, and incremental compensation expense of $ 2.8 million, $ 2.9 million, and $ 4.6 million was recognized during fiscal years 2023, 2022, and 2021, respectively.

In July 2020, we repriced 4.6 million stock options which had been issued in fiscal years 2021 and 2020 after the Series D convertible preferred stock financing closing date.

In conjunction with the modification of these stock options, we recognized incremental compensation expense of approximately $ 1.6 million.

Early Exercised Options

Certain stock option holders have the right to exercise unvested options, subject to a repurchase right held by us at the original exercise price in the event of voluntary or involuntary termination of employment of the option holders, until the options are fully vested.

As of January 31, 2022, there were 0.8 million shares underlying unvested stock options that had been early exercised.

The cash proceeds associated with these early exercises are recorded within accrued expenses and other current liabilities and other liabilities, non-current in our consolidated balance sheets, depending on the future vesting dates of the associated options.

Such accrued amounts totaled $ 2.8 million and $ 5.9 million as of January 31, 2022 and 2021, respectively.

During fiscal year 2023, we repurchased 0.4 million unvested early exercised options in the amount of $ 1.5 million.

Cash proceeds associated with early exercises are recorded within accrued expenses and other current liabilities and other liabilities, non-current in our consolidated balance sheets, depending on the future vesting dates of the associated options.

Such accrued amounts were not material and $ 2.8 million as of January 31, 2023 and 2022, respectively.

Proceeds are transferred to additional paid-in capital at the time of option vesting.

Restricted Stock Units

RSUs granted under the 2021 Plan generally vest over four years .

RSUs granted under th e 2021 Plan g enerally vest over four years .

RSUs are forfeited in case of termination of employment or service before the satisfaction of service-based vesting conditions.

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36,785 $ 22.48

The vesting date fair value of RSUs that vested during fiscal years 2022, 2021, and 2020 was $ 1.4 billion , none , and none , respectively.

Prior to the IPO, we granted RSUs under the 2018 Plan that vested on the satisfaction of both a service-based condition (generally four years ) and a performance-based condition.

(1) Class A common stock has not been issued in connection with 142 vested RSUs because such RSUs were unsettled as of January 31, 2023.

The vesting date fair value of RSUs that vested during fiscal years 2023, 2022, and 2021 was $ 228.8 million , $ 1.4 billion, and none , respectively.

Notes to Consolidated Financial Statements

Prior to the IPO, we granted RSUs under th e 2018 Plan that vested upon the satisfaction of both a service-based condition (generally four years ) and a performance-based condition.

The performance-based vesting condition was deemed satisfied on April 23, 2021, the date that our IPO was completed.

At that time, we recognized $ 233.0 million of cumulative stock-based compensation expense for the portion of these RSUs for which the service-based vesting condition had been fully or partially satisfied.

During fiscal year 2022, our compensation committee approved modifications to allow accelerated vesting of approximately 0.2 million RSUs, resulting in the recognition of $ 10.9 million of incremental expense.

As of January 31, 2023, unrecognized compensation expense associated with unvested RSUs was approximately $ 703.3 million , to be recognized over a weighted-average remaining period of 2.8 years .

During fiscal year 2023, our compensation committee approved modifications to allow accelerated vesting of approximately 0.5 million RSUs upon employee terminations.

The modifications, which were considered improbable-to-probable (Type 3) modifications under ASC 718, resulted in a net reduction of $ 7.4 million in the fair value of the modified awards due to the decrease in our stock price between the grant and modification dates.

During fiscal year 2022, our compensation committee approved modifications to allow accelerated vesting of approximately 0.2 million RSUs upon employee terminations, resulting in the recognition of $ 10.9 million of incremental expense.

In addition, during fiscal year 2022, our compensation committee approved adjustments to the vesting schedules of our unvested RSUs which standardize their future vesting schedules by shifting each vesting date to the first day of the calendar quarter in which that vesting date was originally scheduled to occur.

These adjustments caused a slight reduction in service periods for the affected tranches and resulted in $ 2.2 million of expense acceleration during fiscal year 2022.

Notes to Consolidated Financial Statements

During fiscal year 2020, our compensation committee approved a modification to allow acceleration of all vesting conditions of certain RSUs.

