SentinelOne, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID 34 ) 84 Consolidated Balance Sheets 85 Consolidated Statements of Operations 86 Consolidated Statements of Comprehensive Loss 87 Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Deficit 88 Consolidated Statements of Cash Flows 90 Notes to Consolidated Financial Statements 92 83 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of SentinelOne, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of SentinelOne, Inc. and subsidiaries (the “Company”) as of January 31, 2021 and 2022, the related consolidated statements of operations, comprehensive loss, redeemable convertible preferred stock and stockholders’ equity (deficit), and cash flows, for each of the three years in the period ended January 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2021 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2022, in conformity with accounting principles generally accepted in the United States of America. 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 Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. 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. /s/ DELOITTE & TOUCHE LLP San Jose, California April 7, 2022 We have served as the Company’s auditor since 2018. 84 Table of Contents SENTINELONE, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) January 31, 2022 2021 Assets Current assets: Cash and cash equivalents $ 1,669,304 $ 395,472 Short-term investments 374 364 Accounts receivable, net 101,491 39,315 Deferred contract acquisition costs, current 27,546 14,733 Prepaid expenses and other current assets 18,939 14,173 Total current assets 1,817,654 464,057 Property and equipment, net 24,918 13,373 Operating lease right-of-use assets 23,884 18,026 Deferred contract acquisition costs, non-current 41,022 21,940 Intangible assets, net 15,807 470 Goodwill 108,193 — Other assets 10,703 2,694 Total assets $ 2,042,181 $ 520,560 Liabilities, Redeemable Convertible Preferred Stock, and Stockholders’ Equity (Deficit) Current liabilities: Accounts payable $ 9,944 $ 11,822 Accrued liabilities 22,657 3,671 Accrued payroll and benefits 61,150 20,134 Operating lease liabilities, current 4,613 3,634 Deferred revenue, current 182,957 89,645 Total current liabilities 281,321 128,906 Deferred revenue, non-current 79,062 52,190 Long-term debt — 19,621 Operating lease liabilities, non-current 24,467 18,839 Other liabilities 6,543 401 Total liabilities 391,393 219,957 Commitments and contingencies (Note 15) Redeemable convertible preferred stock; $ 0.0001 par value; zero and 168,985,413 shares authorized as of January 31, 2022 and 2021, respectively; zero and 167,058,113 shares issued and outstanding as of January 31, 2022 and 2021, respectively, and liquidation preference of zero and $ 622,414 as of January 31, 2022 and 2021, respectively — 621,139 Stockholders’ equity (deficit): Preferred stock; $ 0.0001 par value; 50,000,000 and zero shares authorized as of January 31, 2022 and 2021, respectively; and zero shares issued and outstanding as of January 31, 2022 and 2021 — — Class A common stock; $ 0.0001 par value; 1,500,000,000 and zero shares authorized as of January 31, 2022 and 2021, respectively; 162,666,515 and zero shares issued and outstanding as of January 31, 2022 and 2021, respectively 16 — Class B common stock; $ 0.0001 par value; 300,000,000 and 264,659,000 shares authorized as of January 31, 2022 and 2021, respectively; 107,785,100 and 39,242,316 shares issued and outstanding as of January 31, 2022 and 2021, respectively 11 2 Additional paid-in capital 2,271,980 29,869 Accumulated other comprehensive income 454 165 Accumulated deficit ( 621,673 ) ( 350,572 ) Total stockholders’ equity (deficit) 1,650,788 ( 320,536 ) Total liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit) $ 2,042,181 $ 520,560 The accompanying notes are an integral part of these consolidated financial statements. 85 Table of Contents SENTINELONE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) Year Ended January 31, 2022 2021 2020 Revenue $ 204,799 $ 93,056 $ 46,474 Cost of revenue 81,677 39,332 $ 18,331 Gross profit 123,122 53,724 $ 28,143 Operating expenses: Research and development 136,274 62,444 $ 36,683 Sales and marketing 160,576 77,740 $ 51,322 General and administrative 93,504 29,059 $ 15,122 Total operating expenses 390,354 169,243 $ 103,127 Loss from operations ( 267,232 ) ( 115,519 ) $ ( 74,984 ) Interest income 202 231 $ 886 Interest expense ( 787 ) ( 1,401 ) $ ( 2,015 ) Other income (expense), net ( 2,280 ) ( 424 ) $ ( 217 ) Loss before provision for income taxes ( 270,097 ) ( 117,113 ) $ ( 76,330 ) Provision for income taxes 1,004 460 $ 237 Net loss $ ( 271,101 ) $ ( 117,573 ) $ ( 76,567 ) Net loss per share attributable to Class A and Class B common stockholders, basic and diluted $ ( 1.56 ) $ ( 3.31 ) $ ( 2.34 ) Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted 174,051,203 35,482,444 32,712,350 The accompanying notes are an integral part of these consolidated financial statements. 86 Table of Contents SENTINELONE, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands) Year Ended January 31, 2022 2021 2020 Net loss $ ( 271,101 ) $ ( 117,573 ) $ ( 76,567 ) Other comprehensive income (loss): Foreign currency translation adjustments 289 366 ( 378 ) Total comprehensive loss $ ( 270,812 ) $ ( 117,207 ) $ ( 76,945 ) The accompanying notes are an integral part of these consolidated financial statements. 