Planet Labs PBC 10-K

Item 8. Financial Statements INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 75 Consolidated Balance Sheets 78 Consolidated Statements of Operations 79 Consolidated Statements of Comprehensive Loss 80 Consolidated Statements of Stockholders’ Equity 81 Consolidated Statements of Cash Flows 82 Notes to Consolidated Financial Statements 84 74 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Planet Labs PBC Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Planet Labs PBC (the Company) as of January 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended January 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2023, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 30, 2023 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the 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 financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the 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 financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the 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. 75 Table of Contents Revenue Recognition Description of the Matter As described in Note 2 to the consolidated financial statements, the Company derives its revenue principally from licensing rights to use imagery that is delivered digitally through its online platform in addition to providing related services. The Company’s imagery licensing arrangements generally provide customers with the right to access imagery through the Company’s platform, download content on a limited or unlimited basis over the contractual period depending on the terms of the applicable contract, or provide both the right to access imagery and download content. To account for promised goods and services in accordance with ASC 606, Revenue from contracts with customers , the Company allocates the total contract consideration to distinct performance obligations on a relative standalone selling price basis and recognizes revenue when control of the distinct performance obligation is transferred to the customer. For example, the portion of the contract consideration related to the download license of existing or archive imagery content is recognized as revenue at the commencement of the contract when control of the imagery is transferred, and the imagery is available for download by the customer. The portion of the contract consideration related to the download of monitoring imagery content is recognized over the term of the contract utilizing a usage-based output measure of progress based on the download capacity specified in the contract. Auditing the Company's recognition of revenue was challenging and complex due to the effort required to assess the Company’s accounting treatment for the relevant terms and conditions of its contracts in accordance with ASC 606. This also involved judgment to evaluate the determination of the relative standalone selling prices for each distinct performance obligation as well as the timing of recognition of revenue. How We Addressed the Matter in Our Audit Among other procedures to evaluate management’s identification of the distinct performance obligations, we read executed contracts for a sample of revenue transactions to understand the contract, the identified promised goods and services in the contract and distinct performance obligations. To test management’s determination of relative standalone selling price for each performance obligation, we performed audit procedures that included, among others, assessing the appropriateness of the methodology applied, testing the mathematical accuracy of the underlying data and calculations, and testing sample selections to corroborate the data underlying the Company’s calculations. We also evaluated whether the Company appropriately applied its revenue recognition policy to a sample of revenue transactions to determine whether revenue was recognized in the correct amount and period. Finally, we assessed the related disclosures in the consolidated financial statements. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2019. San Jose, California March 30, 2023 76 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Planet Labs PBC Opinion on Internal Control Over Financial Reporting We have audited Planet Labs PBC’s internal control over financial reporting as of January 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), (the COSO criteria). In our opinion, Planet Labs PBC (the Company) maintained, in all material respects, effective internal control over financial reporting as of January 31, 2023, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of January 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, stockholders' equity and cash flows for each of the three years in the period ended January 31, 2023, and the related notes and our report dated March 30, 2023 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible 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 internal control over financial reporting based on our audit. We are a public accounting firm registered with the 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. 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. /s/ Ernst & Young LLP San Jose, California March 30, 2023 77 Table of Contents Planet Labs PBC Consolidated Balance Sheets January 31, (in thousands, except share and par value amounts) 2023 2022 Assets Current assets Cash and cash equivalents $ 181,892 $ 490,762 Short-term investments 226,868 — Accounts receivable, net of allowance of $ 1,289 and $ 1,031 , respectively 38,952 44,373 Prepaid expenses and other current assets 27,943 16,385 Total current assets 475,655 551,520 Property and equipment, net 108,091 133,280 Capitalized internal-use software, net 11,417 10,768 Goodwill 112,748 103,219 Intangible assets, net 14,831 14,197 Restricted cash and cash equivalents, non-current 5,657 5,743 Operating lease right-of-use assets 20,403 — Other non-current assets 3,921 2,714 Total assets $ 752,723 $ 821,441 Liabilities and Stockholders’ Equity Current liabilities Accounts payable $ 6,900 $ 2,850 Accrued and other current liabilities (1) 46,022 48,823 Deferred revenue (1) 51,900 64,233 Liability from early exercise of stock options 12,550 16,135 Operating lease liabilities, current 4,885 — Total current liabilities 122,257 132,041 Deferred revenue (1) 2,882 3,579 Deferred hosting costs (1) 8,679 12,149 Public and private placement warrant liabilities 16,670 23,224 Deferred rent — 798 Operating lease liabilities 17,145 — Contingent consideration 7,499 — Other non-current liabilities 1,487 1,405 Total liabilities 176,619 173,196 Commitments and contingencies (Note 10) Stockholders’ equity Common stock, $ 0.0001 par value, 570,000,000 , 30,000,000 and 30,000,000 Class A, Class B and Class C shares authorized at January 31, 2023 and 2022, 250,625,975 and 241,017,687 Class A shares issued and outstanding at January 31, 2023 and 2022, respectively, 21,157,586 Class B shares issued and outstanding at January 31, 2023 and 2022, 0 Class C shares issued and outstanding at January 31, 2023 and 2022 (1) 27 27 Additional paid-in capital 1,513,102 1,423,151 Accumulated other comprehensive income 2,271 2,096 Accumulated deficit ( 939,296 ) ( 777,029 ) Total stockholders’ equity 576,104 648,245 Total liabilities and stockholders’ equity $ 752,723 $ 821,441 (1) Balance includes related-party transactions entered into with Google, LLC (“Google”). See Note 14. See accompanying notes to consolidated financial statements. 78 Table of Contents Planet Labs PBC Consolidated Statements of Operations Year Ended January 31, (in thousands, except share and per share amounts) 2023 2022 2021 Revenue (1) $ 191,256 $ 131,209 $ 113,168 Cost of revenue (1) 97,248 82,987 87,383 Gross profit 94,008 48,222 25,785 Operating expenses Research and development (1) 110,916 66,684 43,825 Sales and marketing 78,020 52,917 37,268 General and administrative 80,747 56,672 32,134 Total operating expenses 269,683 176,273 113,227 Loss from operations ( 175,675 ) ( 128,051 ) ( 87,442 ) Debt extinguishment gain (loss) — ( 1,690 ) 673 Interest income 7,672 21 53 Interest expense — ( 8,772 ) ( 9,447 ) Change in fair value of convertible notes and warrant liabilities 6,554 5,726 ( 30,053 ) Other income (expense), net 330 ( 2,248 ) 186 Total other income (expense), net 14,556 ( 6,963 ) ( 38,588 ) Loss before provision for income taxes ( 161,119 ) ( 135,014 ) ( 126,030 ) Provision for income taxes 847 2,110 1,073 Net loss $ ( 161,966 ) $ ( 137,124 ) $ ( 127,103 ) Basic and diluted net loss per share attributable to common stockholders $ ( 0.61 ) $ ( 1.72 ) $ ( 2.87 ) Basic and diluted weighted-average common shares outstanding used in computing net loss per share attributable to common stockholders 267,126,918 79,610,970 44,214,426 (1) Balance includes related-party transactions entered into with Google. See Note 14. See accompanying notes to consolidated financial statements. 79 Table of Contents Planet Labs PBC Consolidated Statements of Comprehensive Loss Year Ended January 31, (in thousands) 2023 2022 2021 Net loss $ ( 161,966 ) $ ( 137,124 ) $ ( 127,103 ) Other comprehensive income (loss), net of tax: Foreign currency translation adjustment 13 327 276 Change in fair value of available-for-sale securities 162 — — Other comprehensive income (loss), net of tax 175 327 276 Comprehensive loss $ ( 161,791 ) $ ( 136,797 ) $ ( 126,827 ) See accompanying notes to consolidated financial statements. 80 Table of Contents Planet Labs PBC Consolidated Statements of Stockholders’ Equity (in thousands, except share amounts) Convertible Preferred Stock Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income Accumulated Deficit Total Stockholders’ Equity Shares Amount Shares Amount Balances at February 1, 2020 131,252,627 $ 13 42,275,420 $ 4 $ 728,929 $ 1,493 $ ( 512,802 ) $ 217,637 Issuance of Class A common stock warrants — — — — 1,624 — — 1,624 Issuance of Class A common stock from the exercise of common stock options — — 1,670,778 — 539 — — 539 Stock-based compensation — — — — 14,538 — — 14,538 Change in translation — — — — — 276 — 276 Net loss — — — — — — ( 127,103 ) ( 127,103 ) Balances at January 31, 2021 131,252,627 $ 13 43,946,198 $ 4 $ 745,630 $ 1,769 $ ( 639,905 ) $ 107,511 Issuance of Class A common stock from the exercise of common stock options — — 3,671,551 1 9,399 — — 9,400 Issuance of Class A common stock upon vesting of restricted stock units — — 1,425,209 — — — — — Vesting of early exercised stock options — — 183,822 — 1,793 — — 1,793 Class A common stock withheld to satisfy employee tax withholding obligations — — ( 532,676 ) — ( 5,598 ) — — ( 5,598 ) Issuance of recourse note to employee — — — — ( 391 ) — — ( 391 ) Stock-based compensation — — — — 43,185 — — 43,185 Exercise of Class A common stock warrants — — 2,976,452 — — — — — Conversion of convertible preferred stock to Class A common stock ( 131,252,627 ) ( 13 ) 131,252,627 13 — — — — Reclassification of convertible preferred stock warrant liabilities converted to Class A common stock warrants — — — — 23,477 — — 23,477 Conversion of convertible notes to Class A common stock — — 10,578,521 1 114,353 — — 114,354 Issuance of Class A common stock upon Business Combination and PIPE Investment, net — — 66,772,830 8 478,449 — — 478,457 Issuance of Class A common stock for acquisition of business — — 1,900,739 — 12,854 — — 12,854 Change in translation — — — — — 327 — 327 Net loss — — — — — — ( 137,124 ) ( 137,124 ) Balances at January 31, 2022 — $ — 262,175,273 $ 27 $ 1,423,151 $ 2,096 $ ( 777,029 ) $ 648,245 Cumulative effect of adoption of ASU 2016-13 — — — — — — ( 301 ) ( 301 ) Issuance of Class A common stock from the exercise of common stock options — — 7,138,894 — 15,941 — — 15,941 Issuance of Class A common stock upon vesting of restricted stock units — — 3,264,229 — — — — — Vesting of early exercised stock options — — 367,644 — 3,584 — — 3,584 Class A common stock withheld to satisfy employee tax withholding obligations — — ( 1,162,479 ) — ( 6,337 ) — — ( 6,337 ) Stock-based compensation — — — — 76,873 — — 76,873 Net unrealized gain on available-for-sale securities, net of taxes — — — — — 162 — 162 Other — — — — ( 110 ) — — ( 110 ) Change in translation — — — — — 13 — 13 Net loss — — — — — — ( 161,966 ) ( 161,966 ) Balances at January 31, 2023 — $ — 271,783,561 $ 27 $ 1,513,102 $ 2,271 $ ( 939,296 ) $ 576,104 See accompanying notes to consolidated financial statements. 81 Planet Labs PBC Consolidated Statements of Cash Flows Year Ended January 31, (in thousands) 2023 2022 2021 Operating activities Net loss $ ( 161,966 ) $ ( 137,124 ) $ ( 127,103 ) Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization 43,330 45,043 62,212 Stock-based compensation, net of capitalized cost of $ 1,329 , $ 1,229 and $ 526 , respectively 75,544 41,956 14,012 Change in fair value of convertible notes and warrant liabilities ( 6,554 ) ( 5,726 ) 30,053 Debt extinguishment (gain) loss — 1,671 ( 673 ) Deferred income taxes ( 456 ) ( 1,393 ) — Amortization of debt discount and issuance costs — 2,635 2,750 Impairment of capitalized internal-use software — 1,143 — Other 52 45 823 Changes in operating assets and liabilities Accounts receivable 6,313 3,263 ( 19,932 ) Prepaid expenses and other assets ( 10,080 ) ( 8,680 ) 2,617 Accounts payable, accrued and other liabilities ( 2,986 ) 16,072 11,033 Deferred revenue ( 14,387 ) ( 4,898 ) 14,433 Deferred hosting costs ( 2,743 ) 5,844 7,971 Deferred rent — ( 2,062 ) ( 2,223 ) Net cash used in operating activities ( 73,933 ) ( 42,211 ) ( 4,027 ) Investing activities Purchases of property and equipment ( 10,440 ) ( 10,313 ) ( 26,096 ) Capitalized internal-use software ( 2,320 ) ( 4,618 ) ( 4,030 ) Maturities of available-for-sale securities 55,172 — — Purchases of available-for-sale securities ( 280,297 ) — — Business acquisition, net of cash acquired ( 3,821 ) ( 9,620 ) — Other ( 557 ) ( 598 ) ( 674 ) Net cash used in investing activities ( 242,263 ) ( 25,149 ) ( 30,800 ) Financing activities Proceeds from the exercise of common stock options 14,701 10,640 539 Class A common stock withheld to satisfy employee tax withholding obligations ( 6,337 ) ( 5,598 ) — Proceeds from the early exercise of common stock options — 17,928 — Proceeds from Business Combination and PIPE Investment, net of transaction costs — 533,164 — Principal payment of debt — ( 66,950 ) — Proceeds from issuance of debt and common stock warrants, net of issuance costs — — 14,862 Principal payment of convertible notes — — ( 2,586 ) Proceeds from issuance of convertible notes and preferred stock warrant — — 71,125 Other ( 504 ) — — Net cash provided by financing activities 7,860 489,184 83,940 Effect of exchange rate changes on cash and cash equivalents, and restricted cash and cash equivalents ( 402 ) ( 1,550 ) ( 312 ) Net increase (decrease) in cash and cash equivalents, and restricted cash and cash equivalents ( 308,738 ) 420,274 48,801 Cash and cash equivalents, and restricted cash and cash equivalents at the beginning of the period 496,814 76,540 27,739 Cash and cash equivalents, and restricted cash and cash equivalents at the end of the period $ 188,076 $ 496,814 $ 76,540 82 Planet Labs PBC Consolidated Statements of Cash Flows Year Ended January 31, (in thousands) 2023 2022 2021 Supplemental disclosure of cash flow information Cash paid for interest $ — $ 6,753 $ 6,554 Cash paid for income tax $ 3,100 $ 884 $ 1,084 Supplemental disclosures of noncash investing and financing activities Contingent consideration for business acquisition $ 8,030 $ — $ — Issuance of Class A common stock for business acquisition $ — $ 12,854 $ — Conversion of convertible notes to Class A common stock $ — $ 114,354 $ — Reclassification of convertible preferred stock warrant liabilities converted to Class A common stock warrants $ — $ 23,477 $ — Accrued purchase of property and equipment $ 51 $ 354 $ 522 See accompanying notes to consolidated financial statements. 83 Planet Labs PBC Notes to Consolidated Financial Statements (1) Organization Planet Labs PBC (“Planet,” or the “Company”) was founded to design, construct, and launch constellations of satellites with the intent of providing high cadence geospatial data delivered to customers via an online platform. The Company’s mission is to use space to help life on Earth, by imaging the world every day and making global change visible, accessible, and actionable. The Company is headquartered in San Francisco, California, with operations throughout the United States ( “ U.S.”), Canada, Asia and Europe. The Company has wholly-owned foreign subsidiaries in Canada, Germany, Luxembourg, Singapore and the Netherlands. On July 7, 2021, Planet Labs Inc. (“Former Planet”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with dMY Technology Group, Inc. IV (“dMY IV”), a special purpose acquisition company (“SPAC”) incorporated in Delaware on December 15, 2020, Photon Merger Sub, Inc., a Delaware corporation and a direct wholly owned subsidiary of dMY IV (“First Merger Sub”), and Photon Merger Sub Two, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of dMY IV (“Second Merger Sub”). Pursuant to the Merger Agreement, upon the favorable vote of dMY IV’s stockholders on December 3, 2021, on December 7, 2021, First Merger Sub merged with and into Former Planet (the “Surviving Corporation”), with Former Planet surviving the merger as a wholly owned subsidiary of dMY IV (the “First Merger”), and pursuant to Former Planet’s election immediately following the First Merger and as part of the same overall transaction as the First Merger, the Surviving Corporation merged with and into dMY IV, with dMY IV surviving the merger (the “Business Combination”). Following the completion of the Business Combination, dMY IV was renamed Planet Labs PBC. See Note 3 for further details of the Business Combination. Former Planet was incorporated in the state of Delaware on December 28, 2010. Former Planet was originally incorporated as Cosmogia Inc., and the name was subsequently changed to Planet Labs Inc. on June 24, 2013. (2) Basis of Preparation and Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and include the accounts of Planet Labs PBC and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The Company’s fiscal year end is January 31. The Business Combination was accounted for as a reverse recapitalization in accordance with U.S. GAAP, whereby dMY IV was treated as the acquired company and Former Planet was treated as the acquirer. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Former Planet issuing stock for the net assets of dMY IV, accompanied by a recapitalization. The net assets of dMY IV were stated at historical cost, with no goodwill or other intangible assets recorded. Former Planet was determined to be the accounting acquirer based on the following predominant factors: • Former Planet’s existing stockholders have the majority voting interest in the combined entity; • Former Planet had the ability to nominate a majority of the initial members of the board of directors of the combined entity; • Former Planet’s senior management became the senior management of the combined entity; and • Former Planet is the larger entity based on historical operating activity and has the larger employee base. The consolidated assets, liabilities and results of operations prior to the Business Combination are those of Former Planet. The shares and corresponding capital amounts and losses per share, prior to the Business Combination, have been retroactively restated based on shares reflecting the exchange ratio of approximately 1.53184 (the “Exchange Ratio”) established in the Business Combination. 84 Liquidity Since its inception, the Company has incurred net losses and negative cash flows from operations. The Company expects to incur additional operating losses and negative cash flows from operations as it seeks to expand its business. As of January 31, 2023 and 2022, the Company had $ 181.9 million and $ 490.8 million of cash and cash equivalents, respectively. Additionally, as of January 31, 2023, the Company had short-term investments of $ 226.9 million which are highly liquid in nature and available for current operations. There were no short-term investments as of January 31, 2022. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The significant estimates and assumptions that affect the Company’s consolidated financial statements include, but are not limited to, the useful lives of property and equipment, capitalized internal-use software and intangible assets, allowances for credit losses for available-for-sale debt securities and accounts receivable, estimates related to revenue recognition, including the assessment of performance obligations within a contract and the determination of standalone selling price (“SSP”) for each performance obligation, the fair value of the Company’s common stock prior to the Business Combination and other assumptions used to measure stock-based compensation, the fair value of convertible notes and warrants, the fair value of assets acquired, and liabilities assumed from business combinations, the impairment of long-lived assets and goodwill, the recognition, measurement and valuation of current and deferred income taxes and uncertain tax positions, and contingencies. These estimates and assumptions are based on management’s best estimates and judgment. Management regularly evaluates its estimates and assumptions using historical experience and other factors; however, due to the inherent uncertainties in making estimates, actual results could differ from those estimates and such differences may be material to the consolidated financial statements. Due to the COVID-19 Coronavirus pandemic (“COVID-19” or “COVID-19 pandemic”), and current events involving Russia and Ukraine, there is ongoing uncertainty and disruption in the global economy and financial markets. The Company is not aware of any specific event or circumstance that would require an update to its estimates or assumptions or a revision of the carrying value of its assets or liabilities. These estimates and assumptions may change in the future, as new events occur and additional information is obtained. Short-term investments The Company’s short-term investments are designated as available-for-sale and are recorded at fair value each reporting period, which is based on quoted market prices for such securities, if available, or is estimated on the basis of quoted market prices of financial instruments with similar characteristics. Investments with original maturities greater than 90 days and remaining maturities of less than one year are classified within short-term investments on the Company’s consolidated balance sheets. In addition, investments with maturities beyond one year at the time of purchase that are highly liquid in nature and represent the investment of cash that is available for current operations are classified as short-term investments. Unrealized gains and losses of available-for-sale securities are excluded from earnings and are reported as a component of Other comprehensive income (loss), net of tax, until the security is sold, the security has matured, or the Company determines that the fair value of the security has declined below its adjusted cost basis and the decline is not due to a credit loss. Realized gains and losses on short-term investments are calculated based on the specific identification method and are reclassified from accumulated other comprehensive income (loss) to other income (expense), net on the consolidated statements of operations. Short-term investments are evaluated for allowances and impairment quarterly. The Company considers various factors in determining whether an allowance for expected credit losses or an impairment charge should be recognized, such as the credit quality of the issuer, the duration, severity of and the reason for the decline in value, the potential recovery period, and the Company’s intent to sell. No allowances or impairment charges were recognized during the fiscal year ended January 31, 2023. There were no short-term investments as of January 31, 2022. 85 Accounts Receivable and Allowances Accounts receivable include amounts billed and billable to customers for services or products provided as of the end of the applicable period and do not bear interest. Accounts receivable are recorded and carried at the original invoiced amount less an allowance for any potential uncollectible amounts. Effective February 1, 2022, the allowance is assessed by applying a historical loss-rate methodology in accordance with ASC Topic 326, Financial Instruments - Credit Losses, adjusted as necessary based on the Company's review of accounts receivable, specifically reviewing factors including the age of the balances, customer payment history, creditworthiness, and other factors. The Company also considers market conditions and current and expected future economic conditions to inform adjustments to historical loss data. Expected credit losses are recorded as general and administrative expenses on the consolidated statements of operations. Fair Value Measurement Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability (an “exit price”), in the principal or most advantageous market for that asset or liability in an orderly transaction between market participants on the measurement date. The Company measures fair value based on a three-level hierarchy of inputs, maximizing the use of observable inputs, where available, and minimizing the use of unobservable inputs when measuring fair value. A financial instrument’s level within the three-level hierarchy is based on the lowest level of input that is significant to the fair value measurement. The three-level hierarchy of inputs is as follows: Level 1: Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date; Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. These inputs are based on the Company’s own assumptions about current market conditions and require significant management judgment or estimation. The Company’s assets and liabilities measured at fair value on a recurring basis consist of cash and cash equivalents, short-term investments, restricted cash and cash equivalents, accrued liabilities, contingent consideration related to the Salo Sciences acquisition (Note 6), warrant liabilities and convertible notes. Fair Value Option The Company elected the fair value option to account for its convertible notes. The Company recorded the convertible notes at fair value with changes in fair value recorded on the consolidated statements of operations (Note 5). The primary reason for electing the fair value option was for simplification and cost-benefit considerations of accounting for the convertible notes at fair value versus bifurcation of the embedded derivatives. As a result of applying the fair value option, direct costs and fees related to the convertible notes were expensed as incurred and were not deferred. In connection with the Business Combination, the convertible notes converted into shares of Class A common stock. Concentration of Credit Risk and Other Risks and Uncertainties Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash, cash equivalents, short-term investments and accounts receivable. By their nature, all such financial instruments involve risks, including the credit risk of nonperformance by counterparties. The Company’s cash, cash equivalents and short-term investments are deposited with or held by financial institutions in the U.S., Canada, Germany, the Netherlands and Singapore. The Company generally does not require collateral to support the obligations of the counterparties and deposits at financial institutions may, at times, be in excess of federal or national insured limits or deposit-guarantee limits in each of the respective countries. The Company has not experienced material losses on its deposits. The maximum amount of loss at January 31, 2023 that the Company would incur if parties to cash, cash equivalents, and short-term investments failed completely to perform according to the terms of the contracts is $ 407.9 million. 86 Accounts receivables are typically unsecured and are derived from revenue earned from customers across various countries. As of January 31, 2023, one customer accounted for 15 % of accounts receivable. As of January 31, 2022, four customers accounted for 23 %, 14 %, 12 %, and 10 % of accounts receivable, respectively. For the fiscal year ended January 31, 2023, one customer accounted for 19 % of revenue. For the fiscal year ended January 31, 2022, one customer accounted for 11 % of revenue. For the fiscal year ended January 31, 2021, three customers accounted for 12 %, 10 % and 10 %, of revenue, respectively. The Company’s offerings depend on continued and new approvals from the Federal Communications Commission (“FCC”), National Oceanic and Atmospheric Administration (“NOAA”), and other U.S. and international regulatory agencies for the Company to continue its operations. There can be no assurance that the Company’s operations will continue to receive the necessary approvals or that such operations will be supported by the U.S. government or other governments. If the Company was denied such approvals, if such approvals were delayed, or if the U.S. government’s or other governments’ policies change, these events may have a material adverse impact on the Company’s financial position and results of operations. The Company contracts with certain third-party service providers to launch satellites. Service providers who provide these services are limited. The inability of launch service providers to contract with the Company could materially impact future operating results. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation and amortization. Repair and maintenance costs are expensed as incurred. Significant improvements that extend the useful life or add functionality to property and equipment are capitalized. Depreciation is computed once an asset is placed in service using the straight-line method over the estimated useful life of the asset, which is as follows: Estimated useful life (in years) Computer equipment and purchased software 3 Office furniture, equipment and fixtures 5 Satellites 2.2 to 9 Ground stations and ground station equipment 3 to 10 Leasehold improvements lesser of useful life or term of lease Costs directly associated with design, construction, launch, and commissioning of satellites and systems are capitalized when the design of the satellites and systems is at a sufficiently advanced stage such that the Company believes that recovery of the costs through future cash inflows is probable. The Company capitalizes material, labor and launch costs (including integration and launch insurance costs) that are incurred and necessary for the satellites to be placed into service. The Company depreciates the cost of a satellite over its estimated useful life, using the straight-line method of depreciation, once it is placed into service, which is when the Company determines that the satellites are providing imagery that meets the required quality specifications for sale to its customers. The estimated useful life over which the Company depreciates a satellite is determined once the satellite has been placed into service. The initial determination of the satellite’s useful life involves the consideration of multiple factors, including design life, random part failure probabilities, expected component degradation and cycle life, fuel consumption (where applicable), and experience with satellite parts, vendors and similar assets. At least annually, or more frequently, should facts and circumstances indicate a need, the Company performs an assessment of the remaining useful lives of its property and equipment including its satellites. The assessment for satellites evaluates satellite usage data, remaining fuel (where applicable), operational stresses and other factors that may impact the satellite’s expected useful life. In February 2021, the Company completed an assessment of the useful lives of its satellites and adjusted the estimated useful life of certain satellites from 6 years to 9 years. This change in accounting estimate was effective beginning in fiscal year 2022. In August 2021, additional information specific to a single high resolution satellite became available which indicated the useful life of the satellite will be less than originally estimated. The change in estimate for this satellite was accounted for prospectively beginning in August 2021. The effect of these changes in 87 estimate was a net decrease in depreciation expense of $ 17.6 million and a decrease in basic and diluted net loss per share attributable to common stockholders of approximately $ 0.22 for the fiscal year ended January 31, 2022. Capitalized Internal-Use Software Development Costs Costs directly attributable to the development of internal-use software are capitalized when the preliminary design of the software is completed, management has committed funding to proceed with the development and confirmed adequate probability that the project will be completed and the software will function as intended. Capitalization is discontinued when the project is substantially completed and ready for its intended use. The Company capitalizes labor costs that are incurred and necessary for the software to be placed into service and any interest costs apportioned to the project, if material. The Company amortizes capitalized internal-use software development costs, once it is placed into service, over its estimated useful life using the straight-line method, which is generally one to four years based on management’s determination of the duration of time during which the related software will be in use and contributing to the Company’s cash flows. Impairment of Long-Lived Assets The carrying amount of long-lived assets and finite-lived intangible assets to be held and used in the business are reviewed for impairment annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment indicators include, among other conditions, cash flow deficits, historic or anticipated declines in revenue or operating profit or material adverse changes in the business climate that indicate that the carrying amount of an asset may be impaired. When impairment indicators are present, the recoverability of the asset is measured by comparing the carrying value of the asset to the estimated undiscounted future cash flows expected to be generated by the asset. This evaluation is performed at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities, or an asset group. If the carrying amount of the asset or asset group is not recoverable, the impairment to be recognized is measured by the amount by which the carrying amount of each long-lived asset or asset group exceeds the fair value of the asset or asset group. During the fiscal year ended January 31, 2022, the Company recognized impairment expense of approximately $ 1.1 million relating to capitalized costs for certain internal-use software development projects that were discontinued before the projects were completed. The impairment expense is included in research and development expenses within the consolidated statements of operations for the fiscal year ended January 31, 2022. Other than as noted above, no events or changes in circumstances indicated the carrying amounts of the Company’s long-lived assets may not be recoverable during the fiscal years ended January 31, 2023, 2022 and 2021. Business Combinations The Company accounts for its business combinations using the acquisition accounting method, which requires it to determine the fair value of net assets acquired, including intangible assets and related goodwill. The Company allocates the fair value of purchase consideration to the assets acquired, liabilities assumed, and non-controlling interests in the acquired entity based on their fair values at the acquisition date. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and involves the use of significant estimates, including projections of future cash inflows and outflows, discount rates, asset lives and market multiples. There are different valuation models for each component, the selection of which requires judgment. These determinations will affect the amount of amortization expense recognized in future periods. The Company bases its fair value estimates on assumptions it believes are reasonable but recognizes that the assumptions are inherently uncertain. Acquisition-related costs are accounted for as expenses in the period in which they are incurred. The operating results of the acquired business are reflected in the Company’s consolidated financial statements as of the acquisition date. 88 Goodwill Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in a business combination. Goodwill is not subject to amortization and is tested for impairment at least annually, during the fourth quarter of each fiscal year or more frequently if events or circumstances indicate that the asset might be impaired. In assessing goodwill for impairment, the Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. In the qualitative assessment, the Company considers factors including economic conditions, industry and market conditions and developments, overall financial performance and other relevant entity-specific events in determining whether it is more likely than not that the fair value of the reporting unit is less than the carrying amount. Should the Company conclude that it is more likely than not that the recorded goodwill amounts have been impaired, or if the Company elects to bypass the optional qualitative assessment as provided for under U.S. GAAP, the Company proceeds with performing a quantitative impairment test. Goodwill impairment exists when a reporting unit’s carrying value exceeds its fair value. Significant judgment is applied when goodwill is assessed for impairment. No goodwill impairment was recorded during the fiscal years ended January 31, 2023, 2022 and 2021. Intangible Assets Intangible assets with finite useful lives are carried at cost, net of accumulated amortization and impairment, where applicable. Amortization is recorded over the estimated useful lives of the assets on a straight-line basis as follows: Estimated useful life (in years) Developed technology 5 to 9 Imagery library 3 Customer relationships 5 to 9 Trade names and other 3 to 7 Revenue Recognition The Company recognizes revenue in accordance with Accounting Standard Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“Topic 606”). Under Topic 606, the Company recognizes revenue under the core principle to depict the transfer of control to the Company’s customers in an amount reflecting the consideration to which the Company expects to be entitled. In order to achieve that core principle, the Company applies the following five-step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when a performance obligation is satisfied. The Company derives its revenue principally from licensing rights to use imagery that is delivered digitally through its online platform in addition to providing related services. Imagery licensing agreements vary by contract, however, generally they have annual or multi-year contractual terms. The data licenses are generally purchased via a fixed price contract on a subscription or usage basis, whereby a customer pays for access to the Company’s imagery that may be downloaded over a specific period of time, or, less frequently, on a transactional basis, whereby the customer pays for individual content or archive access licenses. The Company’s imagery licensing agreements and service agreements are generally non-cancelable and do not contain refund-type provisions. At contract inception, the Company assesses the product offerings in its contracts to identify performance obligations that are distinct. A performance obligation is distinct when it is separately identifiable from other items in a bundled package and if a customer can benefit from it on its own or with other resources that are readily available to the customer. To identify the performance obligations, the Company considers all of the product offerings promised in the contract. Imagery licensing arrangements generally provide customers with the right to access imagery through the Company’s platform, download content on a limited or unlimited basis over the contractual period depending on the terms of the applicable contract, or provide both the right to access imagery and download content. The access to imagery through the Company’s online platform and the ability to download such imagery represent two separate performance obligations. As such, a portion of the total contract consideration related to access to continuously updated imagery content is recognized ratably on a straight-line basis over the term of the contract. 