What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-24 compared with 2024-03-27 · 115 added, 115 removed, 320 unchanged (42% of the section changed)

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A discussion regarding our financial condition and our results of operations for fiscal year 2025 compared to fiscal year 2024 is presented below.

A discussion regarding our results of operations for fiscal year 2023 compared to fiscal year 2022 was presented in th e 2023

Form 10-K, under the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations."

For a discussion regarding our results of operations for fiscal year 2024 compared to fiscal year 2023 see th e 2024 Form 10-K , under the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations," which is incorporated herein by reference.

UiPath is at the forefront of technology innovation and thought leadership in automation, as the provider of an end-to-end platform that can help customers realize the true potential of digital transformation.

The UiPath Business Automation Platform leverages AI, ML, and NLP to empow er automations that emulate human behavior, driving operational efficiencies and meaningful business outcomes without requiring significant changes to the organization's underlying technology infrastructure.

The UiPath Platform ™ leverages AI, ML, and NLP to empow er automations that emulate human behavior, driving operational efficiencies and meaningful business outcomes without requiring significant changes to the organization's underlying technology infrastructure.

Historically, we have grown our revenue and ARR sign ificantly by helping customers adopt automation as a tool, process by process.

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• our ability to continue to grow our business over the long term, which depends on our ability to invest in scaling across all organizational functions and domestic and international operations.

For further discussion of our business , our platform , and our growth strategies , refer to Item 1.

For further discussion of our business , our platform , and our growth strategies , refer to Part I, Item 1.

Business of this Annual Report on Form 10-K.

Fiscal Year 2025 Highlights

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Macroeconomic Environment

As a corporation with a global presence, we are subject to risks and uncertainties caused by significant events with macroeconomic impacts, including, but not limited to, the impact of changes in geopolitical relationships, rising inflation and interest rates, monetary policy changes, and foreign currency fluctuations.

As a corporation with a global presence, we are subject to risks and uncertainties caused by significant events with macroeconomic impacts, including, but not limited to, the impact of changes in geopolitical relationships, fluctuating inflation and interest rates, monetary and trade policy changes, government efficiency initiatives, and foreign currency fluctuations.

Additionally, these macroeconomic impacts have generally disrupted the operations of our customers, prospective customers, and partners.

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We continuously monitor the direct and indirect impacts of these circumstances on our business and financial results, as well as the overall global economy and geopolitical landscape.

Fiscal Year 2023 Restructuring Actions

On June 24, 2022, our board of directors approved restructuring actions to manage our operating expenses.

These actions included an overall reduction of approximately 5% of our global workforce, aimed at simplifying our go-to-market approach to improve market segmentation, increase sales productivity, and provide best-in-class customer experience and outcomes.

On November 10, 2022, our board of directors approved further restructuring actions, including an additional 6% workforce reduction to further support our strategic positioning to drive increased execution velocity, operational efficiency, and customer centricity.

Restructuring actions were completed during the second quarter of fiscal year 2024.

Refer to Note 11, Commitments and Contingencies—Fiscal Year 2023 Restructuring Actions included in Part II, Item 8 of this Annual Report on Form 10-K for more information.

Workforce Restructuring

On June 24, 2022, our board of directors approved the Fiscal Year 2023 Workforce Restructuring 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 th ese 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%.

The Fiscal Year 2023 Workforce Restructuring was completed during the second quarter of fiscal year 2024.

On July 8, 2024, o ur board of directors approved the Fiscal Year 2025 Workforce Restructuring to reshape the organization by streamlining our structure, particularly in operational and corporate functions, to better prioritize our go-to-market investments and focus our research and development investments on AI and driving innovation across our platform.

The Fiscal Year 2025 Workforce Restructuring is substantially completed, with any remaining actions now expected to be completed by end of the second quarter of fiscal year 2026.

Refer to Note 11, Commitments and Contingencies— Workforce Restructuring included in Part II, Item 8 of this Annual Report on Form 10-K for more information.

Components of Results of Operations

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and (3) professional services.

We have a unified commercial offering for software products with both on-premise and cloud deployment options that allows customers the choice of either deployment option throughout the term of the contract.

We have a unified commercial offering for software products with both on-premises and cloud deployment options that allows customers the choice of either deployment option throughout the term of the contract.

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

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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.

As licenses revenue is recognized at a point in time, any shift in license start dates or duration will have a direct impact on our licenses revenue.

Subscription Services

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

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

Maintenance and support and SaaS

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

Professional Services and Other

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Subscription Services

Cost of subscription services revenue consists of personnel-related expenses of our customer support and technical support teams, including salaries and bonuses, stock-based compensation expense, and employee benefit costs.

Cost of subscription services revenue primarily consists of personnel-related expenses of our customer support and technical support teams, including salaries and bonuses, stock-based compensation expense, and employee benefit costs.