The modification resulted in accelerated vesting of 0.1 million RSUs, and incremental compensation expenses of $ 0.8 million was recognized during fiscal year 2020.

As of January 31, 2022, unrecognized compensation expense associated with unvested RSUs was approximately $ 777.8 million , to be recognized over a weighted-average remaining period of 3.3 years .

Restricted Stock Awards

In September 2020, we issued 0.1 million RSAs to a member of our board of directors at a grant date fair value of $ 33.22 per share, totaling $ 4.0 million.

Such RSAs vests monthly over four years from the grant date.

Such RSAs vest monthly over four years from the grant date.

The unvested shares are subject to a repurchase right held by us at the original purchase price.

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Year Ended January 31,

Expected term (years) 0.5 0.6

2 unchanged sentences

Expected dividend yield 0.0 % 0.0 %

During the fiscal year ended January 31, 2022, 0.4 million shares were purchased under the ESPP at purchase price of $ 35.24 per share.

During the fiscal year ended January 31, 2023, 1.2 million shares were purchased under the ESPP at a weighted average purchase price of $ 13.28 per share.

As of January 31, 2023, unrecognized compensation expense related to the ESPP was approximately $ 2.9 million, to be recognized over a weighted-average remaining period of 0.4 years.

Stock-Based Compensation Associated with Business Acquisition

At the closing of the acquisition of Re:infer on July 29, 2022, we issued 0.4 million shares of Class A common stock (outside of the 2021 Plan) that will be released to certain employee sellers in equal installments on the first, second, and third anniversaries of the closing date, subject to employment-related clawback provisions.

Notes to Consolidated Financial Statements

January 31, 2023, total unrecognized compensation expense related to these shares was $ 6.4 million, which is to be recognized over a weighted-average remaining period of 2.5 years.

Stock-based Compensation Expense

8 unchanged sentences

Total $ 369,840 $ 515,583 $ 86,167

The expense presented in the above table is net of capitalized stock-based compensation relating to software development costs of $ 4.5 million, $ 0.3 million, and $ 0.4 million for fiscal years 2022, 2021, and 2020, respectively.

See Note 12, Convertible Preferred Stock and Stockholders' Equity (Deficit) for further information regarding stock-based compensation expense recognized in connection with repurchase of common stock, tender offer, and secondary transactions.

Notes to Consolidated Financial Statements

The expense presented in the above table is net of capitalized stock-based compensation relating to software development costs of zero , $ 4.5 million, and $ 0.3 million for fiscal years 2023, 2022, and 2021, respectively.

See Note 12, Convertible Preferred Stock and Stockholders' Equity (Deficit) for further information regarding stock-based compensation expense recognized in connection with secondary transactions.

14 Income Taxes

and foreign components o f loss before income taxes for fiscal years 2022, 2021, and 2020 are as follows (in thousands):

and foreign components o f (loss) income before income taxes for fiscal years 2023, 2022, and 2021 are as follows (in thousands):

Year Ended January 31,

2023 2022 2021

United States $ ( 306,814 ) $ ( 105,589 ) $ ( 337,156 )

$ ( 273,467 ) $ ( 306,814 ) $ ( 105,589 )

Foreign ( 44,094 ) ( 204,069 ) 10,931

12 unchanged sentences

Foreign 861 ( 5,832 ) ( 7,587 )

Total deferred benefit $ ( 5,832 ) $ ( 7,587 ) $ ( 1,324 )

Total deferred expense (benefit) $ 861 $ ( 5,832 ) $ ( 7,587 )

Total provision for (benefit from) income taxes $ 10,791 $ 14,703 $ ( 2,265 )

Notes to Consolidated Financial Statements

The following is a reconciliation of the statutory federal income tax rate to our effective tax rate for fiscal years 2023, 2022, and 2021:

9 unchanged sentences

Effective income tax rate ( 3.4 ) % ( 2.9 ) % 2.4 %

Notes to Consolidated Financial Statements

Significant components of deferred income tax assets and liabilities as of January 31, 2022 and 2021 are as follows (in thousands):

Significant components of DTAs and DTLs as of January 31, 2023 and 2022 are as follows (in thousands):

As of January 31,

2022 2021 (1)

Deferred tax assets:

5 unchanged sentences

Foreign exchange — 4,478

Depreciation and amortization 587 —

Excessive borrowing 1,668 1,370

5 unchanged sentences

Intangible assets ( 3,312 ) ( 579 )

Foreign exchange ( 97 ) —

Depreciation and amortization — ( 1,446 )

2 unchanged sentences

Total deferred tax liabilities ( 32,654 ) ( 18,721 )

Net deferred tax asset $ 10,594 $ 5,368

Net deferred tax asset $ 10,628 $ 8,118

Net deferred tax liability (included in other liabilities, non-current) ( 34 ) ( 2,750 )

Net deferred tax asset $ 10,594 $ 5,368

(1) Prior period amounts have been reclassified to conform to current presentation

Net deferred tax assets $ 5,557 $ 10,594

Net deferred tax assets $ 5,895 $ 10,628

Net deferred tax liabilities (included in other liabilities, non-current) ( 338 ) ( 34 )

Net deferred tax assets $ 5,557 $ 10,594

We have evaluated the available positive and negative evidence supporting the realization of our U.S.

federal and state gross deferred tax assets, including cumulative losses, and the amount and timing of future taxable income, and have determined it is more likely than not that these assets will not be realized.

Accordingly, we recorded a full valuation allowance against U.S.

federal and state deferred tax assets as of January 31, 2022 and 2021, respectively.

We also recorded a full valuation allowance against Romanian and United Kingdom ("U.K.") deferred tax assets as of January 31, 2022 and against Romanian deferred tax assets as of January 31, 2021.

The table below details the changes in deferred tax asset valuation allowances for fiscal years 2022 and 2021 (in thousands):

federal and state, Romanian, and U.K.

DTAs, including cumulative losses and the amount and timing of future taxable income, and have determined that it is more likely than not that these assets will not be realized.

Accordingly, we have recorded a full valuation allowance against U.S.

federal and state, Romanian, and U.K DTAs as of January 31, 2023 and 2022.

Notes to Consolidated Financial Statements

The table below details the changes in DTA valuation allowances for fiscal years 2023 and 2022 (in thousands):

Balance Valuation

6 unchanged sentences

As of January 31, 2023, we had U.S.

federal net operating losses (“NOLs”) of $ 1,015.4 million available to offset future taxable income, $ 1,006.1 million of which can be carried forward indefinitely, and $ 9.3 million of which begin expiring in 2035.

federal NOLs of $ 979.9 million available to offset future taxable income, all of which can be carried forward indefinitely.

As of January 31, 2022 we had U.S.

federal NOLs of $ 288.3 million, $ 279.0 million of which could be carried forward indefinitely, and $ 9.3 million of which begin expiring in 2035.

Notes to Consolidated Financial Statements

federal NOLs of $ 1,015.4 million, $ 1,006.1 million of which could be carried forward indefinitely, and $ 9.3 million of which were to begin expiring in 2035.

As of January 31, 2023 and 2022, we had state NOLs of $ 771.5 million and $ 648.5 million, respectively, which begin expiring in 2024.

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As of January 31, 2023 and 2022, we had Japanese NOLs of $ 10.4 million and $ 13.5 million, respectively, which begin expiring in 2027.

Additionally, as of January 31, 2022 and 2021, we had NOLs in the U.K.

of $ 139.2 million and $ 36.6 million, respectively, which may be carried forward indefinitely.

Pursuant to Section 382 of the Internal Revenue Code, annual use of our U.S.

Additionally, as of January 31, 2023 and 2022, we had U.K.

NOLs of $ 135.1 million and $ 139.2 million, respectively, which may be carried forward indefinitely.

Pursuant to Section 382 of the I R C , annual use of our U.S.

NOLs may be limited in the event a cumulative change in ownership of more than 50% occurs within a three-year period.

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The second resulted in an annual limitation, independent of net unrealized built-in gains, of $ 29.0 million for our NOLs as of July 9, 2020 but did not result in permanent disallowance of any NOLs.

We do not provide for taxes on our undistributed earnings of foreign subsidiaries that have not been previously taxed because we intend to invest such undistributed earnings indefinitely outside of the U.S.