89 At contract inception, existing or archived imagery is available for download by the customer. The existing or archived imagery has significant standalone functionality and is not updated once licensed to a particular customer. As such, the portion of the contract consideration related to the download license of existing or archive imagery content is recognized as revenue at the commencement of the contract when control of the imagery is transferred, and the imagery is available for download by the customer. The portion of the contractual consideration related to the download of monitoring imagery content is recognized over the term of the contract utilizing a usage-based output measure of progress based on the download capacity specified in the contract. To the extent the number of downloads of the specified imagery content is unlimited, the contractual consideration related to downloads is recognized ratably on a straight-line basis over the term of the contract. When the Company’s contracts with customers contain more than a single performance obligation, management allocates the total contract consideration to each performance obligation on a relative SSP basis. The SSP is the price at which the Company would sell a promised product or service separately to a customer. Judgment is required to determine the SSP for each distinct performance obligation. The Company determines SSP by considering its overall pricing practices and market conditions, including the Company’s discounting practices, the size and volume of the Company’s transactions, the customer demographic, price lists, historical sales, contract prices and customer relationships. The Company also provides other services to customers, including professional services such as training, analytical services, research and development services to third parties, and other value-added activities related to imagery products. These revenues are recognized as the services are rendered, on a proportional performance basis for fixed price contracts or ratably over the contract term for subscription professional services contracts. Training revenues are recognized as the services are performed. The Company recognizes revenue on a gross basis. The Company is the principal in the transaction as it is the party responsible for the performance obligation and it controls the product or service before transferring it to the customer. Revenue excludes sales and usage based taxes where it has been determined that the Company is acting as a pass through agent. The transaction price is the total amount of consideration that the Company expects to be entitled to in exchange for the product offerings in a contract. The prices of imagery licensing and other services are generally fixed at contract inception and therefore, the Company’s contracts do not contain a significant amount of variable consideration. From time to time, the Company may enter into contracts with its customers that provide a form of variable consideration, including a revenue share arrangement. For these arrangements, the Company estimates the variable consideration at the contract inception based on the most likely amount in a range of possible outcomes. The estimate of variable consideration is reassessed on a quarterly basis. The Company typically bills in advance either quarterly or annually for contracts with terms of one year or longer. The Company also has a small number of large contracts that have required payment terms that are monthly or quarterly in arrears. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether the underlying performance obligations have been satisfied. Advance payments from customers have been categorized as current or non-current deferred revenue based on the expected performance date. The Company applied the practical expedient in Topic 606 and did not evaluate contracts of one year or less for the existence of a significant financing component. The financing component of multi-year contracts were not significant. Cost of Revenue Cost of revenue consists of employee-related costs of performing account and data provisioning, customer support, satellite and engineering operations, as well as the costs of operating and retrieving information from the satellites, processing and storing the data retrieved, third party imagery expenses, depreciation of satellites and ground stations, amortization of acquired intangibles and the amortization of capitalized internal-use software related to creating imagery provided to customers. Cost of revenue from professional services consists primarily of employee-related costs associated with providing these services, including costs paid to subcontractors and certain third-party fees. Employee-related costs include salaries, benefits, bonuses and stock-based compensation. 90 Research and Development Expenditures Research and development expenditures primarily include personnel related expenses for employees and consultants, hardware costs, supplies costs, contractor fees and administrative expenses. Employee-related costs include salaries, benefits, bonuses and stock-based compensation. Expenses classified as research and development are expensed as incurred and attributable to advancing technology research, platform and infrastructure development and the research and development of new product iteration. The Company continues to iterate its satellites and operations for optimal efficiency and function. Costs associated with satellite and other space related research and development activities are expensed as incurred. Funding for the Company’s performance of research and development services under certain arrangements (see Note 9) are recognized as a reduction of research and development expenses based on measurement of progress using the input method. Sales and Marketing Sales and marketing expenditures primarily include costs incurred to market and distribute the Company’s products. Such costs include advertising and conferences, sales commissions, salaries, benefits and stock-based compensation for the Company’s sales and marketing personnel and sales office expenses. Sales and marketing expenses are expensed as incurred. Advertising expenses for the fiscal years ended January 31, 2023, 2022 and 2021 were not material. General and Administrative General and administrative expenses include personnel-related expenses and facilities-related costs primarily for its executive, finance, accounting, legal and human resources functions. General and administrative expenses also include fees for professional services principally comprised of legal, audit, tax, and insurance, as well as executive management expenses. General and administrative costs are expensed as incurred. Income Taxes The Company is subject to income taxes in the U.S. and various foreign jurisdictions and uses estimates in determining its provisions for income taxes. The Company accounts for income taxes under the asset and liability method. Deferred assets and liabilities are recognized for the future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets where it is more likely than not that the deferred tax assets will not be realized. The Company recognizes and measures uncertain tax positions in accordance with ASC 740, Income Taxes, which prescribes a recognition threshold and measurement process for recording uncertain tax positions taken, or expected to be taken in a tax return, in the consolidated financial statements. The Company accrues for the estimated amount of taxes for uncertain tax positions if it is more likely than not that the Company would be required to pay such additional taxes. An uncertain tax position will not be recognized if it has a less than 50% likelihood of being sustained. The global intangible low-taxed income (GILTI) provisions of the Tax Cut and Jobs Act impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporation. The Company elects to treat any potential GILTI inclusions as a period cost. Common Stock Valuations The Company has historically granted stock options at an exercise price equal to the fair value as determined by the Company’s board of directors on the date of grant. Given the absence of a public market for the Company’s common stock prior to the Business Combination, the board of directors of the Company estimated the fair value of its common stock at the time of each grant of an equity-based award. The board of directors of the Company utilized various valuation methodologies in accordance with the framework of the American Institute of Certified Public Accountants’ Technical Practice Aid, Valuation of Privately Held Company Equity Securities Issued as 91 Compensation , to estimate the fair value of its common stock. These estimates and assumptions include numerous objective and subjective factors to determine the fair value of the Company’s common stock at each grant date, including the following factors: • relevant precedent transactions including the Company’s capital transactions; • the liquidation preferences, rights, preferences, and privileges of the Company’s convertible preferred stock relative to the common stock; • the Company’s actual operating and financial performance; • the Company’s current business conditions and projections; • the Company’s stage of development; • the likelihood and timing of achieving a liquidity event for the common stock underlying the stock options, such as an initial public offering, given prevailing market conditions; • any adjustment necessary to recognize a lack of marketability of the common stock underlying the granted options; • the market performance of comparable publicly traded companies; and • U.S. and global capital market conditions. If different assumptions had been made, equity-based compensation expense, net loss, and net loss per common share could have been significantly different. Following the consummation of the Business Combination, the fair value of the Company’s common stock at the time of grant of each equity-based award is determined based on its quoted market price on the NYSE. Stock-Based Compensation The Company accounts for stock-based compensation expense in accordance with the fair value recognition and measurement provisions of U.S. GAAP, which require compensation cost for the grant-date fair value of stock-based awards to be recognized over the requisite service period. The Company determines the fair value of stock-based awards granted or modified, using appropriate valuation techniques. The Company recognizes forfeitures as they occur. The Company uses the Black-Scholes option pricing model to determine the fair value of the stock options granted. The Black-Scholes option pricing model requires the input of subjective assumptions, including the fair value of the underlying common stock, the expected term of the option, the expected volatility of the price of the common stock, risk-free interest rates, and the expected dividend yield of the common stock. The assumptions used to determine the fair value of the option awards represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment. The Company records stock-based compensation expense for stock options on a straight-line basis over the requisite service period, which is generally four years. The fair value of Restricted Stock Units (“RSUs”) is the fair value of the underlying stock at the measurement date. For RSU awards that are subject only to a time-based service vesting requirement, the Company records stock-based compensation expense on a straight-line basis over the requisite service period, which is generally four years. For RSU awards that are subject to both time-based service and performance condition (including liquidity event) vesting requirements, no expense is recognized until it is probable that the vesting criteria would be met. Stock-based compensation expense for RSU awards with performance and other vesting criteria is recognized as expense under an accelerated graded vesting model. Pursuant to the Merger Agreement for the Business Combination, Former Planet equity holders, including Former Planet equity award holders, have the right to receive earn-out consideration (the “Earn-out Shares”). The Earn-out Shares may be earned in four equal tranches based on market condition vesting requirements (see Note 3). The Earn-out Shares allocated to Former Planet equity award holders are accounted for as stock-based compensation pursuant to ASC 718, Compensation—Stock Compensation, because service must be provided through each market condition vesting requirement. The fair value of the Earn-out Shares allocated to Former Planet equity award holders was determined upon the close of the Business Combination which is recognized as stock-based compensation 92 expense over the requisite service period. Compensation expense for awards with market conditions is not reversed if the market condition is not met. The fair value of the Earn-out Shares was estimated using a model based on multiple stock price paths developed through the use of a Monte Carlo simulation that incorporates into the valuation the possibility that the market condition targets may not be satisfied. This valuation model requires inputs such as the fair value of the Company’s Class A common stock, the risk-free interest rate, expected term, expected dividend yield and expected volatility. The fair value of the Company’s Class A common stock is the closing stock price on the NYSE as of the measurement date. The risk-free interest rate assumption is determined by using the U.S. Treasury rates of the same period as the expected term of the Earn-out Shares, which is 5 years from the closing of the Business Combination. The Company’s volatility was derived from several publicly traded peer companies. The Company had historically been a private company and lacked sufficient company-specific historical and implied volatility information. Therefore, the Company estimated its expected stock volatility based on the historical volatility of a publicly traded set of peer companies. The requisite service period for each of the four vesting tranches for the Earnout Shares was derived from the median time to vest for each tranche utilizing the same simulation model that produced the fair value estimate. Public and Private Placement Warrant Liabilities In connection with dMY IV’s initial public offering, which occurred on March 9, 2021, dMY IV issued 34,500,000 units, consisting of one share of Class A common stock of dMY IV and one-fifth of one redeemable warrant, at a price of $ 10.00 per unit (the “Public Warrants”). Simultaneously with the closing of its initial public offering, dMY IV completed the private sale of 5,933,333 warrants to dMY Sponsor IV, LLC (the “dMY Sponsor”) at a purchase price of $ 1.50 per warrant (the “Private Placement Warrants”). Additionally, pursuant to a lock-up agreement entered into with the dMY Sponsor in connection with the Business Combination, 2,966,667 of the Private Placement Warrants are subject to vesting conditions (the “Private Placement Vesting Warrants”). See Note 13 for further details relating to the Public Warrants and Private Placement Warrants. The Company evaluated the Public Warrants and Private Placement Warrants, which are warrants for Class A common stock, under ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity (“ASC 815-40”), and concluded that they do not meet the criteria to be classified in stockholders’ equity. Specifically, the exercise of the warrants may be settled in cash upon the occurrence of a tender offer or exchange that involves 50% or more of the Company’s Class A stockholders. As there are two classes of common stock, not all of the stockholders need to participate in such tender offer or exchange to trigger the potential cash settlement and the Company does not control the occurrence of such an event, the Company concluded that the warrants do not meet the conditions to be classified in equity. Since the Public Warrants and Private Placement Warrants meet the definition of a derivative under ASC 815, the Company recorded these warrants as liabilities on the balance sheet at fair value, with subsequent changes in their respective fair values recognized in the consolidated statements of operations at each reporting date. The Public Warrants are traded on the NYSE and are recorded at fair value using the closing price as of the measurement date. The fair value of the Private Placement Warrants (excluding the Private Placement Vesting Warrants) are estimated using the Black-Scholes option pricing model. Due to the market condition vesting requirements, the fair value of the Private Placement Vesting Warrants are estimated using a model based on multiple stock price paths developed through the use of a Monte Carlo simulation that incorporates into the valuation the possibility that the market condition targets may not be satisfied. These valuation models require inputs such as the fair value of the Company’s Class A common stock, the risk-free interest rate, expected term, expected dividend yield and expected volatility. The fair value of the Company’s Class A common stock is the closing stock price on the NYSE as of the measurement date. The risk-free interest rate assumption is determined by using the U.S. Treasury rates of the same period as the expected term of the Private Placement Warrants, which is 5 years from the closing of the Business Combination. The Company had historically been a private company and lacked sufficient company-specific historical and implied volatility information. Therefore, the Company estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies. 93 Preferred Stock Warrants Prior to the Business Combination, the Company had preferred stock warrants which were exercisable for Series B and Series D convertible preferred stock. The Company’s convertible preferred stock was classified as permanent equity, as redemption was solely within control of the Company. Prior the Business Combination, the Company evaluated the Series B and Series D Preferred Stock warrants under ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity , and concluded the Series B and Series D preferred stock warrants did not meet the criteria to be classified in stockholders’ equity. Specifically, the settlement provisions of the Series B and certain Series D preferred stock warrants met the criteria for liability classification as the number of shares to be issued was not fixed at the time of issuance. Certain other Series D preferred stock warrants met the criteria for liability classification as certain terms of the warrants precluded them from being indexed to the Company’s stock. As such, the Series B preferred stock warrants and Series D preferred stock warrants were recognized as liabilities and recorded at fair value. The change in fair value of these warrants was recognized at each reporting date in the consolidated statements of operations. Upon the closing of the Business Combination, all Series B preferred stock warrants converted into warrants for Class A common stock warrants and were exercised. Upon the closing of the Business Combination, all Series D preferred stock warrants converted into warrants for Class A common stock, and a portion of such Class A common stock warrants were not exercised and remained outstanding (see Note 11). The