Cost of subscription services revenue also includes third-party consulting services, hosting costs related to our SaaS products, amortization of acquired developed technology and capitalized software development costs related to SaaS products, depreciation, and allocated overhead.

Overhead is allocated to cost of subscription services r evenue based on applicable headcount.

Overhead is allocated based on applicable headcount.

We recognize these expenses as they are incurred.

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In the future, we expect further expansion of our cloud-based deployments.

As sales of SaaS products become a larger percentage of our total revenue, we expect our gross margin to be impacted by increased hosting fees and cloud infrastructure costs.

As more of our customer base deploys our products via SaaS, we expect our gross margin to be impacted by increased hosting fees and cloud infrastructure costs.

Professional Services and Other

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We recognize these expenses as they are incurred.

We expect cost of professional services and other revenue to continue to increase in absolute dollars for the foreseeable future.

We expect cost of professional services and other revenue to increase in absolute dollars for the foreseeable future.

Operating Expenses

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Research and development costs are expensed as incurred, with the exception of certain software development costs which are eligible for capitalization.

We expect that our research and development expenses will increase in absolute dollars for the foreseeable future as we continue to invest in efforts to develop new technology and enhance the functionality and capabilities of our existing products and platform infrastructure.

We expect that our research and development expenses will increase in absolute dollars for the foreseeable future as we continue to invest in efforts

to develop new technology and enhance the functionality and capabilities of our existing products and platform infrastructure.

Our research and development expenses may fluctuate as a percentage of revenue from period to period due to the timing and extent of expenses.

General and Administrative

human resources, compliance, and other administrative teams, as well as accounting and legal professional services fees, other corporate-related expenses, and allocated overhead.

General and administrative expenses consist primarily of personnel-related expenses, including salaries and bonuses, stock-based compensation expense, and employee benefits costs associated with our finance, legal, human resources, compliance, and other administrative teams, as well as accounting and legal professional services fees, other corporate-related expenses, and allocated overhead.

We expect that over the longer term our general and administrative expenses will decrease as a percentage of revenue, although this percentage may fluctuate from period to period due to timing and extent of expenses.

Interest Income

Interest income consists of interest income earned on our cash and cash equivalents and marketable securities.

Other Income (Expense), Net

Other inc ome (expense) , net primarily consists of foreign exchange gains and losses.

Other income (expense), net also includes amortization of discounts and premiums on marketable securities, as well as gains and losses associated with foreign currency forward contracts for those periods in which such contracts were outstanding.

Provision For Income Taxes

Provision for income taxes consists of U.S.

Interest income consists of interest earned on our cash and cash equivalents and marketable securities.

Other Income, Net

Other inc ome, net primarily consists of foreign exchange gains and losses.

Other income, net also includes accretion of discounts and premiums on marketable securities.

(Benefit From) Provision For Income Taxes

(Benefit from) provision for income taxes consists of U.S.

federa l and state income taxes and income taxes in foreign jurisdictions in which we conduct business.

We maintain a full valuation allowance on our U.S.

federal and state, Romanian, and U.K.

DTAs , as we have concluded as of January 31, 2024 that it is more likely than not that these DTAs will not be realized.

We currently maintain a full valuation allowance on our U.S.

federal and state and Romania DTAs , as we have concluded as of January 31, 2025 that it is more likely than not that these DTAs will not be realized.

Our effective tax rate is affected by tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions, as well as by non-deductible expenses as permanent differences, and by ch anges in our valuation allowances.

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Cost of revenue:

10,469 10,421

Subscription services (1)(2)(3)(4)

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Loss before income taxes (78,100) (75,815)

Provision for income taxes 14,068 10,791

(Benefit from) provision for income taxes

(4,406) 14,068

Net loss $ (73,694) $ (89,883)

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Loss before income taxes (5) % (6) %

Provision for income taxes 1 % 1 %

(Benefit from) provision for income taxes

Net loss (5) % (7) %

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Total revenue $ 1,429,664 $ 1,308,072 $ 121,592 9 %

Total revenue increased by $249.5 million, or 24%, for fiscal year 2024 compared to fiscal year 2023, primarily due to a $141.1 million increase in subscription services revenue, related in part to the transition to our Flex Offerings, and a $123.6 million increase in licenses revenue.

Total revenue increased by $121.6 million, or 9%, for fiscal year 2025 compared to fiscal year 2024, primarily due to a $152.0 million increase in subscription services revenue partially offset by a $34.2 million decrease in licenses revenue, related in part to the transition to our Flex Offerings.

As we continued to expand our sales efforts in the U.S.

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Gross margin 83 % 85 %

Total cost of revenue increased by $15.9 million, or 9%, for fiscal year 2024 compared to fiscal year 2023, primarily due to an increase in cost of subscription services revenue, partially offset by a decrease in cost of professional services and other revenue.