We do not provide for deferred taxes on $ 76.0 million of the undistributed earnings of our foreign subsidiaries as of January 31, 2023, because we intend to indefinitely reinvest such undistributed earnings in our non-U.S.

As of January 31, 2023, we had gross unrecognized tax benefits totaling $ 2.3 million related to income taxes, which would impact the effective tax rate if recognized.

Of this amount, the total liability pertaining to uncertain tax positions was $ 0.5 million, excluding interest and penalties, which are accounted for as a component of our income tax provision.

As of January 31, 2021, we had no unrecognized tax benefits for uncertain tax positions and had no accrued interest or penalties related to uncertain tax positions.

As of January 31, 2022, we had gross unrecognized tax benefits of $ 2.5 million.

Of this amount, the total liability pertaining to uncertain tax positions was $ 0.6 million, excluding interest and penalties

Our tax positions are subject to income tax audits in multiple tax jurisdictions globally, and we believe that we have provided adequate reserves for our income tax uncertainties in all open tax years.

Our Indian subsidiary is currently under audit for 2019-2020 tax year.

Our Romanian subsidiary is currently under audit for tax years from 2017 through 2022.

Our Indian subsidiary is currently under audit for tax years from 2019 through 2021.

We file income tax returns in the U.S.

federal jurisdiction, various state jurisdictions, and in various international jurisdictions.

federal jurisdiction, various state jurisdictions, and various international jurisdictions.

Tax years 2019 and forward generally remain open for examination for federal and state tax purposes.

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Shares issuable under 2021 ESPP 828 — 312 — — —

Total 111,527 — 359,295 — 345,167 —

Returnable shares issued in connection with business acquisition 219 — — — — —

Total weighted-average anti-dilutive common stock equivalents 46,725 — 111,527 — 359,295 —

Notes to Consolidated Financial Statements

16 Related Party Transactions

For a description of certain related party transactions, see Note 12, Conver tible Preferred Stock and Stockholders ' Equity ( Deficit) —Repurchase and Retirement of Common Stock, —Tender Offer Transactions, and —Secondary Transactions.

On February 6, 2019 and March 6, 2019, we entered into loan agreements with our Chief Financial Officer which provided him a total loan amount of $ 0.2 million to facilitate his exercise of stock options under the 2018 Stock Plan.

These loan agreements are nonrecourse;

we deemed these transactions as a modification of the original vested stock options, and the incremental charges recognized as a result of this modification were immaterial.

Each of these loans was repaid on November 3, 2020.

In August 2019, an immediate family member of our Chief Executive Officer, Co-Founder, and Chairman entered into an employment agreement with a third-party personnel supplier contracted by us to serve as a security specialist.

Pursuant to this agreement, we paid $ 0.2 million and $ 0.2 million in compensation (through the third-party supplier and in the form of cash and RSUs) for fiscal year 2021 and 2020, respectively.

In March 2021, we hired this individual and granted him options to purchase 7 thousand shares of Class A common stock at an exercise price of $ 0.10 per share, with an aggregate estimated fair value of $ 0.4 million.

Additional compensation during fiscal year 2022 was not material.

Beginning in the third quarter of fiscal 2022, we have made use of an aircraft owned by our Chief Executive Officer through a special purpose limited liability company in which we have a variable interest.

For a description of certain related party transactions, see Note 12, Convertible Preferred Stock and Stockholders' Equity (Deficit) —Secondary Transactions.

Since the third quarter of fiscal 2022, we have made use of an aircraft owned by Daniel Dines, our Co-CEO , through a special purpose limited liability company in which we have a variable interest.

The aircraft is operated by a third-party aircraft management company.

The CEO, through the special purpose limited liability company, obtained financing for the aircraft and bears all associated operating, personnel, and maintenance costs.

For the fiscal year ended January 31, 2022, we incurred expenses of $ 1.1 million related to our business use of the aircraft.

Dines, through the special purpose limited liability company, obtained financing for the aircraft and bears all associated operating, personnel, and maintenance costs.

We are able to use the aircraft, when available, for business purposes in the course of our normal operations at rates that approximate the cost of operating the aircraft but that do not exceed current market rates.

For fiscal years 2023 and 2022 we incurred expenses of $ 1.9 million and $ 1.1 million, respectively, related to our business use of the aircraft.

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