Company evaluated such Class A common stock warrants that remained outstanding under ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity and concluded they met the criteria to be classified in stockholders’ equity. Specifically, given that the underlying shares of such warrants are now Class A common stock, the terms of such warrants no longer preclude them from being indexed to the Company’s stock. Accordingly, the Class A common stock warrants that remained outstanding were measured at fair value and classified within stockholders’ equity on the date of the Business Combination. Foreign Currency Transactions and Translation The Company’s reporting currency is the U.S. dollar. The functional currency of the Company’s subsidiaries has been determined to be either the U.S. dollar, Euro or Canadian dollar as the case may be. Revenue and expenses of the Company’s foreign subsidiaries, with a functional currency of either Euro or Canadian dollar, are translated into U.S. dollars using the monthly average exchange rates prevailing during the period. The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars at the exchange rate in effect at the balance sheet date. Translation adjustments are recorded as a component of accumulated other comprehensive income (loss) within stockholders’ equity. Transactions denominated in currencies other than the functional currency are recorded based on the exchange rates at the time of the transaction. Monetary assets and liabilities are subject to remeasurement at the exchange rate in effect at the balance sheet date, with subsequent changes in exchange rates resulting in transaction gains or losses, which are included within other income (expense), net in the consolidated statements of operations and comprehensive loss. Foreign currency gain (loss) was $( 0.5 ) million, $( 0.5 ) million and $ 0.3 million for the years ended January 31, 2023, 2022 and 2021, respectively. Segments Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined that it operates in one operating segment and one reportable segment, as the CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. See Note 4, Revenue, for revenue by geographic region. See Note 8, Balance Sheet Components, for long-lived assets by geographic region. Net Loss Per Share Attributable to Common Stockholders Basic and diluted net loss per share attributable to common stockholders is presented in conformity with the two-class method required for participating securities. Under the two-class method, net loss is attributed to common stockholders and participating securities based on their participation rights. The Company considered all series of its 94 convertible preferred stock to be participating securities prior to their conversion into shares of Class A common stock in connection with the Business Combination. Net loss attributable to common stockholders was not allocated to the convertible preferred stock as the holders of the convertible preferred stock did not have a contractual obligation to share in any losses. Basic net loss per share attributable to common stockholders is the same for Class A and Class B shares of common stock because they are entitled to the same liquidation and dividend rights. Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding and the weighted-average number of certain Class A common stock warrants that were previously outstanding and were exercised in connection with the Business Combination. Such Class A common stock warrants were not contingently exercisable and the common stock of the Company was issued for little or no consideration, as such the shares underlying these Class A common stock warrants were considered outstanding in the denominator in the calculation of basic net loss per share attributable to common stockholders from the issuance date of such Class A common stock warrants. Diluted net loss per share attributable to common stockholders is computed by giving effect to all potentially dilutive securities outstanding for the period. For the fiscal years ended January 31, 2023, 2022 and 2021, all potentially dilutive securities were antidilutive and accordingly, basic net loss per share equals diluted net loss per share. Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (“ Topic 842 ”), which supersedes the guidance in former ASC 840, Leases . The new guidance requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification determines whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use (“ROU”) asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less may be accounted for similar to existing guidance for operating leases under Topic 840. The Company adopted Topic 842 effective February 1, 2022 and applied the new guidance prospectively utilizing the modified retrospective approach. Comparative periods prior to the effective date were not adjusted and continue to be reported in accordance with the previous lease guidance under Topic 840. The Company elected to utilize the package of practical expedients for transition which permitted the Company to not reassess its prior conclusions regarding whether a contract is or contains a lease, lease classification and initial direct costs. Upon adoption, the Company recognized ROU assets and lease liabilities for operating leases of $ 8.4 million and $ 11.4 million, respectively. The difference between the ROU assets and lease liabilities resulted from deferred rent liability balances that were reclassified to ROU assets upon adoption. The Company currently has no finance leases. The adoption of Topic 842 did not result in a cumulative effect adjustment to accumulated deficit, did not impact the Company’s previously reported financial results and did not impact the Company’s consolidated statements of operations and comprehensive loss. Additionally, the adoption of Topic 842 had no impact on cash provided by or used in operating, investing or financing activities on the Company’s consolidated statements of cash flows. In June 2016, the FASB issued ASU 2016-13, Financial instruments, Credit Losses (“ Topic 326 ”): Measurement of Credit Losses on Financial Instruments , which amends the guidance on the impairment of financial instruments by requiring measurement and recognition of expected credit losses for most financial assets, including trade receivables, available-for-sale debt securities, and other instruments that are not measured at fair value through net income. The Company adopted the new guidance effective February 1, 2022 utilizing the modified retrospective transition method and recorded a $ 0.3 million adjustment to the beginning accumulated deficit balance to reflect the cumulative effect of the accounting change. The adoption of the new guidance did not have a material impact on the Company’s consolidated financial statements and related disclosures. 95 In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, a new accounting standard update to simplify the measurement of goodwill by eliminating the Step 2 impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. The new guidance requires an entity to compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The Company adopted ASU 2017-04 effective February 1, 2022 which did not impact the Company’s consolidated financial statements and related disclosures. In December 2019, the FASB issued ASU 2019-12, Income Taxes ( “Topic 740” ): Simplifying the Accounting for Income Taxes, which eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. The Company adopted ASU 2019-12 effective February 1, 2022, which did not have a material impact on the Company’s consolidated financial statements and related disclosures. In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which requires an entity to apply guidance in ASC 606, Revenue from Contracts with Customers to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination as if the entity had originated the contracts. The Company adopted ASU 2021-08 effective February 1, 2022, which did not have a material impact on the Company’s consolidated financial statements and related disclosures. (3) Business Combination As discussed in Note 1, the Company completed the Business Combination on December 7, 2021, pursuant to the Merger Agreement. Upon the consummation of the Business Combination, the following events contemplated by the Merger Agreement occurred, based on Former Planet’s capitalization as of December 7, 2021: • all Former Planet convertible preferred stock (see Note 12) converted into shares of Former Planet Class A common stock and all Former Planet convertible preferred stock warrants became warrants for Former Planet Class A common stock (see Note 11); • the Venture Tranche B loans and the 2020 Convertible Notes (see Note 11) converted into shares of Former Planet Class A common stock; • each share of Former Planet capital stock (other than Former Planet Class B common stock) was converted into the right to receive shares of Planet’s Class A common stock after giving effect to the Exchange Ratio of approximately 1.53184 as calculated in accordance with the Merger Agreement; • each share of Former Planet Class B common stock was converted into the right to receive shares of Planet’s Class B common stock after giving effect to the Exchange Ratio of approximately 1.53184 as calculated in accordance with the Merger Agreement; • all granted and outstanding unexercised Former Planet stock options were converted into Planet stock options exercisable for shares of Planet’s Class A common stock with the same terms and vesting conditions except for the number of shares exercisable and the exercise price, each of which was adjusted by the Exchange Ratio; • all granted and outstanding unvested Former Planet restricted stock units were converted into Planet restricted units for shares of Planet’s Class A common stock with the same terms and vesting conditions except for the number of shares, which was adjusted by the Exchange Ratio; and • Former Planet Class A common stock warrants that remained outstanding subsequent to the closing of the Business Combination (see Note 11) were converted into warrants for Planet’s Class A common stock with the same terms except for the number of shares exercisable and the exercise price, each of which was adjusted by the Exchange Ratio 96 Pursuant to the Merger Agreement, Former Planet equity holders, including Former Planet equity award holders, will have the right to receive up to an additional 27,000,000 shares in earnout consideration (the “Earn-out Shares”), of which up to 24,600,000 shares may be issued as shares of Class A common stock and up to 2,400,000 may be issued to William Marshall and Robert Schingler, Jr. (the “Planet Founders”) as shares of Class B common stock. The Earn-out Shares may be earned in four equal tranches (i) when the closing price of Class A common stock equals or exceeds $ 15.00 , $ 17.00 , $ 19.00 and $ 21.00 , over any 20 trading days within any 30 day trading period prior to December 7, 2026 or (ii) when the Company consummates a change of control transaction prior to December 7, 2026 that entitles its stockholders to receive a per share consideration of at least $ 15.00 , $ 17.00 , $ 19.00 and $ 21.00 . Any right to Earn-out Shares that remains unvested on the first business day after five years from the closing of the Business Combination will be forfeited without any further consideration. Approximately 5,540,990 shares of the Earn-out Shares were allocated to Former Planet equity award holders, which are accounted for as stock-based compensation pursuant to ASC 718, Compensation—Stock Compensation because service must be provided through each market condition vesting requirement described above. The remaining Earn-out Shares are accounted for as equity classified equity instruments, were included as merger consideration as part of the Business Combination, and recorded in Additional paid-in capital. Additionally, the shares of dMY IV Class B common stock automatically converted to 8,625,000 shares of the Company’s Class A common stock (the “dMY Sponsor Shares”), of which, pursuant to a lock-up agreement entered into with the dMY Sponsor in connection with the Business Combination, 862,500 shares are subject to vesting under conditions consistent with the Earn-out Shares discussed above (the “dMY Sponsor Earn-out Shares”). The dMY Sponsor Earn-out Shares are accounted for as equity classified equity instruments, were included as merger consideration as part of the Business Combination, and recorded in Additional paid-in capital. On July 7, 2021, in connection with the execution of the Merger Agreement, and on September 13, 2021, following receipt of interest expressed by additional subscribers after the announcement of the Business Combination, dMY IV entered into subscription agreements (collectively, the “Subscription Agreements”) with certain parties subscribing for shares of dMY IV’s Class A common stock (such parties, the “Subscribers”), pursuant to which the Subscribers agreed to purchase, and dMY IV agreed to sell to the Subscribers, an aggregate of 25,200,000 shares of dMY IV Class A Common Stock, for a purchase price of $ 10.00 per share. Immediately prior to the closing of the Business Combination, the Company issued and sold 25,200,000 shares of its Class A common stock to the Subscribers for aggregate gross proceeds to the Company of $ 252.0 million (the “PIPE Investment”). In connection with the Business Combination transactions, the outstanding principal, accrued interest and repayment fees of $ 67.1 million of the credit agreement with SVB and Hercules was repaid (see Note 11). The Business Combination was accounted for as a reverse recapitalization in accordance with U.S. GAAP, whereby dMY IV was treated as the acquired company and Former Planet was treated as the acquirer. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Former Planet issuing stock for the net assets of dMY IV, accompanied by a recapitalization. The net assets of dMY IV were stated at historical cost, with no goodwill or other intangible assets recorded. The following table reconciles the elements of the Business Combination to the consolidated statement of cash flows and the consolidated statement of stockholders’ equity for the fiscal year ended January 31, 2022: (in thousands) Recapitalization Cash - dMY IV Trust and cash, net of redemptions $ 338,383 Cash - PIPE Investment 252,000 Less: Transaction costs (1) ( 57,219 ) Proceeds from Business Combination and PIPE Investment. net $ 533,164 Less: non-cash accrued transaction costs ( 326 ) Less: non-cash liability assumed as part of Business Combination ( 171 ) Less: non-cash fair value of Public Warrants ( 24,840 ) Less: non-cash fair value of Private Placement Warrants ( 29,370 ) Business Combination and PIPE Investment, net $ 478,457 97 (1) Excludes $ 2.2 million of transaction costs incurred attributable to the Public Warrants and Private Placement Warrants, which were recorded within other income (expense), net in the consolidated statement of operations for the fiscal year ended January 31, 2022. The number of shares of the Company’s common stock outstanding immediately following the consummation of the Business Combination and related transactions is as follows: Number of Shares Former Planet stockholders - Class A Common Stock (1) 172,161,152 Former Planet stockholders - Class B Common Stock 21,157,586 dMY IV’s public stockholders - Class A Common Stock (2) 33,810,330 Holders of dMY IV’s sponsor shares - Class A Common Stock (3) 7,762,500 PIPE Investment - Class A Common Stock 25,200,000 Total shares of common stock immediately after Business Combination 260,091,568 (1) Excludes 1,746,296 shares of Class A common stock associated with the early exercise of unvested Former Planet stock options. (2) Upon the closing of the Business Combination, dMY IV’s public stockholders were offered the opportunity to redeem shares of dMY IV Class A common stock then held by them for cash equal to their pro rata share of the aggregate amount on deposit (as of two business days prior to the closing) in the trust account. The table above reflects redemptions of 689,670 shares of Class A common stock that occurred. (3) Excludes 862,500 shares of Class A common associated with the dMY Sponsor Earn-out Shares that are subject to vesting requirements. (4) Revenue Deferred Revenue During the fiscal years ended January 31, 2023, 2022 and 2021, the Company recognized revenue of $ 63.2 million, $ 55.2 million and $ 34.7 million, respectively, that had been included in deferred revenue as of January 31, 2022, January 31, 2021 and January 31, 2020, respectively. Remaining Performance Obligations The Company often enters into multi-year imagery licensing arrangements with its customers, whereby the Company generally invoices the amount for the first year of the contract at signing followed by subsequent annual invoices at the anniversary of each year. Remaining performance obligations represent the amount of contracted future revenue that has not yet been recognized, which includes both deferred revenue and non-cancelable contracted revenue that will be invoiced and recognized in revenue in future periods. The Company’s remaining performance obligations were $ 152.0 million as of January 31, 2023, which consists of both deferred revenue of $ 54.8 million and non-cancelable contracted revenue that will be invoiced in future periods of $ 97.2 million. The Company expects to recognize approximately 75 % of the remaining performance obligation over the next 12 months, approximately 98 % of the remaining obligation over the next 24 months, and the remainder thereafter. Remaining performance obligations do not include unexercised contract options, firm orders where funding has not been appropriated and contracts which provide the customer with a right to terminate for convenience without incurring a substantive termination penalty. 98 Disaggregation of Revenue The following table disaggregates revenue by major geographic region: Year Ended January 31, (in thousands) 2023 2022 2021 United States $ 97,773 $ 55,993 $ 61,471 Canada 12,952 9,370 15,910 Rest of world 80,531 65,846 35,787 Total revenue $ 191,256 $ 131,209 $ 113,168 No single country in the Rest of World accounted for more than 10% of revenue for the fiscal years ended January 31, 2023, 2022, and 2021. Costs to Obtain and Fulfill a Contract Commissions paid to the Company’s direct sales force are considered incremental costs of obtaining a contract with a customer. Accordingly, commissions are capitalized when incurred and amortized to sales and marketing expense over the period of benefit from the underlying contracts. The period of benefit from the underlying contract is consistent with the timing of transfer to the performance obligations to which the capitalized costs relate, and is generally consistent with the contract term. During the fiscal years ended January 31, 2023, 2022 and 2021, the Company deferred $ 4.0 million, $ 1.7 million and $ 3.0 million of commission expenditures to be amortized in future periods. The Company’s amortization of commission expenditures was $ 1.9 million, $ 2.0 million and $ 1.9 million for the fiscal years ended January 31, 2023, 2022 and 2021, respectively. As of January 31, 2023 and 2022, deferred commissions consisted of the following: January 31, (in thousands) 2023 2022 Deferred commission, current $ 2,405 $ 1,375 Deferred commission, non-current 2,206 1,083 Total deferred commission $ 4,611 $ 2,458 The current portion of deferred commissions are included in prepaid expenses and other current assets on the consolidated balance sheets. The non-current portion of deferred commissions are included in other non-current assets on the consolidated balance sheets. (5) Fair Value of Financial Assets and Liabilities Assets and liabilities recognized or disclosed at fair value in the financial statements are categorized based upon the level of judgment associated with the inputs used to measure their respective fair values. The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis for recognition or disclosure purposes as of January 31, 2023 and 2022 by level within the fair value hierarchy. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and considers factors specific to the asset or liability. 99 January 31, 2023 (in thousands) Level 1 Level 2 Level 3 Assets Cash equivalents: Money market funds $ 72,382 $ — $ — Commercial paper — 999 — Restricted cash equivalents: money market funds 5,486 — — Short-term investments: U.S. Treasury securities 59,433 — — Commercial paper — 19,849 — Corporate bonds — 139,589 — U.S. government agency securities — 7,997 — Total assets $ 137,301 $ 168,434 $ — Liabilities Public Warrants $ 6,969 $ — $ — Private Placement Warrants — — 9,701 Contingent consideration for acquisition of business — — 8,030 Total liabilities $ 6,969 $ — $ 17,731 January 31, 2022 (in thousands) Level 1 Level 2 Level 3 Assets Cash equivalents: money market funds $ 470,066 $ — $ — Restricted cash equivalents: money market funds 5,875 — — Total assets $ 475,941 $ — $ — Liabilities Public Warrants $ 10,764 $ — $ — Private Placement Warrants — — 12,460 Total liabilities $ 10,764 $ — $ 12,460 The fair value of cash held in banks and accrued liabilities approximate the stated carrying value due to the short time to maturity and are excluded from the tables above. Money Market Funds The fair value of the Company’s money market funds is based on quoted active market prices for the funds and is determined using the market approach. Short-term Investments The fair value of the Company’s short-term investments classified within Level 2 are valued using third-party pricing services. The pricing services utilize industry standard valuation models. Inputs utilized include market pricing based on real-time trade data for the same or similar securities and other significant inputs derived from or corroborated by observable market data. Public and Private Placement Warrants The Public Warrants are classified within Level 1 as they are publicly traded and had an observable market price in an active market. The Private Placement Warrants (excluding the Private Placement Vesting Warrants) were valued based on a Black-Scholes option pricing model. Due to the market condition vesting requirements, the fair value of the Private 100 Placement Vesting Warrants were valued using a model based on multiple stock price paths developed through the use of a Monte Carlo simulation that incorporates into the valuation the possibility that the market condition targets may not be satisfied. The Private Placement Warrants are collectively classified as a Level 3 measurement within the fair value hierarchy because these valuation models involve the use of unobservable inputs relating to the Company’s estimate of its expected stock volatility which was developed based on the historical volatility of a publicly traded set of peer companies. The expected volatility inputs utilized for the fair value measurements of the Private Placement Warrants as of January 31, 2023 and 2022 were 70.0 % and 60.0 %, respectively. The following is a rollforward of balances for the Private Placement Warrants for the fiscal years ended January 31, 2023 and 2022: (in thousands) Private Placement Warrants Assumed in Business Combination $ 29,370 Change in fair value ( 16,910 ) Fair value as of January 31, 2022 $ 12,460 Change in fair value ( 2,759 ) Fair value as of January 31, 2023 $ 9,701 Contingent consideration for acquisition of business The Company recorded contingent consideration liabilities in connection with its acquisition of Salo Sciences, Inc. on January 3, 2023 (see Note 6). The Company measures the fair value of the contingent consideration liabilities based on significant inputs not observable in the market, which caused them to be classified as a Level 3 measurement within the fair value hierarchy. The fair value of the contingent consideration liability for the technical milestone payments is determined based on the present value of the probability-weighted payments for each of the milestones. The significant unobservable inputs used in the fair value measurement are management’s estimate of the probability to achieve the technical milestone criteria and the discount rate. The fair value of the contingent consideration liability for customer contract earnout payments is determined using a Monte Carlo simulation. The fair value estimate involves a simulation of future customer contract cash collections during the four-year performance period, the probability of entering into contracts with the named customers and discounting the probability-weighed earnout payments to present value. The significant unobservable inputs used in the fair value measurement are management’s estimate of obtaining the customer contracts, including probabilities, timing and contract values, and management’s estimate of the discount rate. The aggregate fair value of the contingent consideration liabilities as of January 31, 2023 was $ 8.0 million, consisting of $ 4.4 million for the technical milestone payments and $ 3.6 million for the customer contract earnout payments. The current portion of the contingent consideration liabilities are included in accrued and other current liabilities on the Company’s consolidated balance sheets. The change in fair value between the acquisition date and January 31, 2023 was immaterial and no payments were made for the contingent consideration arrangements during the fiscal year ended January 31, 2023. Convertible notes In connection with the Business Combination, the convertible notes converted into shares of Class A common stock. The Company measured the fair value of the convertible notes upon conversion based on the closing price of the Company’s Class A common stock on the date of the Business Combination and the number of Class A common stock shares into which the notes converted. As of January 31, 2021, the Company measured its convertible notes at fair value based on significant inputs not observable in the market, which caused them to be classified as a Level 3 measurement within the fair value hierarchy. The fair value of the convertible notes as of January 31, 2021 was estimated using a probability- weighted hybrid method combining (i) an option pricing model, and (ii) a discounted cash flow analysis. The significant unobservable inputs used in the fair value measurement of the Company’s convertible notes are the estimated time to liquidation, volatility, discount yield and risk-free interest rates. 101 The following table provides quantitative information associated with the fair value measurement of the convertible notes as of January 31, 2021: Fair Value as of January 31, 2021 Valuation Technique Unobservable Input Description Input (in thousands) Convertible Notes $ 101,212 Probability-weighted Estimated time to liquidation 0.2 - 0.5 years Volatility 35.0 % Discount Yield 16.0 % Risk-free interest rate 0.1 % The following is a rollforward of balances for the convertible notes for the fiscal years ended January 31, 2022 and 2021: (in thousands) Convertible Notes Fair value as of February 1, 2020 10,804 Issuance 68,529 Extinguishment ( 3,260 ) Change in fair value 25,139 Fair value as of January 31, 2021 101,212 Change in fair value 13,142 Conversion to Class A Common Stock ( 114,354 ) Fair value as of January 31, 2022 $ — Preferred stock warrant liability In connection with the Business Combination, all Series B and Series D preferred stock warrants converted into warrants for Class A common stock. A portion of such Class A common stock warrants were exercised upon the closing of the Business Combination. The Company measured the fair value of the exercised warrants upon settlement based on the closing price of the Company’s Class A common stock on the date of the Business Combination and the number of Class A common stock shares that were issued to the warrant holders. For the portion of the Class A common stock warrants that were not exercised and remained outstanding subsequent to the closing of the Business Combination, the Company concluded such warrants met the criteria to be classified in stockholders’ equity. Accordingly, the Class A common stock warrants that remained outstanding were measured at fair value and classified within stockholders’ equity on the date of the Business Combination. As of January 31, 2021, the Company measured its liabilities for the Series B and D preferred stock warrants at fair value based on significant inputs not observable in the market, which caused them to be classified as a Level 3 measurement within the fair value hierarchy. The fair value of the preferred stock warrant liabilities as of January 31, 2021 was estimated using an option pricing model. The significant unobservable inputs used in the fair value measurement of the Company’s preferred stock warrant liabilities are volatility, term and discount for lack of marketability. The following table provides quantitative information associated with the fair value measurement of the preferred stock warrant liability as of January 31, 2021: 102 Fair Value as of January 31, 2021 Valuation Technique Unobservable Input Description Input (in thousands) Preferred Stock Warrant Liability $ 11,359 Option Pricing Method Term 0.5 - 1.75 years Volatility 60 % Discount for lack of marketability 10 % - 17 % The following is a rollforward of balances for the preferred stock warrant liability for the fiscal years ended January 31, 2022 and 2021: (in thousands) Preferred Stock Warrant Liability Fair value as of February 1, 2020 3,849 Issuance 2,596 Change in fair value 4,914 Fair value as of January 31, 2021 11,359 Change in fair value 12,118 Reclassification to stockholders’ equity upon conversion to Class A common stock warrants ( 23,477 ) Fair value as of January 31, 2022 $ — Other The Company measures certain non-financial assets including property and equipment, and other intangible assets at fair value on a non-recurring basis in periods after initial measurement in circumstances when the fair value of such assets are impaired below their recorded cost. As of January 31, 2023 and 2022, there were no material non-financial assets recorded at fair value. (6) Acquisitions Salo Sciences On January 3, 2023, the Company acquired all of the equity interest of Salo Sciences, Inc. (“Salo”), a climate technology company that provides solutions to measure Earth’s ecosystems. The acquisition allows the Company to further develop its offerings and enable customers to quantify carbon stocks globally, monitor forest change, and mitigate climate risks. The fair value of the consideration transferred on the acquisition date was $ 11.8 million, consisting of $ 3.8 million in cash, net of cash acquired and $ 8.0 million of liabilities recognized for contingent consideration arrangements. 103 The following table summa rizes the fair value of the assets acquired and liabilities assumed at the date of acquisition: (in thousands) January 3, 2023 Net Assets Acquired Goodwill $ 9,529 Identifiable intangible assets acquired Customer relationships 984 Developed technology 2,061 Accounts receivable 1,572 Deferred revenue (1) ( 1,567 ) Other net working capital acquired, net of cash acquired 25 Deferred tax liability ( 755 ) Total purchase consideration 11,849 (1) Deferred revenue represents contract liabilities assumed by the Company for contracts with customers acquired in the acquisition. The Company applied the guidance in ASC 606, Revenue from Contracts with Customers to recognize and measure the deferred revenue on the acquisition date. The identifiable intangible assets were measured at fair value. The developed technology was valued using the royalty method under the income approach. The customer relationships were valued using the excess earnings method under the income approach. These models primarily utilized Level 3 inputs, including estimated projections of revenues and expenses, estimated discount rates, and with respect to the developed technology, an estimated royalty rate. The customer relationships were assigned an estimated useful life of 5 years and the developed technology was assigned an estimated useful life of 7 years. The goodwill primarily represents the value expected from the synergies created through the operational enhancement benefits resulting from the integration of Salo into the Company and the combination of Salo’s solutions with the Company’s existing products. The goodwill is not deductible for tax purposes. The financial results of Salo are included in the consolidated financial statements from the date of acqui sition. Acquisition-related costs associated with this transaction were not material. Pro forma results of operations have not been presented as the effect of this acquisition was not material to the consolidated financial statements. The purchase agreement for the Salo acquisition includes two contingent consideration arrangements. One arrangement contingently obligates the Company to make payments based on the achievement of certain technical milestones relating to the integration of Salo. The other arrangement contingently obligates the Company to make earnout payments based on the amount of cash collected by the Company under certain of Salo’s existing and prospective customer contracts. The technical milestone payments consist of two equal milestone payments for aggregate payments of up to $ 6.5 million. The first milestone payment becomes payable if certain technical milestones are achieved within the first two years following the closing of the acquisition and the second milestone payment becomes payable if certain additional technical milestones are achieved within the first four years following the closing of the acquisition. Each of the payments becomes payable following the end of respective performance periods. The customer contract earnout payments are paid on the basis of 80% of cash collected by the Company under certain of Salo’s existing and prospective customer contracts during the first four years following the closing of the acquisition with such payments made on quarterly basis following collections under the customer contracts. The maximum amount payable for the earnout payments is $ 10.4 million. The aggregate fair value of the contingent consideration liabilities on the acquisition date was determined to be $ 8.0 million, consisting of $ 4.4 million for the technical milestone payments and $ 3.6 million for the customer contract earnout payments. The Company will continue to measure the contingent consideration liabilities at fair value each reporting period until the earlier of when the full amounts have been paid or the measurement period for 104 each of the arrangements has ended. See Note 5 for details of the fair value measurement for the contingent consideration liabilities. VanderSat On December 13, 2021, the Company acquired all of the equity interest of VanderSat B.V. (“VanderSat”), a provider of advanced earth data and analytics that report on key conditions on the Earth’s surface, including soil moisture, land surface temperature and vegetation optical depth. The purpose of the acquisition was to allow the Company to a ccelerate its position in agriculture and continue to mature its offerings in other verticals including insurance, civil government, and finance. The acquisition date fair value of the consideration transferred was $ 22.8 million, consisting of $ 9.6 million in cash, net of cash acquired, $ 12.9 million in Class A common stock valued at $ 9.47 per share based on the quoted closing price of the Company’s Class A common stock, and a contingent consideration liability of $ 0.3 million. In connection with the acquisition, the Company issued 1,900,739 shares of its Class A common stock, of which 1,357,348 shares were accounted for as purchase consideration. The remaining 543,391 shares of Class A common stock were issued to an employee and former owner of VanderSat and are accounted for as stock-based compensation because the shares are subject to forfeiture based on post-acquisition time-based service vesting (see Note 15). The following table summa rizes the fair value of the assets acquired and liabilities assumed at the date of acquisition: (in thousands) December 13, 2021 Net Assets Acquired Goodwill $ 14,826 Identifiable intangible assets acquired Customer relationships 671 Developed technology 8,487 Other 796 Deferred tax asset 892 Property and equipment 61 Net working capital acquired, net of cash acquired ( 394 ) Deferred tax liability ( 2,568 ) Total purchase consideration $ 22,771 Identifiable intangible assets were measured at fair value. The developed technology was valued using the royalty method under the income approach, which requires the Company to estimate a royalty rate, identify relevant projected revenue and expenses and select an appropriate discount rate. The goodwill primarily represents the value expected from the synergies created through the operational enhancement benefits resulting from the integration of VanderSat into the Company and the combination of VanderSat’s solutions with the Company’s existing products. The goodwill is not deductible for tax purposes. The financial results of VanderSat are included in the consolidated financial statements from the date of acqui sition. Acquisition-related costs associated with this transaction were not material. Pro forma results of operations have not been presented as the effect of this acquisition was not material to the consolidated financial statements. (7) Leases The Company’s leasing activities primarily consist of real estate leases for its operations, including office space, and certain ground station service agreements that convey the right to control the use of specified equipment and facilities. The Company assesses whether each lease is an operating or finance lease at the lease commencement date. As of January 31, 2023, the Company has no finance leases. 