The increase in cost of subscription services revenue was primarily driven by a $14.3 million increase in personnel-related expenses, which included a $9.7 million increase in salary-related and bonus expenses associated with both increased headcount and merit increases, a $2.9 million increase in stock-based compensation expense, and a $1.4 million increase in employee insurance costs.

Cost of subscription services revenue was also impacted by a $5.1 million increase in hosting and software services costs as a result of increased usage, a $2.7 million increase in costs associated with the use of third-party vendors, an aggregate $0.8 million increase in depreciation and amortization and other administrative costs, and a $0.5 million increase in travel expenses.

The decrease in cost of professional services and other revenue was primarily driven by a $6.1 million decrease in costs associated with the use of third-party subcontractors to deliver professional services to our customers.

Additionally, cost of professional services and other revenue was impacted by a $2.7 million decrease in personnel-related expenses, primarily related to lower bonus expenses and stock-based compensation expenses due to a decrease in headcount driven by our fiscal year 2023 restructuring actions, partially offset by an increase in general employee severance.

Our gross margin increased to 85% for fiscal year 2024 compared to 83% for fiscal year 2023, due to change in mix driven by growth in higher-margin licenses and subscription services revenue and decrease in lower-margin professional services and other revenue.

Total cost of revenue increased by $51.0 million, or 26%, for fiscal year 2025 compared to fiscal year 2024, primarily due to a $55.7 million increase in cost of subscription services revenue, partially offset by a $2.8 million decrease in cost of professional services and other revenue.

The increase in cost of subscription services revenue was primarily driven by a $25.1 million increase in third-party hosting and software services costs as a result of increased usage of our subscription services and a $23.1 million increase in personnel-related expenses, which included a $12.4 million increase in salary-related and bonus expenses associated with both increased average headcount and merit increases, a $4.7 million increase in stock-based compensation expense, a $3.1 million aggregate increase in employee insurance costs and employer payroll tax expense, and a $2.6 million increase in employee termination benefits related to our Fiscal Year 2025 Workforce Restructuring.

Cost of subscription services revenue was also impacted by a $6.9 million increase in costs associated with the use of third-party vendors.

The decrease in cost of professional services and other revenue was primarily driven by a $3.8 million decrease in personnel-related expenses, largely related to lower salary-related and bonus expenses, partially offset by a $1.5 million increase in costs associated with the use of third-party subcontractors to deliver professional services to our customers.

Our gross margin decreased to 83% for fiscal year 2025 compared to 85% for fiscal year 2024, due to decrease in the proportion of higher-margin license revenue and the aforementioned increase in cost of subscription services revenue driven by increased hosting and personnel costs.

Operating Expenses

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Sales and marketing expense increased by $25.4 million, or 4%, for fiscal year 2025 compared to fiscal year 2024.

This increase was primarily attributable to a $29.0 million increase in sales commissions expense as a result of higher amortization of capitalized contract acquisition costs, an $11.6 million increase in marketing and travel-related expenses due in part to our Forward VI event, a $5.4 million increase in sales-related software expenses, and an aggregate $1.5 million increase in depreciation and amortization and other administrative costs.

These increases were partially offset by a $32.7 million decrease in personnel-related expenses, which included a $17.6 million decrease in employee termination benefits as a result of the completion of our fiscal year 2023 restructuring actions in the second quarter of fiscal year 2024, a $10.1 million decrease in stock-based compensation expense, and an $8.0 million decrease in salary-related and bonus expenses, partially offset by a $3.1 million increase in employee insurance and other benefit costs.

Sales and marketing expense was also impacted by a $4.8 million decrease in third-party consulting fees.

This increase was primarily attributable to a $15.0 million increase in personnel-related expenses, which included a $14.1 million increase in employee termination benefits related to our Fiscal Year 2025 Workforce Restructuring, a $9.1 million increase in salary-related and bonus expenses, a $2.5 million aggregate increase in employee insurance costs and employer payroll taxes, and a $0.5 million increase in general employee severance, partially offset by a $10.2 million decrease in stock-based compensation expense and a $1.1 million decrease in employer payroll tax expense related to employee equity transactions.

Sales and marketing was also impacted by a $10.7 million increase in sales commissions as a result of higher amortization of capitalized contract acquisition costs and a $4.7 million increase in marketing expenses largely related to our Forward VII user conference.

These increases were partially offset by a $2.8 million decrease in depreciation and amortization expense and a $1.1 million decrease in sales-related software expenses.

Research and Development

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Research and development expense increased by $48.6 million, or 15%, for fiscal year 2025 compared to fiscal year 2024.

The increase was primarily attributable to a $34.0 million increase in personnel-related costs, which included a $15.4 million increase in stock-based compensation expense, a $14.7 million increase in salary-related and bonus expenses, a $1.8 million increase in employee insurance costs, and a $1.3 million increase in employer payroll tax expense related to employee equity transactions.

Research and development expense was also impacted by an $11.5 million increase in hosting and software services costs and a $2.5 million increase in travel-related expenses, partially offset by a $2.2 million decrease in third-party consulting fees.

The increase was primarily attributable to a $26.1 million increase in personnel-related costs, which included a $14.8 million increase in stock-based compensation expense, an $8.5 million increase in salary-related and bonus expenses, and a $2.7 million increase in employee termination benefits related to our Fiscal Year 2025 Workforce Restructuring.

Research and development expense was also impacted by an $18.7 million increase in hosting and software services costs, a $1.7 million increase in third-party consulting fees, and a $1.6 million increase in rent expense.

General and Administrative

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General and administrative expense decreased by $5.5 million, or 2%, for fiscal year 2025 compared to fiscal year 2024.

This decrease was primarily attributable to a $7.7 million decrease in personnel-related expenses, which included a $5.2 million decrease in stock-based compensation expense, a $1.6 million decrease in salary-related and bonus expense, and a $1.4 million decrease in employee termination benefits as a result of the completion of our fiscal year 2023 restructuring actions in the second quarter of fiscal year 2024, partially offset by a $1.0 million increase in employer payroll tax expense related to employee equity transactions.

General and administrative expense was also impacted by a $4.8 million decrease in third-party consulting fees and a $4.5 million decrease in commercial insurance costs, partially offset by an $8.0 million increase in software service expenses.

This decrease was primarily attributable to a $19.7 million decrease in personnel-related expenses, which included a $23.5 million decrease in stock-based compensation expense and a $0.8 million decrease in employer payroll tax expense related to employee equity transactions, partially offset by a $2.6 million increase in employee termination benefits related to our Fiscal Year 2025 Workforce Restructuring and a $1.9 million increase in employee insurance costs.

General and administrative expense was also impacted an $11.1 million increase in software service and implementation costs, a $2.7 million increase due to a credit loss recovery recorded in the prior comparable period, a $2.3 million increase in charitable donations mainly driven by the increased fair value of our Class A common shares contributed to a donor-advised fund in the current year, and a $1.9 million increase in third-party consulting fees, partially offset by a $3.9 million decrease in commercial insurance costs.

Interest Income

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Percentage of revenue 3 % 4 %

Interest income increased by $29.2 million, or 104%, for fiscal year 2024 compared to fiscal year 2023 as a result of a period-over-period increase in our marketable securities balance as well as increased interest rates.

Interest income decreased by $7.7 million, or 13%, for fiscal year 2025 compared to fiscal year 2024 as a result of a period-over-period decrease in our aggregate balance of cash and cash equivalents and marketable securities, as well as decreased interest rates.

Other Income, Net

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(dollars in thousands)

Other income, net $ 31,775 $ 2,767 $ 29,008 NM (1)

Other income, net $ 35,047 $ 31,775 $ 3,272 10 %

Percentage of revenue 3 % 3 %

(1) Not meaningful

Other income, net increased by $29.0 million for fiscal year 2024 compared to fiscal year 2023, primarily due to a $26.5 million increase in amortization of discounts on marketable securities and a $0.8 million increase in gains from foreign currency transactions.

Provision For Income Taxes

Other income, net increased by $3.3 million, or 10%, for fiscal year 2025 compared to fiscal year 2024, primarily due to a $6.6 million increase in foreign currency transaction gains and a $1.9 million increase in accretion of discounts on marketable securities, partially offset by a $3.9 million decrease in legal expense related to shareholder litigation and a $1.6 million decrease in sublease income.

(Benefit From) Provision For Income Taxes

Year Ended January 31,

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(dollars in thousands)

Provision for income taxes $ 14,068 $ 10,791 $ 3,277 30 %

(Benefit from) provision for income taxes $ (4,406) $ 14,068 $ (18,474) NM (1)

Percentage of revenue 0 % 1 %

Provision for income taxes increased by $3.3 million, or 30%, for fiscal year 2024 compared to fiscal year 2023.

The effective tax rate was (18.6)% and (3.4)% for fiscal years 2024 and 2023, respectively.

The increase in provision for income taxes was primarily driven by higher foreign tax expenses of our cost-plus margin entities in certain foreign jurisdictions.

(1) Not meaningful

Provision for income taxes decreased by $18.5 million for fiscal year 2025 compared to fiscal year 2024, mainly driven by the tax benefit related to release of valuation allowance associated with our U.K.

DTA, partially offset by tax expenses recognized related to the changing of our intent with respect to permanent reinvestment of foreign earnings.

Key Performance Metric

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We define ARR as annualized invoiced amounts per solution SKU from subscription licenses and maintenance and support obligations assuming no increases or reductions in customers' subscriptions.

ARR does not include the costs we may incur to obtain such subscription licenses or provide such maintenance and support, and does not reflect any actual or anticipated reductions in invoiced value due to contract non-renewals or service cancellations other than for certain reserves, for example those for credit losses or disputed amounts.