105 The Company’s lease agreements do not contain residual value guarantees or material restrictive covenants. Certain of the Company’s leases include escalation clauses, options to renew and options for early termination. The Company utilizes the base, non-cancelable period as the lease term when initially recognizing right-of-use assets and lease liabilities, unless it is reasonably certain that a renewal or termination option will be exercised. Leases with an initial term of 12 months or less are not recorded on the Company’s consolidated balance sheet and expense for these leases are recognized on a straight-line basis over the lease term. The Company does not separate lease and non-lease components for its operating leases. Operating lease costs were $ 6.6 million for the fiscal year ended January 31, 2023. Variable lease expenses, short-term lease expenses and sublease income were immaterial for the fiscal year ended January 31, 2023. Operating cash flows from operating leases were $ 7.9 million for the fiscal year ended January 31, 2023. Right of use assets obtained in exchange for operating lease liabilities were $ 17.8 million for the fiscal year ended January 31, 2023. Maturities of operating lease liabilities as of January 31, 2023 were as follows: (in thousands) Fiscal Year 2024 $ 6,355 2025 7,450 2026 7,198 2027 4,048 2028 12 Thereafter 19 Total lease payments $ 25,082 Less: Imputed interest ( 3,052 ) Total lease liabilities $ 22,030 Weighted average remaining lease term (years) 3.5 Weighted average discount rate 7.6 % As the rate implicit in the lease is generally not readily determinable for the Company’s operating leases, the discount rates used to determine the present value of the Company’s lease liabilities are based on the Company’s incremental borrowing rate at the lease commencement date and commensurate with the remaining lease term. The incremental borrowing rate for a lease is the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment. To determine the incremental borrowing rate, the Company references market yield curves which are risk-adjusted to approximate a collateralized rate. As of January 31 , 2023 , the Company had additional leases for ground station equipment that had not yet commenced totaling $ 8.4 million and therefore are not reflected on the consolidated balance sheet and table above. These leases are expected to commence between fiscal year 2024 and fiscal year 2025 with lease terms of 5 years. In accordance with ASC Topic 840, rent expense for the fiscal years ended January 31, 2022 and 2021, net of sublease income of $ 0.3 million and $ 1.3 million, respectively, was $ 3.1 million and $ 3.0 million, respectively. (8) Balance Sheet Components Cash and Cash Equivalents, and Restricted Cash and Cash Equivalents Cash and cash equivalents include interest-bearing bank deposits, money market funds and other highly liquid investments with maturities of 90 days or less at the date of purchase. The Company had restricted cash and cash equivalents balances of $ 6.2 million and $ 6.1 million as of January 31, 2023 and 2022, respectively. The restricted cash and cash equivalents balances as of January 31, 2023 primarily consisted of $ 4.1 million of collateral money market investments for the Company’s headquarters and other 106 domestic office operating leases and $ 1.8 million of performance guarantees required for the Company’s foreign sales activities. The restricted cash and cash equivalents balances as January 31, 2022 primarily consisted of $ 4.2 million of collateral money market investments for the Company’s headquarters and other domestic office operating leases and $ 1.6 million of performance guarantees required for the Company’s foreign sales activities. A reconciliation of the Company’s cash and cash equivalents, and restricted cash and cash equivalents in the consolidated balance sheets to total cash and cash equivalents, and restricted cash and cash equivalents in the consolidated statements of cash flows as of January 31, 2023 and 2022 is as follows: January 31, (in thousands) 2023 2022 Cash and cash equivalents $ 181,892 $ 490,762 Restricted cash and cash equivalents, current 527 309 Restricted cash and cash equivalents, non-current 5,657 5,743 Total cash and cash equivalents, and restricted cash and cash equivalents $ 188,076 $ 496,814 The current restricted cash and cash equivalents balances as of January 31, 2023 and 2022 are included in prepaid expenses and other current assets. Short-term Investments Short-term investments consisted of the following as of January 31, 2023: Gross Unrealized (in thousands) Cost or Amortized Cost Gains Losses Fair Value U.S Treasury securities $ 59,255 $ 296 $ ( 118 ) $ 59,433 Commercial paper 19,744 105 — 19,849 Corporate bonds 139,644 34 ( 89 ) 139,589 U.S. government agency securities 8,063 — ( 66 ) 7,997 Total short-term investments $ 226,706 $ 435 $ ( 273 ) $ 226,868 The following table summarizes the contracted maturities of the Company’s short-term investments as of January 31, 2023: January 31, 2023 (in thousands) Amortized Cost Fair Value Due in 1 year or less $ 124,068 $ 124,234 Due in 1-2 years 102,638 102,634 $ 226,706 $ 226,868 There were no short-term investments as of January 31, 2022. 107 Property and Equipment, Net Property and equipment, net consists of the following: January 31, (in thousands) 2023 2022 Satellites* $ 307,720 $ 310,861 Leasehold improvements 15,389 15,448 Ground stations and ground station equipment 15,113 12,685 Office furniture, equipment and fixtures 5,787 5,335 Computer equipment and purchased software 8,638 8,197 Total property and equipment, gross 352,647 352,526 Less: Accumulated depreciation ( 244,556 ) ( 219,246 ) Total property and equipment, net $ 108,091 $ 133,280 * Satellites include $ 13.8 million and $ 13.7 million of satellites in process and not placed into service as of January 31, 2023 and 2022, respectively. There was no interest expense associated with manufactured satellites for the fiscal year ended January 31, 2023. Interest expense associated with manufactured satellites was not material for the fiscal years ended January 31, 2022 and 2021. The Company’s long-lived assets by geographic region are as follows: January 31, (in thousands) 2023 2022 United States $ 103,366 $ 130,230 Rest of the world 4,725 3,050 Total property and equipment, net $ 108,091 $ 133,280 The Company concluded that satellites in service continue to be owned by the U.S. entity and accordingly are classified as U.S. assets in the table above. No single country other than the U.S. accounted for more than 10% of total property and equipment, net, as of January 31, 2023 and 2022. Total depreciation expense for the fiscal years ended January 31, 2023, 2022, and 2021 was $ 38.0 million, $ 37.8 million and $ 52.7 million, respectively, of which $ 34.7 million, $ 33.0 million and $ 44.2 million, respectively, was depreciation expense specific to satellites. Capitalized Internal-Use Software Development Costs Capitalized internal-use software costs, net of accumulated amortization consists of the following: January 31, (in thousands) 2023 2022 Capitalized internal-use software $ 39,535 $ 36,453 Less: Accumulated amortization ( 28,118 ) ( 25,685 ) $ 11,417 $ 10,768 There was no interest expense associated with capitalized internal-use software costs for the fiscal year ended January 31, 2023. Interest expense associated with capitalized internal-use software costs was not material for the fiscal years ended January 31, 2022 and 2021. Amortization expense for capitalized internal-use software for the fiscal years ended January 31, 2023, 2022 and 2021 was $ 2.4 million, $ 5.3 million and $ 7.1 million, respectively. 108 Estimated future amortization expense of capitalized internal-use software at January 31, 2023, is as follows: (in thousands) 2024 $ 2,556 2025 3,481 2026 3,184 2027 1,896 2028 300 $ 11,417 Goodwill and Intangible Assets Goodwill and Intangible assets consist of the following: January 31, 2023 January 31, 2022 (in thousands) Gross Carrying Amount Accumulated Amortization Foreign Currency Translation Net Carrying Amount Gross Carrying Amount Accumulated Amortization Foreign Currency Translation Net Carrying Amount Developed technology $ 18,619 $ ( 8,871 ) $ ( 8 ) $ 9,740 $ 16,557 $ ( 7,583 ) $ ( 9 ) $ 8,965 Image library 12,384 ( 11,004 ) 231 1,611 12,028 ( 10,610 ) 104 1,522 Customer relationships 4,935 ( 2,788 ) 7 2,154 3,951 ( 2,161 ) 8 1,798 Trade names and other 4,551 ( 3,264 ) 39 1,326 4,551 ( 2,678 ) 39 1,912 Total intangible assets $ 40,489 $ ( 25,927 ) $ 269 $ 14,831 $ 37,087 $ ( 23,032 ) $ 142 $ 14,197 Goodwill $ 110,942 $ — $ 1,806 $ 112,748 $ 101,413 $ — $ 1,806 $ 103,219 No impairment charges were recognized related to intangible assets (including goodwill) in the fiscal years ended January 31, 2023, 2022 and 2021. Amortization expense for the fiscal years ended January 31, 2023, 2022 and 2021 was $ 2.9 million, $ 2.0 million and $ 2.4 million, respectively. Estimated future amortization expense of intangible assets at January 31, 2023, is as follows: (in thousands) 2024 $ 3,272 2025 2,355 2026 1,986 2027 1,986 2028 1,646 Thereafter 3,586 $ 14,831 The change in the carrying amount of goodwill during the years ended January 31, 2023 and 2022 is as follows: January 31, (in thousands) 2023 2022 Beginning of period $ 103,219 $ 88,393 Acquisition 9,529 14,826 End of period $ 112,748 $ 103,219 Accrued and Other Current Liabilities Accrued liabilities and other current liabilities consist of the following: 109 January 31, (in thousands) 2023 2022 Deferred R&D service liabilities (see Note 9) $ 19,959 $ 21,878 Payroll and related expenses 8,518 6,007 Deferred hosting costs 4,694 3,967 Deferred rent — 2,193 Withholding taxes and other taxes payable 2,272 3,731 Other accruals 10,579 11,047 Total accrued and other current liabilities $ 46,022 $ 48,823 (9) Research and Development Arrangements Research and Development Services Agreement In December 2020, the Company entered into a development services agreement whereby the Company agreed to provide the technical knowledge and services to design and develop certain prototype satellites and deliver and test early data collected (the “ R&D Services Agreement ”). The R&D Services Agreement, including subsequent amendments to such agreement, provides for funding of $ 45.8 million to be paid to the Company as specified milestones are achieved over a three year period. The R&D Services Agreement is unrelated to the Company’s ordinary business activities. The Company has discretion in managing the activities under the R&D Services Agreement and retains all developed intellectual property. The Company has no obligation to repay any of the funds received regardless of the outcome of the development work; therefore, the arrangement is accounted for as funded research and development pursuant to ASC 730-20, Research and Development . As ASC 730-20 does not indicate the accounting model for research and development services, the Company determined the total transaction price is recognized over the agreement term as a reduction of research and development expenses based on a cost incurred method. During the fiscal years ended January 31, 2023 and 2022, the Company recognized $ 15.6 million and $ 4.7 million of funding and incurred $ 15.6 million and $ 4.8 million of research and development expenses, respectively, in connection with the R&D Services Agreement. As of January 31, 2023 and 2022, the Company had received a total of $ 36.3 million and $ 26.7 million, respectively, of funding under the R&D Services Agreement. NASA Communication Services Project In connection with its Communication Services Project (“CSP”), the National Aeronautics and Space Administration (“NASA”) selected certain satellite communications providers that NASA will fund to develop and demonstrate near-Earth space communication services that may support future NASA missions using commercial technology. In June 2022 and August 2022, the Company entered into separate agreements with two of the satellite communications providers selected by NASA whereby the Company agreed to participate in the NASA CSP as a subcontractor. The agreements provide for the Company to receive aggregate funding of $ 40.5 million to be paid as milestones are completed. The Company determined that the agreements are in the scope of ASC 912-730, Contractors –Federal Government – Research and Development (“ASC 912-730”). In accordance with ASC 912-730, funding is recognized over the term of each agreement as a reduction of research and development expenses based on a cost incurred method. During the fiscal year ended January 31, 2023, the Company recognized $ 3.0 million of funding and incurred $ 3.8 million of research and development expenses, respectively, in connection with the NASA CSP. As of January 31, 2023, the Company had received a total of $ 6.5 million of funding in connection with the NASA CSP. (10) Commitments and Contingencies Launch Services The Company has purchase commitments for future satellite launch services to be performed by third-parties subsequent to January 31, 2023. Future purchase commitments under noncancelable launch service contracts as of January 31, 2023 are as follows: 110 (in thousands) Launch 2024 $ 475 Thereafter — Total purchase commitments $ 475 Other The Company has minimum purchase commitments for hosting services from Google through January 31, 2028 (see Note 14). Future minimum purchase commitments under the noncancelable hosting service agreement with Google as of January 31, 2023 is as follows: (in thousands) 2024 $ 28,050 2025 30,120 2026 31,190 2027 32,725 2028 33,427 Total purchase commitments $ 155,512 Contingencies The Company is not a party to any material legal proceedings and is not aware of any pending or threatened claims, individually or in the aggregate, that are expected to have a material adverse impact on its consolidated financial statements as of each reporting period. From time to time however, the Company may have certain contingent liabilities that arise in the ordinary course of business activities including those arising from disputes and claims and events arising from revenue contracts entered into by the Company. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. Indemnification The Company enters into standard indemnification arrangements in the ordinary course of business. Pursuant to these arrangements, the Company indemnifies, holds harmless, and agrees to reimburse the indemnified parties for losses suffered or incurred by the indemnified party, in connection with any trade secret, copyright, patent, or other intellectual property infringement claim by any third-party with respect to its technology. The term of these indemnification agreements is generally perpetual after the execution of the agreement. The Company has not incurred costs to defend lawsuits or settle claims related to these indemnification agreements. In the event that one or more of these matters were to result in a claim against the Company, an adverse outcome, including a judgment or settlement, may cause a material adverse effect on the Company’s future business, operating results or financial condition. It is not possible to determine the maximum potential amount under these contracts due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. The Company has entered into indemnification agreements with its directors and officers that may require the Company to indemnify them against liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct of the individual. To date, we have not incurred any material costs, and have not accrued any liabilities in the consolidated financial statements as a result of these provisions. (11) Debt, Convertible Notes, and Warrants Venture Loans In November 2014, the Company entered into a secured term loan agreement with Venture Lending & Leasing, Inc. (“ Venture ”), an affiliate of Western Technology Investment, for a $ 25.0 million loan. The Company drew the full amount under the loan agreement, which was fully repaid in March 2019. In connection with the loan, the Company 111 issued warrants to Venture for the purchase of up to 761,340 shares of Series B convertible preferred stock which were exercisable at any time until March 1, 2025, unless all other preferred stock issued by the Company had been converted into common stock, in which case the warrants automatically converted into common stock at a price not less than $ 9.3844 per share. In connection with the Business Combination (see Note 3), the Series B convertible preferred stock warrants discussed above converted into warrants for Class A common stock and were exercised on a cashless basis resulting in the issuance of 761,340 shares of Class A common stock. In May 2017, the Company entered into two additional secured term loan agreements (the “ 2017 Loans ”) with Venture for loan amounts of $ 25.0 million each. Each loan bore an interest rate of 11.0 % per annum. The Company drew down a total of $ 25.0 million of the 2017 Loans in May 2017 which were set to mature in November 2021, with the remaining $ 25.0 million drawn down in February 2018 which was set to mature in August 2022. In connection with the 2017 Loans, the Company issued warrants to Venture for the purchase of up to a total of 745,914 shares of Series D convertible preferred stock for the loan amounts drawn in 2018 and 2017. The warrants were exercisable by Venture at any time until April 1, 2028, unless all other preferred stock issued by the Company had been converted into common stock, in which case the warrants automatically converted into common stock at a price not less than $ 9.3844 per share. Venture was also able to exercise the warrants on a cashless or “net issuance” basis in return for a reduced preferred stock allocation. In connection with the Business Combination (see Note 3), the Series D convertible preferred stock warrants were converted into warrants for Class A common stock and were exercised on a cashless basis, resulting in the issuance of 745,914 shares of Class A common stock. On June 21, 2019, the Company amended the 2017 Loans (the “ Amendment ”), bifurcating the loans into two tranches: Tranche A, in an amount of $ 49.0 million, representing the remaining principal amount of the 2017 Loans; and Tranche B, in an amount of $ 8.6 million, representing the 2017 Loans prepayment penalty. Tranche A was paid in full upon the execution of the Amendment. Tranche B, consisting of two separate subordinated contract liability instruments of $ 4.3 million each, remained outstanding. The Tranche B loans bore no interest, had no maturity date or prepayment schedule, and were subordinate to SVB & Hercules Loan (defined below) for any enforcement of a security interest or lien. At the option of the lenders, the Tranche B loans were convertible into Series D convertible preferred stock at any time. In addition, the Tranche B loans included conversion features conditioned on future rounds of preferred equity financing, and bridge financing. The Tranche B loans were due and payable in full upon an Acceleration Event (as defined in the Tranche B loans) and included optional prepayment and conversion features contingent upon an additional debt issuance by the Company. The Company elected to apply the fair value option to the outstanding Tranche B loans. The loans were classified as a current liability and were measured at a fair value of $ 10.9 million at issuance. Changes in fair value were subsequently recognized in the consolidated statements of operations and comprehensive loss. During the fiscal year ended January 31, 2021, the Company repaid $ 2.6 million of Tranche B and recognized a debt extinguishment gain of $ 0.7 million. In July 2021, the Company amended certain terms of the Tranche B loans and certain terms of the warrants issued to Venture to provide for, among other things, (i) an amendment to the definition of an initial public offering to include the acquisition of the Company by a SPAC, (ii) immediately prior to the consummation of an initial public offering, the automatic conversion of the outstanding principal under the notes into bridge financing securities and (iii) immediately prior to the consummation of an initial public offering, the automatic exchange of the warrants for shares of the Company securities. The amended terms of the Venture Tranche B loans were not considered substantially different than the original terms of such loans. As such, the Tranche B loans continued to be recognized at fair value pursuant to the fair value option. In connection with the Business Combination (see Note 3), the Tranche B loans converted into 754,378 shares of the Company’s Class A common stock, therefore there were no loan amounts outstanding as of January 31 , 2023 or 2022. SVB & Hercules Loan On June 21, 2019, the Company entered into a Credit Agreement with SVB and Hercules for a $ 50.0 million secured loan with an interest rate of 11.0 % per annum (the prime rate plus 5.5 %, minimum of 11.0 %), with a maturity date of June 21, 2022, or 91 days prior to the maturity date of the 2020 Convertible Notes, described below, if the outstanding 2020 Convertible Notes have not been converted into equity securities. With the proceeds, the Company paid back its Venture Tranche A of the 2017 Loans, amounting to $ 49.0 million. In connection with the loan, the 112 Company issued warrants to the lenders and their affiliates for the purchase of 1,049,801 shares of the Company’s Class A common stock with an exercise price of $ 0.00001 per share, expiring in June 2029. The loan required the Company to make interest-only payments through the maturity date of June 21, 2022. The Company incurred $ 0.3 million of loan fees associated with its entry into the agreement and accrued $ 1.5 million of final loan fees payable upon maturity. The proceeds of debt issuance were allocated between debt and the warrants based on their relative fair value. The difference between debt proceeds and the amount of those proceeds allocated to debt gave rise to a debt discount of $ 4.2 million. The discount amount due to the warrant of $ 4.2 million along with the total loan fees of $ 1.8 million was being amortized as interest expense through maturity using the effective interest method. On June 5, 2020, the Company obtained an additional $ 15.0 million secured loan from SVB and Hercules. The loan bore an interest rate of 11.0 % per annum with a maturity date of June 21, 2022, or 91 days prior to the maturity date of the 2020 Convertible Notes, described below, if the outstanding 2020 Convertible Notes have not been converted into equity securities. With the proceeds, the Company paid back $ 2.6 million, or 30.0 % of the face value of its Venture Tranche B loans. In connection with the loan, the Company issued warrants to the lenders and their affiliates for the purchase 384,155 shares of Class A common stock of the Company with an expiration date of June 2030. The proceeds of debt issuance were allocated between debt and the warrants based on their relative fair value. The difference between debt proceeds and the amount of those proceeds allocated to debt gave rise to a debt discount of $ 1.6 million. The discount amount due to the warrant of $ 1.6 million along with the total loan fees of $ 0.6 million was being amortized as interest expense through maturity using the effective interest method. In connection with the Business Combination (see Note 3), the outstanding principal, accrued interest and repayment fees of $ 67.1 million relating to the credit agreement with SVB and Hercules was repaid. As a result of the repayment, the Company recognized a debt extinguishment loss of $ 1.7 million during the fiscal year ended January 31, 2022. There were no loan amounts outstanding as of January 31 , 2023 or 2022. During the fiscal year ended January 31, 2022, the Class A common stock warrants discussed above were exercised on a net-basis resulting in the issuance of 1,433,567 shares of Class A common stock. 