ARR does not include the costs we may incur to obtain such subscription licenses or provide such maintenance and support.

ARR also does not reflect nonrecurring rebates payable to partners (upon establishing sufficient history of their nonrecurring nature), the impact of nonrecurring incentives (such as one-time discounts provided under sales promotional programs), and any actual or anticipated reductions in invoiced value due to contract non-renewals or service cancellations other than for certain reserves (for example those for credit losses or disputed amounts).

At January 31, 2025 and 2024, our ARR was $1,666.1 million and $1,463.7 million, respectively, representing a growth rate of 14%.

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Our dollar-based net retention rate, which represents the net expansion of ARR from existing customers over the preceding 12 months, was 110% and 119% as of January 31, 2025 and 2024, respectively.

We calculate dollar-based net retention rate as of a period end by starting with Prior Period ARR , the ARR from the cohort of all customers as of 12 months prior to such period end.

We calculate dollar-based net retention rate as of a period end by starting with Prior Period ARR , the ARR from the

cohort of all customers as of 12 months prior to such period end.

We then calculate Current Period ARR , the ARR from these same customers as of the current period end.

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Our invoiced amounts are not matched to transfer of control of the performance obligations associated with the underlying subscription licenses and maintenance and support obligations.

This can result in timing differences between our GAAP revenue and ARR calculations.

Our ARR calculation simply takes our invoiced amounts per solution SKU under a subscription license or maintenance agreement and divides that amount by the invoice term and multiplies by 365 days to derive the annualized value.

In contrast, for our revenue calculated in accordance with GAAP, subscription licenses revenue derived from the sale of term-based licenses hosted on-premises is recognized at the point in time when the customer is able to use and benefit from our software, which is generally upon delivery to the customer or upon the commencement of the renewal term, and maintenance, support, an d SaaS re venue is recognized ratably over the term of the arrangement.

This can result in timing differences between our U.S.

GAAP revenue and ARR calculations.

Generally speaking, our ARR calculation simply takes our invoiced amounts per solution SKU under a subscription license or maintenance agreement as of the end of an invoiced period and divides that amount by the corresponding term and multiplies by 365 days to derive the annualized renewal value.

In contrast, for our revenue calculated in accordance with U.S.

GAAP, subscription licenses revenue derived from the sale of term-based licenses hosted on-premises is recognized at the point in time when the customer is able to use and benefit from our software, which is generally upon delivery to the customer or upon the commencement of the renewal term, and maintenance, support, an d SaaS re venue is recognized ratably over the term of the arrangement.

ARR is not a forecast of future revenue.

Unlike ARR, future revenue can be impacted by contract start and end dates and duration.

Unlike ARR, revenue is impacted by contract start and end dates and duration.

The timing of recognition of ARR is determined by contract billing structure, whereas billing structure will neither accelerate nor delay recognition of future revenue.

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Moreover, our presentation of ARR may differ from similarly titled metrics presented by other companies and may not be comparable to such other metrics.

For further information, s ee the section titled “ Risk Factors—Risks

Related to Our Business, Products, Operations, and Industry " included in Part I, Item 1A of this Annual Report on Form 10-K.

For further information, s ee the section titled “ Risk Factors—Risks Related to Our Business, Products, Operations, and Industry " included in Part I, Item 1A of this Annual Report on Form 10-K.

A summary of ARR-related data at January 31, 2025 and 2024 is as follows:

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(dollars in thousands)

Annualized renewal run-rate (ARR) $ 1,463,698 $ 1,203,845

$ 1,666,136 $ 1,463,698

Incremental ARR (1)

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Dollar-based net retention rate 110 % 119 %

(1) For the twelve months ended January 31, 2024 and 2023, respectively

(1) For the fiscal years ended January 31, 2025 and 2024, respectively

Liquidity and Capital Resources

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Our principal uses of cash in recent periods have been to fund our operations, invest in capital expenditures, engage in various business acquisitions, and, more recently, repurchase shares of our Class A common stock.

As of January 31, 2024 and 2023, our principal sources of liquidity were cash, cash equivalents, and marketable securities totaling $1,879.8 million and $1,759.8 million, respectively, and we had an accumulated deficit of $1,914.2 million and $1,824.3 million, respectively.

During the fiscal years ended January 31, 2024 and 2023, we reported net losses of $89.9 million and $328.4 million, respectively, and net cash provided by (used in) operations of $299.1 million and $(10.0) million, respectively.

In April 2021, we completed our IPO, which resulted in the issuance of 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 pursuant to the exercise in full of the underwriters’ option to purchase additional shares.

Net proceeds were $687.9 million after deducting underwriting discounts and commissions of $35.6 million and offering expenses of $4.5 million.

In February 2021, we completed our Series F preferred stock financing with gross proceeds totaling $750.0 million.

In connection with our IPO, all shares of convertible preferred stock then outstanding automatically converted into shares of Class A common stock.

As of January 31, 2025 and 2024, our principal sources of liquidity were cash, cash equivalents, and

marketable securities totaling $1,723.6 million and $1,879.8 million, respectively, and we had an accumulated deficit of $1,987.9 million and $1,914.2 million, respectively.

During the fiscal years ended January 31, 2025 and 2024, we reported net losses of $73.7 million and $89.9 million, respectively, and net cash provided by operations of $320.6 million and $299.1 million, respectively.

In October 2020, we entered into the Credit Facility with an available borrowing capacity of $200.0 million.

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On September 1, 2023, our board of directors authorized a stock repurchase program, pursuant to which we may repurchase from time to time up to $500.0 million of our outstanding shares of Class A common stock.

On August 30, 2024, our board of directors authorized the repurchase of an additional $500.0 million of our outstanding shares of Class A common stock.

Refer to Note 12, Stockholders' Equity—Stock Repurchase Program for further details.

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(dollars in thousands)

Net cash provided by (used in) operating activities (1)

Net cash provided by operating activities (1)

$ 320,565 $ 299,082

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Cash paid for employer payroll taxes related to employee equity transactions $ (6,907) $ (10,483)

Net payments of employee tax withholdings on stock option exercises (980) (5,394)

Net receipts (payments) of employee tax withholdings on stock option exercises

Cash paid for restructuring costs (15,283) (6,180)

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Our primary uses of cash from operating activities are for personnel-related expenses, direct costs to deliver licenses and provide subscription and professional services, and marketing expenses.

Until recently, our operating cash flows have generally been negative and we have supplemented working capital requirements primarily through net proceeds from the sale of equity securities.

Net cash provided by operating activities for fiscal year 2024 of $299.1 million was driven by by cash collections from our customers, which were approximately 25% higher than in the prior year, and interest income on our marketable securities , partially offset by cash payments for operating expenditures, primarily associated with the compensation of our teams, including bonuses paid in the first quarter of fiscal year 2024 and employer payroll taxes related to employee equity transactions.

Net cash provided by operating activities for fiscal year 2025 of $320.6 million was driven by cash collections from our customers, which were approximately 7% higher than in the prior year, and interest income on our marketable securities .

These cash inflows were partially offset by cash payments for operating expenditures, primarily associated with the compensation of our teams, including fiscal year 2024 bonuses paid in the first quarter

of fiscal year 2025 and employer payroll taxes related to employee equity transactions.

Other cash operating expenditures included payments related to our Fiscal Year 2025 Workforce Restructuring, and payments for professional service, software and office rent.

Net cash provided by operating activities for fiscal year 2024 of $299.1 million was driven by cash collections from our customers and interest income on our marketable securities, partially offset by cash payments for operating expenditures, primarily associated with the compensation of our teams, including fiscal year 2023 bonuses paid in the first quarter of fiscal year 2024 and employer payroll taxes related to employee equity transactions.

Other cash operating expenditures included payments related to our Fiscal Year 2023 Workforce Restructuring, which was concluded during the second quarter of fiscal year 2024, and payments for professional services, software, and office rent.

Net cash used in operating activities for fiscal year 2023 of $10.0 million was driven by cash payments for operating expenditures, primarily associated with the compensation of our teams, including bonuses paid in the first quarter of fiscal year 2023 and employer payroll taxes related to employee equity transactions.

Other cash operating expenditures included payments related to our workforce restructuring, and payments for professional services, software, and office rent.

Investing Activities

Net cash used in investing activities for fiscal year 2025 of $45.5 million was primarily driven by a $35.8 million investment in the H company and $14.9 million in capital expenditures, partially offset by $5.2 million in net maturities of marketable securities.

Net cash used in investing activities for fiscal year 2024 of $439.6 million was primarily driven by $435.0 million in net purchases of marketable securities and $7.3 million in capital expenditures.

Net cash used in investing activities for fiscal year 2023 of $289.1 million was primarily driven by $237.0 million in net purchases of marketable securities, $29.5 million in cash consideration associated with the acquisition of Re:Infer, which is presented net of cash acquired, and $23.8 million in capital expenditures.

Financing Activities

Net cash used in financing activities for fiscal year 2024 of $196.9 million was primarily driven by payments of tax withholdings on net settlement of equity awards of $112.1 million, $102.6 million in repurchases of Class A common stock under our stock repurchase program, and $5.9 million loan note payment on the first anniversary of the acquisition of Re:infer, partially offset by proceeds from ESPP contributions of $17.6 million and proceeds from stock option exercises of $6.7 million.

Net cash used in financing activities for fiscal year 2023 of $60.7 million was primarily driven by payments of tax withholdings on net settlement of equity awards of $73.1 million, net payments of tax withholdings on sell-to-cover equity award transactions of $9.5 million, and $1.5 million in repurchases of unvested early exercised stock options, partially offset by proceeds from ESPP contributions of $15.0 million and proceeds from stock option exercises of $8.4 million.