2020 Convertible Notes During the fiscal year ended January 31, 2021, the Company entered into a Convertible Note and Warrant Purchase Agreement with certain investors, pursuant to which it issued convertible promissory notes (the “ 2020 Convertible Notes ”). The 2020 Convertible Notes bore interest at a rate of 6 % per annum, that compounded quarterly and had a June 22, 2022 maturity date. The principal amount of the 2020 Convertible Notes issued is $ 71.1 million in the aggregate. The Company issued warrants for the purchase of Series D convertible preferred stock, equal to 20 % of the original principal amount of the notes, with an exercise price of $ 9.3844 . The warrants expire on the tenth anniversary of the date of issuance. The number of shares of Series D convertible preferred stock issuable under the warrants is 1,515,799 in aggregate. The 2020 Convertible Notes contained an automatic conversion features in the event of the closing of the Company’s next sale of preferred stock occurring on or prior to the 2020 Convertible Notes’ maturity date resulting in gross proceeds in excess of at least $ 75.0 million, (the “ Next Equity Financing ”), and an optional conversion feature upon an equity financing by the Company which does not constitute a Next Equity Financing (a “ Non-Qualified Financing Conversion ”). The Company elected to apply the fair value option to the outstanding 2020 Convertible Notes. As such, the 2020 Convertible Notes were recognized at fair value with changes in fair value recognized in the consolidated statements of operations and comprehensive loss. In July 2021, the Company amended certain terms of its 2020 Convertible Notes to provide for, among other things, the automatic conversion of the outstanding principal and accrued interest under the notes into shares of common stock immediately prior to the Business Combination. The amended terms of the 2020 Convertible Notes were not considered substantially different than the original terms of such notes. As such, the 2020 Convertible Notes continued to be recognized at fair value pursuant to the fair value option. 113 In connection with the Business Combination (see Note 3), the 2020 Convertible Notes converted into 9,824,143 shares of the Company’s Class A Common Stock, therefore there were no 2020 Convertible Notes outstanding as of January 31 , 2023 or 2022. In connection with the Business Combination (see Note 3), 450,205 of the Series D convertible preferred stock warrants discussed above converted into warrants for Class A common stock and were exercised on a cashless basis, resulting in the issuance of 27,713 shares of Class A common stock. The remaining 1,065,594 Series D convertible preferred stock warrants that were not exercised converted into warrants for Class A common stock shares and remained outstanding as of January 31 , 2023 and 2022. The following table presents the interest expense related to the contractual interest coupon, the amortization of debt issuance costs, the amortization of debt discounts and loss (gain) on extinguishment of debt: Year Ended January 31, (in thousands) 2023 2022 2021 Contractual interest coupon $ — $ 6,137 $ 6,697 Amortization of debt issuance costs — 768 811 Amortization of debt discounts — 1,867 1,939 Debt extinguishment (gain) loss — 1,690 ( 673 ) Total interest expense and extinguishment (gain) loss $ — $ 10,462 $ 8,774 A summary of warrants that remain outstanding as of January 31, 2023 in connection with the above transactions is as follows: Number of Warrants Outstanding Number of Warrants Exercisable Weighted Average Exercise Price Weighted Average Remaining Term (in Years) Warrants to purchase Class A Common Stock 1,065,594 1,065,594 $ 9.3844 7.2 (12) Stockholders’ Equity Upon the closing of the Business Combination, the Company’s restated certificate of incorporation (the “ Charter ”) authorizes the issuance of 631,500,000 shares, of which 570,000,000 shares are shares of Class A common stock, par value $ 0.0001 per share, 30,000,000 shares are shares of Class B common stock, par value $ 0.0001 per share, 30,000,000 shares are shares of Class C common stock, par $ 0.0001 per share and, and 1,500,000 shares are shares of preferred stock, par value $ 0.0001 per share. Class A Common Stock Voting Rights Holders of Class A common stock are entitled to cast one vote per Class A share. Generally, holders of all classes of common stock vote together as a single class, and an action is approved by Planet stockholders if the number of votes cast in favor of the action exceeds the number of votes cast in opposition to the action, while directors are elected by a plurality of the votes cast. Holders of Class A common stock are not entitled to cumulate their votes in the election of directors. Dividend Rights Holders of Class A common stock will share ratably (based on the number of shares of Class A common stock held) if and when any dividend is declared by the Company’s board of directors out of funds legally available therefor, subject to restrictions, whether statutory or contractual (including with respect to any outstanding indebtedness), on the declaration and payment of dividends and to any restrictions on the payment of dividends imposed by the terms of any outstanding preferred stock or any class or series of stock having a preference over, or the right to participate with, the Class A common stock with respect to the payment of dividends. 114 Other Matters Holders of shares of the Company’s Class A common stock do not have subscription, redemption or conversion rights. Class B Common Stock Voting Rights The shares of Class B common stock have the same economic terms as the shares of Class A common stock including with respect to dividends and in the event of the Company’s liquidation, dissolution or winding up, but the shares of Class B common stock have 20 votes per share. Conversion to Class A Common Stock Shares of Class B common stock will convert to the Company’s Class A common stock on a one -for-one basis on the earlier of the date that such shares are not held by a Qualified Stockholder, the Sunset Date, and the date of the death or mental incapacity of such Planet Founder. A “ Qualified Stockholder ” refers to (a) William Marshall and Robert Schingler, Jr. (each, a “ Planet Founder ”); (b) any other registered holder of a share of Class B common stock immediately following the filing of the Charter that would be a transferee of shares of Class B common stock received in certain transfers permitted by the terms of the Charter; (c) a trust, individual retirement account or foundation of a Planet Founder as long as the Planet Founder retains voting and dispositive power over the relevant shares of Class B common stock; or (d) a permitted transferee of Class B common stock (in accordance with the terms of the Charter). The “ Sunset Date ” refers to the earlier of (a) the 10-year anniversary of the closing of the Business Combination or (b) solely with respect to such Planet Founder, the date that is six months after such Planet Founder is no longer providing services to the Company as a director, executive officer, member of the senior leadership team or other full-time employee with an on-going substantial role with the Company (or, immediately at such time as such Planet Founder is no longer providing any services to the Company as a director, executive officer, member of the senior leadership team or other full time employee with an on-going substantial role with the Company as a result of a termination for cause). Class C Common Stock The shares of Class C common stock have substantially the same rights as Class A common stock including with respect to dividends and in the event of the Company’s liquidation, dissolution or winding up, except they do not have any voting rights. Preferred Stock The Company’s board of directors is authorized to issue shares of preferred stock from time to time in one or more series, each such series to have such terms as stated or expressed in the resolution or resolutions providing for the creation and issuance of such series. In connection with the closing of the Business Combination on December 7, 2021, all Former Planet convertible preferred stock converted into Former Planet Class A common stock on a one -to-one basis, which shares were then converted into 131,252,627 shares of the Company’s Class A common stock at the exchange ratio of approximately 1.53184 , as calculated in accordance with the Merger Agreement. (13) Public and Private Placement Warrants As of January 31 , 2023 , the Company had 6,899,982 Public Warrants and 5,933,333 Private Placement Warrants, including 2,966,667 Private Placement Vesting Warrants, outstanding. The Public Warrants entitle the holder thereof to purchase one share of Class A common stock at a price of $ 11.50 per share, subject to adjustment. The Public Warrants may be exercised only for a whole number of shares of Class A common stock, and expire on December 7, 2026, or earlier upon redemption or liquidation. No fractional shares will be issued upon exercise of the warrants. The Public Warrants are listed on the NYSE” under the symbol “PL WS.” The Public Warrants became exercisable on March 9, 2022; provided that the Company has an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the Public Warrants, and a current prospectus relating to them is available (or the Company permits holders to exercise 115 their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities Act). Redemptions of Public Warrants When the Price Per Share of Class A Common Stock Equals or Exceeds $ 18.00 The Company may call the Public Warrants redemption for cash: • in whole and not in part; • at a price of $ 0.01 per warrant; • upon not less than 30 days’ prior written notice of redemption to each warrant holder; and • if, and only if, the closing price of the Company’s Class A common stock equals or exceeds $ 18.00 per share (as adjusted) for any 20 trading days within a 30 ‑trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders. The Company will not redeem the warrants unless an effective registration statement under the Securities Act covering the Class A common stock issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of Class A common stock is available throughout the 30 -day redemption period. Redemptions of Public Warrants When the Price Per Share of Class A Common Stock Equals or Exceeds $ 10.00 The Company may redeem the Public Warrants: • in whole and not in part; • at $ 0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to an agreed table based on the redemption date and the “fair market value” (as defined below) of the Company’s Class A common stock; and • if, and only if, the closing price of the Company’s Class A common stock equals or exceeds $ 10.00 per public share (as adjusted) for any 20 trading days within the 30 -trading day period ending three trading days before the Company sends notice of redemption to the warrant holders. The “fair market value” of Class A common stock shall mean the volume weighted average price of Class A common stock during the 10 trading days immediately following the date on which the notice of redemption is sent to the holders of warrants. In no event will the warrants be exercisable in connection with this redemption feature for more than 0.361 shares of Class A common stock per warrant (subject to adjustment). The exercise price and number of shares of common stock issuable upon exercise of the Public Warrants may be adjusted in certain circumstances, including in the event of a share dividend, or recapitalization, reorganization, merger or consolidation. Simultaneously with the closing of its initial public offering, dMY IV completed the private sale of the 5,933,333 Private Placement Warrants to dMY Sponsor IV, LLC (the “ dMY Sponsor ”) at a purchase price of $ 1.50 per warrant. Each Private Placement Warrant is exercisable for one share of Class A common stock at $ 11.50 per share. The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants, including the Class A common stock issuable upon exercise, are not transferable, assignable or salable until 30 days after the closing of the Business Combination (except in limited circumstances) and are not redeemable by the Company so long as they are held by the dMY Sponsor or its permitted transferees. Additionally, the dMY Sponsor, or its permitted transferees, has the option to exercise the Private Placement Warrants on a cashless basis. If the Private Placement Warrants are held by holders other than the dMY Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. 116 Additionally, the 2,966,667 Private Placement Vesting Warrants vest in four equal tranches (i) when the closing price of Class A common stock equals or exceeds $ 15.00 , $ 17.00 , $ 19.00 and $ 21.00 , over any 20 trading days within any 30 day trading period prior to December 7, 2026 or (ii) when the Company consummates a change of control transaction prior to December 7, 2026 that entitles its stockholders to receive a per share consideration of at least $ 15.00 , $ 17.00 , $ 19.00 and $ 21.00 . Any right to Private Placement Vesting Warrants that remains unvested on the first business day after five years from the closing of the Business Combination will be forfeited without any further consideration. (14) Related Party Transactions As of January 31, 2023 and 2022, Google owned greater than 10 % of the Company’s common shares through its total investment of 31,942,641 shares of Class A common stock. In March 2020, Google purchased $ 10.0 million of 2020 Convertible Notes (Note 11). Upon issuance of such 2020 Convertible Notes to Google, the Company also issued warrants to Google for the purchase of 213,119 shares of Series D preferred stock. In connection with the Business Combination, such 2020 Convertible Notes converted to shares of Class A common stock and such Series D preferred stock warrants converted to and were exercised for shares of Class A common stock. In April 2017, the Company and Google entered into a five year content license agreement pursuant to which the Company licenses content to Google. In April 2022, the agreement automatically renewed for a period of one year . The agreement will expire in April 2023, unless it is extended for up to one year if the delivery obligations are not met by the company, or it is otherwise renewed at Google’s discretion for an additional year, in each case in accordance with its terms. Additionally, Google may terminate the agreement prior to April 2023. As of January 31, 2023 and 2022, the deferred revenue balance associated with the content license agreement was $ 0.3 million and $ 12.2 million, respectively. For the fiscal years ended January 31, 2023, 2022 and 2021, the Company recognized revenue of $ 11.9 million, $ 8.6 million and $ 11.5 million, respectively, related to the content license agreement. In addition, the Company purchases hosting and other services from Google, of which $ 13.4 million and $ 16.1 million is deferred as of January 31, 2023 and 2022, respectively. The Company recorded hosting expense of $ 23.9 million, $ 19.4 million and $ 13.1 million during the fiscal years ended January 31, 2023, 2022 and 2021, respectively. As of January 31, 2023 and 2022, the Company’s accounts payable and accrued liabilities balance included $ 2.3 million and $ 2.0 million, related to hosting and other services provided by Google, respectively. On June 28, 2021, the Company amended the terms of its hosting agreement with Google. The amendment, among other things, increases the aggregate purchase commitments to $ 193.0 million. The amended agreement commenced on August 1, 2021 and extends through January 31, 2028. See Note 10 for future Google hosting purchase commitments, including the amended commitments, as of January 31, 2023. (15) Stock-based Compensation Planet Labs Inc. Amended and Restated 2011 Stock Incentive Plan Prior to the Business Combination, the Company issued equity awards under the Planet Labs Inc. Amended and Restated 2011 Stock Incentive Plan (previously named the Cosmogia Inc. 2011 Stock Incentive Plan) (the “ Legacy Incentive Plan ”). The Legacy Incentive Plan provided for the granting of stock options and restricted stock units (“ RSUs” ) to employees, consultants, and advisors of the Company. Options granted under the Legacy Incentive Plan may be either incentive stock options (“ ISOs ”) or nonqualified stock options (“ NSOs ”). ISOs may be granted only to Company employees including officers and directors who are also employees. NSOs may be granted to Company employees, consultants, and advisors. Options under the Legacy Incentive Plan have a contractual life for periods of up to ten years (or five years if granted to a 10% stockholder). Options granted generally vest over four years . Planet Labs PBC 2021 Incentive Award Plan In connection with the Business Combination, the Company adopted the Planet Labs PBC 2021 Incentive Award Plan (the “ Incentive Plan ”). No further awards will be granted under the Legacy Incentive Plan. Directors, employees and consultants are eligible to receive awards under the Incentive Plan; however, ISOs may only be granted to employees. The Incentive Plan allows for the grant of awards in the form of: (i) ISOs; (ii) NSOs; (iii) 117 stock appreciation rights (“ SARs ”); (iv) restricted stock; (v) RSUs; (vi) dividend equivalents; and (vii) other stock and cash-based awards. The aggregate number of shares of Class A common stock reserved for issuance under the Incentive Plan is the sum of (i) 32,412,802 shares, (ii) any shares that were subject to awards outstanding under a Legacy Incentive Plan as of the effective date of the Incentive Plan and which, following such effective date, became or become (as applicable) available for issuance under the Incentive Plan and (iii) an annual increase on the first day of each fiscal year commencing with February 1, 2022 and ending on and including February 1, 2031 equal to a number of shares equal to 5 % of the aggregate number of shares of Class A and Class B common stock outstanding on the final day of the immediately preceding fiscal year (or such lesser number of shares as is determined by the board of directors). The maximum number of shares of Class A common stock that may be granted with respect to ISOs under the Incentive Plan is 56,963,788 shares. Stock-Based Compensation The following table summarizes stock-based compensation expense recognized related to awards granted to employees and nonemployees, as follows: Year Ended January 31, (in thousands) 2023 2022 2021 Cost of revenue $ 5,119 $ 2,257 $ 843 Research and development 33,354 16,629 4,109 Sales and marketing 13,729 7,877 1,687 General and administrative 24,671 16,422 7,899 Total expense 76,873 43,185 14,538 Capitalized to internal-use software development costs and property and equipment ( 1,329 ) ( 1,229 ) ( 526 ) Total stock-based compensation expense $ 75,544 $ 41,956 $ 14,012 Stock Options A summary of stock option activity is as follows: Options Outstanding Number of Options Weighted Average Exercise Price Weighted Average Remaining Term (Years) Aggregate Intrinsic Value (in thousands) Balances at February 1, 2020 30,780,382 $ 2.72 7.13 Exercised ( 1,670,778 ) 0.32 Granted 12,255,668 4.04 Forfeited ( 2,118,576 ) 3.56 Balances at January 31, 2021 39,246,696 3.19 7.21 Exercised (1) ( 6,199,287 ) 4.61 Granted 12,189,367 9.09 Forfeited ( 3,329,225 ) 3.94 Balances at January 31, 2022 41,907,551 4.63 6.71 Exercised ( 6,449,365 ) 2.28 Forfeited ( 1,736,412 ) 4.75 Balances at January 31, 2023 33,721,774 $ 5.08 6.28 $ 34,989 Vested and exercisable at January 31, 2023 24,914,421 $ 4.18 5.66 $ 32,492 (1) Includes 1,838,207 shares of Class A common stock issued upon the early exercise of unvested stock options that are subject to repurchase as described further below. 