Net cash used in financing activities for fiscal year 2025 of $450.5 million was primarily driven by $390.8 million in repurchases of Class A common stock under our stock repurchase program, $77.9 million in payments of tax withholdings on net settlement of equity awards, and $5.6 million loan note payment on the second anniversary of the acquisition of Re:infer, partially offset by $15.6 million in proceeds from ESPP contributions and $8.0 million in proceeds from stock option exercises.

Net cash used in financing activities for fiscal year 2024 of $196.9 million was primarily driven by $112.1 million in payments of tax withholdings on net settlement of equity awards, $102.6 million in repurchases of Class A common stock under our stock repurchase program, and $5.9 million loan note payment on the first anniversary of the acquisition of Re:infer, partially offset by $17.6 million in proceeds from ESPP contributions and $6.7 million in proceeds from stock option exercises.

Material Cash Requirements

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As of January 31, 2025, accrued compensation and benefits of $112.4 million are included in current liabilities on our consolidated balance sheet.

Refer to Note 9, Con solidated Balance Sheet Components—Acc rued Expenses and Other Liabilities for details of additional short-term payroll-related obligations included in accrued expenses and other current liabilities as of January 31, 2024.

Refer to Note 9, Consolidated Balance Sheet Components—Accrued Expenses and Other Current Liabilities for details of additional short-term payroll-related obligations included in accrued expenses and other current liabilities as of January 31, 2025.

The following table summarizes the aggregate effect that our material contractual obligations as of January 31, 2025 are expected to have on our cash flows in the periods indicated (in thousands):

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Obligations under contracts that we can cancel without a significant penalty are not included in the table above.

Refer to Note 8, Ope rating Leases for more detailed information regarding timing of future lease payments, and to Note 11, Commitments and Contingencies—Non-Cancelable Purchase Commitments for more detailed information regarding timing of purchase commitments.

Refer to Note 8, Operating Leases for more detailed information regarding timing of future lease payments, and to Note 11, Commitments and Contingencies—Non-Cancelable Purchase Commitments for more detailed information regarding timing of purchase commitments.

Additionally, our stock repurchase program may represent a material use of cash depending upon the number of shares repurchased, which is ultimately discretionary.

As of January 31, 2024, approximately $397.5 million remained of the $500.0 million originally authorized.

The authorization expires on March 1, 2025, subject to modification by our board of directors.

Refer to Note 12 , Stockholders' E quity —Stock Repurchase Program for further details.

As of January 31, 2025, approximately $507.4 million remained of the $1,000.0 million authorized by our board of directors.

The current authorization may be suspended or discontinued at any time and does not have a specified expiration date.

Refer to Note 12, Stockholders' Equity—Stock Repurchase Program for further details.

Critical Accounting Estimates

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For further information about our revenue recognition, refer to Note 2, Summary of Significant Accounting Policies—Revenue Recognition and Note 3, Revenue Recognition , included in Part II, Item 8 of this Annual Report on Form 10-K.

Stock-Based Compensation

We recognize stock-based compensation expense in accordance with the provisions of ASC 718, Compensation—Stock Compensation .

ASC 718 requires the measurement and recognition of compensation expense for all stock-based awards made to employees, directors, and non-employees based on the grant date fair value of the awards.

Stock Options

The fair value of stock options is determined using the Black-Scholes pricing model, which considers the value of our Class A common stock, exercise price, expected term, expected volatility, risk-free interest rate, and expected dividend yield.

Stock options granted during f iscal year 2024 were granted in-the-money with an exercise price of $0.10, which is our current broad-based granting practice in certain non-U.S.

jurisdictions;

given their immaterial exercise price, the fair values of these in-the-money stock options closely approximated the closing price of our publicly

traded Class A common stock on the respective grant dates and were not sensitive to the other inputs to the Black-Scholes pricing model.

However, during fiscal year 2023, 2.1 million stock option grants were U.S.

executive-level grants with an at-the-money exercise price, the fair values of which were sensitive to the other inputs of the Black-Scholes pricing model.

The most subjective of these inputs are as follows:

• Expected term.

We do not yet have sufficient relevant historical exercise data to provide a reasonable basis for estimation of expected term post-IPO;

we presently use the simplified method permitted under Staff Accounting Bulletin 14, which deems the expected term to be the average of the time-to-vest and the contractual life.

The expected term for the aforementioned 2.1 million stock options ranged from 5.3 to 6.1 years at grant.

• Expected volatility.

As a public market for our common stock did not exist prior to our IPO, we have limited trading history on which to base expectations of volatility;

during fiscal year 2023 w e estimated expected volatility based on the volatility of a group of similar publicly held entities, referred to as “guideline companies,” over a look-back period equivalent to the expected term.

In evaluating the similarity of guideline companies, we consider factors such as industry, stage of life cycle, size, and degree of financial leverage.

The expected volatility for the aforementioned 2.1 million stock options ranged from 59.4% to 61.8% at grant.

(Beginning in fiscal year 2024, we have begun to include our own stock price volatility within the reference group and will continue to increase the weighting of our own volatility over time as sufficient trading history is established.)

A ten percent change in the Black-Scholes values of these 2.1 million stock options would have impacted our fiscal year 2024 stock-based compensation expense by $0.6 million.

The fair value of ESPP awards is determined using the Black-Scholes pricing model, with the most subjective input being expected volatility.

A s a public market for our common stock did not exist prior to our IPO, we have limited trading history on which to base expectations of volatility;

until late fiscal year 2023, we estimated expected volatility based on the volatility of the same group of guideline companies used for our stock options, over a look-back period equal to the six-month term of our ESPP offering periods.

Beginning with the offering period in the fourth quarter of fiscal year 2023, having established sufficient trading history, we have estimated expected volatility using the volatility of our own Class A common stock over the look-back period.

The expected volatility used in valuing ESPP offering periods outstanding during fiscal year 2024 ranged from 60.8% to 76.7%.

A ten percent change in the Black-Scholes values of these ESPP awards would have impacted our fiscal year 2024 stock-based compensation expense by $0.7 million.

We are subject to income taxes in the U.S and in a number of foreign jurisdictions.

We apply significant judgment in determining our provision for (benefit from) income taxes, particularly with regard to assessment of DTAs and evaluation of tax positions.

Pursuant to ASC 740, Income Taxes , we account for income taxes using the asset and liability method, whereby DTAs and DTLs are recognized to represent the expected future tax consequences of temporary differences between the financial reporting and income tax bases of assets and liabilities, and for NOL and tax credit carryforwards.

DTAs and DTLs are measured using the currently enacted tax rates and laws that are expected to apply in the years in which we expect to realize or settle them.

In the case of DTAs, we regularly assess the realizability of future associated tax benefits by considering both positive and negative evidence, such as the adequacy of expected future taxable income on a jurisdictional basis (including forecasted income and whether a sustained trend of profitability exists historically), any carryforward periods available, and prudent and feasible tax planning strategies.

The evaluation of this evidence requires judgment.

If we determine that it is more likely than not that all or a portion of a DTA will not be realized in the future, a valuation allowance is provided.

If and when sufficient positive evidence becomes available to indicate that it is more likely than not at all or a portion of a DTA will be realized, we may release all or a portion of a valuation allowance accordingly.

For example, during fiscal year 2025, based on the available positive and negative evidence including the amount of taxable income in the U.K.

in recent years and our expectations of future profits in the U.K., we determined it to be more likely than not that our U.K.

DTA is realizable and released the $24.7 million valuation allowance associated with the U.K.

However, we continue to maintain full valuation allowances against our U.S.

and Romania DTAs because we believe that it is more likely than not that these DTAs will not be realized, with our valuation allowances totaling $406.3 million as of January 31, 2025.

We may release some or all of these valuation allowances in future periods if objective negative evidence of cumulative losses is no longer present and if positive evidence of sustained profitability is established to support the realization of the related DTAs.

Such release would result in a decrease in the provision for income taxes in the period of the release.

Similarly, significant judgement is required in evaluating our tax positions.

In the ordinary course of business, there exist many transactions and calculations for which the ultimate tax settlement is uncertain.

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

(1) evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon audit, based on the technical merits of the tax position, and including resolution of related appeals or litigation processes, if any;

and (2) measure the tax benefit as the largest amount which is more likely than not of being realized and effectively settled.

We consider a number of factors when evaluating tax positions and estimating tax benefits, including changes in facts and circumstances, changes in tax law, tax audit status, and communications with tax authorities.

Any changes in the recognition or measurement of uncertain tax positions could result in material increases or decreases in our provision for income taxes in the period in which the change is made.

In particular, if a tax position is not sustained upon audit and we are required to pay amounts in excess of the associated accrual, or if no accrual has been made, our provision for income taxes will increase.

For further information about our income taxes, including DTAs and associated valuation allowances and tax positions, refer to Note 14.

Income Taxes , included in Part II, Item 8 of this Annual Report on Form 10-K.

Recent Accounting Pronouncements

See Note 2, Summary of Significant Accounting Policies— Recently Issued Accounting Pronouncements , included in Part II, Item 8 of this Annual Report on Form 10-K for more information.

See Note 2, Summary of Significant Accounting Policies—Recently A dopted Accounting Pr onoun cem ents and — Re cently Issued Accounting Pronouncements , included in Part II, Item 8 of this Annual Report on Form 10-K for more information.

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What changed 10-K

Item 7. Management’s Discussion and Analysis