118 The intrinsic value of options exercised during the fiscal years ended January 31, 2023, 2022 and 2021 was $ 20.7 million, $ 23.0 million and $ 6.1 million, respectively. A summary of options outstanding and exercisable by price at January 31, 2023 are as follows: Options Outstanding Options Exercisable Exercise Price Number of Options Weighted Average Remaining Contractual Life (in Years) Number of Options Weighted Average Remaining Contractual Life (in Years) $ 0.070 128,183 0.61 128,183 0.61 $ 0.559 608,963 1.26 608,963 1.26 $ 1.807 1,575,264 1.59 1,575,264 1.59 $ 2.026 1,048,238 2.55 1,048,238 2.55 $ 2.325 1,717,390 2.27 1,717,390 2.27 $ 3.417 267,491 3.65 267,491 3.65 $ 3.689 2,236,197 3.78 2,236,197 3.78 $ 3.817 1,305,034 5.31 1,305,034 5.31 $ 3.921 5,699,202 6.32 5,029,375 6.28 $ 4.041 9,452,367 7.27 7,464,060 7.20 $ 5.249 1,609,249 8.09 811,027 8.07 $ 9.753 8,074,196 8.40 2,723,199 8.38 33,721,774 24,914,421 The weighted-average grant date fair value of options granted during the fiscal years ended January 31, 2022 and 2021 was $ 3.79 and $ 1.85 per share, respectively. As of January 31, 2023, total unrecognized compensation cost related to stock options was $ 31.6 million. These costs are expected to be recognized over a period of approximately 2.13 years. The fair value of the employee stock options granted during the fiscal years ended January 31, 2022 and 2021 was estimated using the following assumptions: Year Ended January 31, 2022 2021 Weighted-average expected term (years) 2.62 - 7.32 5.02 - 6.76 Expected volatility 42.45 % - 48.39 % 42.45 % - 44.71 % Risk-free interest rate 0.37 % - 1.23 % 0.31 % - 0.52 % Dividend yield 0.00 % 0.00 % The expected term of stock options represents the weighted-average period the stock options are expected to remain outstanding. The Company uses the simplified method to determine its expected term because it does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. No stock options have been granted after the Business Combination. As the Company was privately held before the Business Combination, and there had been no public market for its common stock during that time, the expected volatility was based on the average historical stock price volatility of comparable publicly-traded companies in its industry peer group. The risk-free rate assumption is based on the U.S. Treasury instruments whose term was consistent with the expected term of the Company’s stock options. The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. 119 Restricted Stock Units A summary of RSU activity is as follows: Number of RSUs Weighted Average Grant Date Fair Value Balances at February 1, 2020 1,441,354 $ 3.94 Vested — — Granted 306,368 4.22 Forfeited ( 84,723 ) 3.91 Balances at January 31, 2021 1,662,999 $ 3.98 Vested ( 1,425,209 ) 4.75 Granted 5,519,278 9.66 Forfeited ( 317,332 ) 5.89 Balances at January 31, 2022 5,439,736 $ 9.42 Vested ( 3,267,382 ) 7.08 Granted 16,242,372 4.96 Forfeited ( 1,442,125 ) 5.97 Balances at January 31, 2023 16,972,601 $ 5.90 RSUs generally vest over four years , subject to the recipient’s continued service through each applicable vesting date. RSUs granted in periods prior to the Business Combination were subject to both time-based service and liquidity event vesting requirements. The liquidity event requirement was met upon the closing of the Business Combination on December 7, 2021 and the Company commenced recognition of stock-based compensation expense for these RSUs on such date. Stock-based compensation expense recognized for RSUs during the fiscal years ended January 31, 2023 and 2022 was $ 33.7 million and $ 21.2 million, respectively. There was no expense recognized for RSUs during the fiscal year ended January 31, 2021. As of January 31, 2023, total unrecognized compensation cost related to RSUs was $ 75.4 million. These costs are expected to be recognized over a period of approximately 2.91 years. Early Exercises of Stock Options The Legacy Incentive Plan provided for the early exercise of stock options for certain individuals as determined by the Company’s board of directors. Shares of common stock issued upon early exercises of unvested options are not deemed, for accounting purposes, to be issued until those shares vest according to their respective vesting schedules and accordingly, the consideration received for early exercises is initially recorded as a liability and reclassified to common stock and additional paid-in capital as the underlying awards vest. Stock options that are early exercised are subject to a repurchase option that allows the Company to repurchase within ninety days of an individual’s termination for any reason, any unvested shares of such individual for a repurchase price equal to the lesser of the then-current fair market value of a share and the amount previously paid by the individual for such unvested shares. During the fiscal year ended January 31, 2022, the Company issued 1,838,207 shares of Class A common stock upon the early exercise of unvested stock options. As of January 31, 2023, the Company had a $ 12.5 million liability recorded for the early exercise of unvested stock options, and the related number of unvested shares subject to repurchase was 1,286,741 . Earn-out Shares Pursuant to the Merger Agreement, Former Planet equity award holders will have the right to receive up to 5,540,990 shares that are contingently issuable in shares of Class A common stock. The Earn-out Shares may be earned in four equal tranches (i) when the closing price of Class A common stock equals or exceeds $ 15.00 , $ 17.00 , $ 19.00 and $ 21.00 , over any 20 trading days within any 30 day trading period prior to December 7, 2026 or (ii) when the Company consummates a change of control transaction prior to December 7, 2026 that entitles its stockholders to receive a per share consideration of at least $ 15.00 , $ 17.00 , $ 19.00 and $ 21.00 . Any right to Earn- 120 out Shares that remains unvested on the first business day after five years from the closing of the Business Combination will be forfeited without any further consideration. The Earn-out Shares allocated to Former Planet equity award holders are accounted for as stock-based compensation pursuant to ASC 718, Compensation—Stock Compensation because service must be provided through each contingent vesting condition described above. The fair value of the Earn-out Shares allocated to Former Planet equity award holders of $ 45.3 million was estimated using a model based on multiple stock price paths developed through the use of a Monte Carlo simulation that incorporates into the valuation the possibility that the market condition targets may not be satisfied. Compensation expense for awards with market conditions is recognized over the requisite service period and is not reversed if the market condition is not met. The requite service period for each of the four vesting tranches for the Earn-out Shares was derived from the median time to vest for each tranche utilizing the same simulation model that produced the fair value estimate. During the fiscal years ended January 31, 2023 and 2022, there were 445,387 and 782,751 Earn-out Shares that were forfeited, respectively. No Earn-out shares vested during the fiscal years ended January 31, 2023 and 2022. As of January 31, 2023 and 2022, there were 4,312,852 and 4,758,239 Earn-out Shares outstanding relating to Former Planet equity award holders, respectively. During the fiscal year ended January 31, 2023 and 2022, the Company recognized $ 24.5 million and $ 4.5 million of stock-based compensation expense related to the Earn-out Shares, respectively. As of January 31, 2023, total unrecognized compensation cost related to Earn-out Shares was $ 6.3 million. These costs are expected to be recognized over a period of approximately 0.75 years. Other Stock-based Compensation In connection with the acquisition of VanderSat (s ee Note 6), t he Company issued 543,391 shares of Class A common stock to an employee and former owner of VanderSat which are accounted for as stock-based compensation because the shares are subject to forfeiture based on post-acquisition time-based service vesting. The shares vest in quarterly increments over two years commencing on December 13, 2021. The fair value was determined to be $ 9.47 per share based on the quoted closing price of the Company’s Class A common stock on the date of the VanderSat acquisition. During the fiscal years ended January 31, 2023 and 2022, the Company recognized $ 2.6 million and $ 0.3 million of stock-based compensation expense related to these shares, respectively. As of January 31, 2023, unrecognized compensation cost related to these shares was $ 2.2 million. These costs are expected to be recognized over a period of approximately 0.92 years. (16) Income Taxes The components of the loss before income taxes are as follows: Year Ended January 31, (in thousands) 2023 2022 2021 Domestic $ ( 163,575 ) $ ( 131,478 ) $ ( 127,599 ) Foreign 2,456 ( 3,536 ) 1,569 Total loss before income taxes $ ( 161,119 ) $ ( 135,014 ) $ ( 126,030 ) The provision for (benefit from) income taxes consists of the following: 121 Year Ended January 31, (in thousands) 2023 2022 2021 Current Federal $ — $ — $ — State 45 15 23 Foreign 1,258 3,488 1,095 Total current tax provision 1,303 3,503 1,118 Deferred Federal ( 583 ) 30 60 State ( 90 ) ( 2 ) 30 Foreign 217 ( 1,421 ) ( 135 ) Total deferred tax benefit ( 456 ) ( 1,393 ) ( 45 ) Income tax provision $ 847 $ 2,110 $ 1,073 A reconciliation between the U.S. federal statutory income tax and the Company’s effective tax rates as a percentage of loss before income taxes is as follows: Year Ended January 31, 2023 2022 2021 Provision computed at federal statutory rate 21.0 % 21.0 % 21.0 % States taxes, net of federal benefit 3.7 % 3.7 % 2.4 % Foreign rate differential ( 0.4 ) % ( 2.2 ) % ( 0.8 ) % Revaluation gain/loss 0.9 % 0.9 % ( 5.0 ) % Tax credits 2.8 % 2.5 % 2.3 % Change in valuation allowance ( 27.3 ) % ( 27.3 ) % ( 21.3 ) % Other ( 1.2 ) % ( 0.2 ) % 0.5 % Effective tax rate ( 0.5 ) % ( 1.6 ) % ( 0.9 ) % The components of the Company’s deferred tax assets and liabilities are as follows: 122 January 31, (in thousands) 2023 2022 2021 Deferred tax assets Net operating loss carryforwards $ 124,823 $ 114,654 $ 92,570 Tax Credit carryforwards 25,710 21,245 17,679 Stock-based compensation 17,683 8,252 4,013 Capitalized research expenses 24,152 — — Deferred revenue 1,599 3,909 5,239 Excess interest expense 8,742 8,656 6,799 Operating lease liability 5,274 — — Other 14,101 12,208 4,826 Total deferred tax assets 222,084 168,924 131,126 Valuation allowance ( 211,813 ) ( 166,081 ) ( 126,270 ) Total deferred tax assets 10,271 2,843 4,856 Deferred tax liabilities Operating lease right-of-use assets ( 4,863 ) — — Intangible assets ( 5,566 ) ( 2,701 ) ( 4,432 ) Total deferred tax liabilities ( 10,429 ) ( 2,701 ) ( 4,432 ) Net deferred tax assets (liabilities) $ ( 158 ) $ 142 $ 424 The Company had deferred tax assets of $ 222.1 million and $ 168.9 million before valuation allowances as of January 31, 2023 and 2022, respectively. The Company assesses the realizability of its deferred tax assets and establishes a valuation allowance if it is more-likely-than-not that some or all of its deferred tax assets will not be realized. The Company evaluates all available positive and negative evidence such as past operating results, future reversals of existing deferred tax liabilities, projected future taxable income, as well as prudent and feasible tax-planning strategies. Management believes that it is more likely than not that the majority of U.S. and foreign deferred tax assets will not be realized. Accordingly, the Company has recorded a valuation allowance against its deferred tax assets in these jurisdictions. The net change in the total valuation allowance is as follows: Year Ended January 31, (in thousands) 2023 2022 2021 Valuation allowance, beginning of year $ 166,081 $ 126,270 $ 102,758 Change in valuation allowance 45,732 39,811 23,512 Valuation allowance, end of year $ 211,813 $ 166,081 $ 126,270 The Company considers the undistributed earnings of its foreign subsidiaries permanently reinvested in foreign operations and has not provided for U.S. income taxes on such earnings. As of January 31, 2023, the Company’s unremitted earnings from its foreign subsidiaries were $ 21.7 million and the corresponding unrecognized deferred U.S. income tax liability is not material. As of January 31, 2023, the Company had approximately $ 504.7 million of federal, $ 276.9 million of state and $ 0.9 million of foreign net operating loss (“ NOL ”) carryforwards available to offset future taxable income, which will expire in varying amounts beginning in 2023. An insignificant amount of NOL and credits carryforwards may be subject to annual limitations under Internal Revenue Code Section 382. As of January 31, 2023, the Company had approximately $ 20.4 million of federal and $ 14.1 million of California research and development credit carryforwards available to reduce future taxable liability. The federal credit carryforwards will expire beginning in 2032 and California credits can be carried forward indefinitely. The Company’s unrecognized tax benefits are as follows: 123 Year Ended January 31, (in thousands) 2023 2022 2021 Beginning of year $ 5,688 $ 4,714 $ 3,918 Additions based on tax positions related to the current year 1,212 906 796 Additions for tax positions of prior years — 68 — End of year $ 6,900 $ 5,688 $ 4,714 As of January 31, 2023, the Company had no unrecognized tax benefits that, if recognized, would affect the effective tax rate. The Company’s policy is to include interest and penalties related to unrecognized tax benefits within the provision for taxes. The Company determined that no accrual for interest and penalties was required as of January 31, 2023 and 2022 and no such expenses were incurred in the years presented. The Company does not anticipate the total amounts of unrecognized tax benefits to significantly increase or decrease in the next twelve months. The Company files U.S. federal, various state and foreign income tax returns. The Company is not currently under audit by any taxing authorities. All tax years remain open to examination by taxing jurisdictions to which the Company is subject. (17) Net Loss Per Share Attributable to Common Stockholders Net loss per share calculations for all periods prior to the Business Combination have been retrospectively adjusted for the equivalent number of shares outstanding immediately after the Business Combination to effect the reverse recapitalization. The Company computes net loss per share of the Class A common stock and Class B common stock using the two-class method required for participating securities. Basic and diluted net loss per share are the same for each class of common stock because they are entitled to the same liquidation and dividend rights. The following table sets forth the computation of basic and diluted loss per Class A common stock and Class B common stock (amounts in thousands, except share and per share amounts): Year Ended January 31, 2023 2022 2021 Numerator: Net loss attributable to common stockholders $ ( 161,966 ) $ ( 137,124 ) $ ( 127,103 ) Denominator: Basic and diluted weighted-average common shares outstanding used in computing net loss per share attributable to common stockholders 267,126,918 79,610,970 44,214,426 Basic and diluted net loss per share attributable to common stockholders $ ( 0.61 ) $ ( 1.72 ) $ ( 2.87 ) Basic and diluted net loss per share was the same for each period presented as the inclusion of all potential Class A common stock and Class B common stock outstanding would have been anti-dilutive. The following table presents the potential common stock outstanding that was excluded from the computation of diluted net loss per share of common stock as of the periods presented because including them would have been antidilutive: 124 Year Ended January 31, 2023 2022 2021 Convertible Preferred Stock — — 131,252,627 Convertible notes — — 7,265,238 Warrants to purchase Series B Convertible Preferred Stock — — 761,340 Warrants to purchase Series D Convertible Preferred Stock — — 2,261,713 Warrants to purchase Class A common stock 1,065,594 1,065,594 — Common stock options 33,721,774 41,907,551 39,246,696 Restricted Stock Units 16,972,601 5,439,736 1,662,999 Earn-out Shares 25,771,862 26,217,249 — dMY Sponsor Earn-out Shares 862,500 862,500 — Public Warrants 6,899,982 6,899,982 — Private Placement Warrants 5,933,333 5,933,333 — Early exercised common stock options, subject to future vesting 1,286,741 1,654,385 — Shares issued in connection with acquisition, subject to future vesting 271,695 543,391 — 92,786,082 90,523,721 182,450,612 (18) Defined Contribution Plan The Company sponsors a defined-contribution savings plan under Section 401(k) of the Internal Revenue Code of 1986, as amended, covering substantially all full-time U.S. employees. Participating employees may contribute a percentage of their qualifying annual compensation up to the annual Internal Revenue Service contribution limit. The 401(k) plan was adopted in 2013. Since the inception of the plan, the Company has not matched employee contributions. (19) Subsequent Events On March 26, 2023, the Company entered into an asset purchase agreement with Holding Sinergise d.o.o., a company existing under the laws of Slovenia (“Sinergise”), and its subsidiaries and certain shareholders of Sinergise, to acquire from Sinergise its cloud-based geo-spatial analysis products, platforms and solutions business. The acquisition is expected to expand the Company’s data analysis platform and allow customers to extract insights from earth observation data more easily. The purchase price will be approximately $ 45.0 million , subject to certain purchase price adjustments, and will be paid fifty percent ( 50 %) in cash and fifty percent ( 50 %) through the issuance of shares of the Company’s Class A common stock. The transaction is subject to certain closing conditions and is expected to close in the second quarter of the fiscal year ending January 31, 2024. 125 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures The information required by this Item 9 was previously reported in the Company’s Current Report on Form 8-K/A that was filed with the SEC on December 13, 2021.