87 Table of Contents SENTINELONE, INC. CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) (in thousands, except share data) Redeemable Convertible Preferred Stock Class A and Class B Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity (Deficit) Shares Amount Shares Amount Balances as of February 1, 2019 97,686,390 $ 149,955 31,679,835 $ 1 $ 3,660 $ 177 $ ( 156,432 ) $ ( 152,594 ) Issuance of Series D Preferred Stock, net of issuance costs of $ 0.1 million 15,837,558 51,871 — — — — — — Issuance of common stock upon exercise of options — — 1,870,974 — 899 — — 899 Vesting of early exercised options — — — — 68 — — 68 Stock based compensation expense — — — — 4,359 — — 4,359 Foreign currency translation adjustments — — — — — ( 378 ) — ( 378 ) Net loss — — — — — — ( 76,567 ) ( 76,567 ) Balances as of January 31, 2020 113,523,948 $ 201,826 33,550,809 $ 1 $ 8,986 $ ( 201 ) $ ( 232,999 ) $ ( 224,213 ) Issuance of Series E Preferred Stock, net of issuance costs of $ 0.1 million 31,405,183 152,539 — — — — — — Issuance of Series F Preferred Stock, net of issuance costs of $ 0.1 million 22,128,982 266,774 — — — — — — Issuance of common stock upon exercise of options — — 5,358,692 1 4,607 — — 4,608 Issuance of common stock upon exercise of warrants — — 321,802 — 200 — — 200 Issuance of common stock for services provided — — 11,013 — 47 — — 47 Vesting of early exercised options — — — — 71 — — 71 Stock based compensation expense — — — — 15,958 — — 15,958 Foreign currency translation adjustments — — — — — 366 — 366 Net loss — — — — — — ( 117,573 ) ( 117,573 ) Balances as of January 31, 2021 167,058,113 $ 621,139 39,242,316 $ 2 $ 29,869 $ 165 $ ( 350,572 ) $ ( 320,536 ) Conversion of redeemable convertible preferred stock to common stock upon initial public offering ( 167,058,113 ) ( 621,139 ) 169,787,200 10 621,129 — — 621,139 Issuance of common stock upon initial public offering and private placements, net of underwriting discounts and commissions — — 41,678,568 4 1,380,956 — — 1,380,960 Issuance of common stock upon exercise of options — — 9,793,331 10 14,611 — — 14,621 Issuance of common stock upon exercise of warrants — — 940,953 — — — — — Vesting of restricted stock units — — 15,218 — — — — — Issuance of common stock under employee stock purchase plan — — 381,716 — 11,356 — — 11,356 Vesting of early exercised options — — — — 572 — — 572 Issuance of common stock and awards assumed in connection with Scalyr acquisition — — 7,277,214 1 120,319 — — 120,320 88 Table of Contents SENTINELONE, INC. CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) (in thousands, except share data) Issuance of restricted stock awards 1,315,099 — — — — — Stock based compensation expense — — — — 92,668 — — 92,668 Issuance of restricted stock for services provided 20,000 — 500 — — 500 Foreign currency translation adjustments — — — — — 289 — 289 Net loss — — — — — — ( 271,101 ) ( 271,101 ) Balances as of January 31, 2022 — — 270,451,615 $ 27 $ 2,271,980 $ 454 $ ( 621,673 ) $ 1,650,788 The accompanying notes are an integral part of these consolidated financial statements. 89 Table of Contents SENTINELONE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended January 31, 2022 2021 2020 CASH FLOW FROM OPERATING ACTIVITIES: Net loss $ ( 271,101 ) $ ( 117,573 ) $ ( 76,567 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 7,909 2,837 1,855 Amortization of deferred contract acquisition costs 21,670 11,518 5,749 Non-cash operating lease costs 2,862 3,085 — Stock-based compensation expense 87,889 15,912 4,346 Other ( 456 ) ( 22 ) ( 35 ) Changes in operating assets and liabilities, net of effects of acquisition Accounts receivable ( 59,082 ) ( 8,320 ) ( 18,986 ) Prepaid expenses and other current assets ( 7,319 ) ( 9,438 ) ( 1,237 ) Deferred contract acquisition costs ( 53,565 ) ( 26,934 ) ( 14,606 ) Accounts payable ( 2,076 ) 7,429 2,854 Accrued liabilities 18,080 1,374 643 Accrued payroll and benefits 41,462 7,758 5,644 Operating lease liabilities ( 3,139 ) ( 3,261 ) — Deferred revenue 115,142 49,065 46,264 Other liabilities 6,136 — ( 348 ) Net cash used in operating activities ( 95,588 ) ( 66,570 ) ( 44,424 ) CASH FLOW FROM INVESTING ACTIVITIES: Purchases of property and equipment ( 3,653 ) ( 3,283 ) ( 953 ) Purchases of intangible assets ( 802 ) ( 224 ) ( 200 ) Capitalization of internal-use software ( 5,839 ) ( 2,758 ) ( 1,700 ) Purchases of strategic investments ( 6,000 ) — ( 334 ) Cash paid for acquisition, net of cash and restricted cash acquired ( 3,449 ) — — Net cash used in investing activities ( 19,743 ) ( 6,265 ) ( 3,187 ) CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from issuance of Series D redeemable convertible preferred stock, net of issuance costs — — 51,871 Proceeds from issuance of Series E redeemable convertible preferred stock, net of issuance costs — 152,539 — Proceeds from issuance of Series F redeemable convertible preferred stock, net of issuance costs — 266,774 — Payments of deferred offering costs ( 7,416 ) — — Proceeds from revolving line of credit — 19,857 — Repayment of debt ( 20,000 ) ( 20,000 ) — Proceeds from exercise of stock options 14,622 4,608 899 Proceeds from exercise of warrants — 200 — Proceeds from issuance of common stock under the employee stock purchase plan 11,356 — — Proceeds from initial public offering and private placement, net of underwriting discounts and commissions 1,388,562 — — Net cash provided by financing activities 1,387,124 423,978 52,770 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 1,146 289 36 NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 1,272,939 351,432 5,195 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH–Beginning of period 399,112 47,680 42,485 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH–End of period $ 1,672,051 $ 399,112 $ 47,680 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid $ 409 $ 1,379 $ 1,844 Income taxes paid, net $ 583 $ 298 $ 363 SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Stock-based compensation capitalized as internal-use software $ 4,779 $ 46 $ 13 Property and equipment purchased but not yet paid $ 913 $ 78 $ 152 90 Table of Contents SENTINELONE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Vesting of early exercised stock options $ 575 $ 71 $ 68 Deferred offering costs accrued but not yet paid $ 186 $ — $ — Issuance of common stock and assumed equity awards in connection with acquisition $ 120,319 $ — $ — Conversion of redeemable convertible preferred stock to common stock upon initial public offering $ 621,139 $ — $ — The accompanying notes are an integral part of these consolidated financial statements. 91 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. ORGANIZATION AND DESCRIPTION OF BUSINESS Business SentinelOne, Inc. (SentinelOne, we, our, or us) was incorporated in January 2013 in the State of Delaware. On March 29, 2021, we amended our certificate of incorporation to change our name from Sentinel Labs, Inc. to SentinelOne, Inc. We are a cybersecurity provider that delivers an artificial intelligence-powered platform to enable autonomous cybersecurity defense. Our headquarters is located in Mountain View, California with various other global office locations. Initial Public Offering and Private Placement In July 2021, we completed our initial public offering (IPO) and a concurrent private placement, in which we issued and sold an aggregate of 41,678,568 shares of our Class A common stock at $ 35 per share, including 5,250,000 shares issued upon the exercise of the underwriters’ option to purchase additional shares and 1,428,568 shares issued pursuant to the private placement. We received net proceeds of approximately $ 1.4 billion after deducting underwriting discounts, commissions and deferred offering costs. Upon closing of the IPO, all 167,058,113 shares of our then-outstanding redeemable convertible preferred stock automatically converted into an aggregate of 169,787,200 shares of Class B common stock. All of our redeemable convertible preferred stock converted on a one-to-one basis, other than 31,405,183 shares of our then-outstanding Series E redeemable preferred stock, which converted into 34,134,270 shares of Class B common stock. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The consolidated financial statements include the accounts of SentinelOne and our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Fiscal Year Our fiscal year ends on January 31. References to fiscal 2022, 2021 and 2020 refer to the fiscal years ended January 31, 2022, January 31, 2021 and January 31, 2020, respectively. Forward Stock Split On February 6, 2020, we effected a one-to-three forward stock split of our issued and outstanding shares of common stock and redeemable convertible preferred stock. The par values of common stock and redeemable convertible preferred stock were not adjusted as a result of the stock split. All references to shares of common stock, options, warrants, and redeemable convertible preferred stock and per share amounts have been retroactively adjusted to reflect the forward stock split for the periods presented. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. These estimates include, but are not limited to, the valuation of our common stock prior to our IPO in June 2021, stock-based compensation, the period of benefit for deferred contract acquisition costs, standalone selling prices (SSP) for each performance obligation, useful lives of long-lived assets, the incremental borrowing rate (IBR) used for operating lease liabilities, and accounting for income taxes. Actual results could differ from those estimates. 92 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As the impact of the COVID-19 pandemic continues to evolve, estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require increased judgment. These estimates and assumptions may change in future periods and will be recognized in the consolidated financial statements as new events occur and additional information becomes known. To the extent our actual results differ materially from those estimates and assumptions, our future financial statements could be affected. Segment and Geographic Information We have a single operating and reportable segment. Our chief operating decision maker (CODM) is our Chief Executive Officer. The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and assessing financial performance. For information regarding our revenue and long-lived assets by geography, see Notes 3 and 14, respectively. Foreign Currency During fiscal 2022, we changed the functional currency of certain subsidiaries from their respective local currency to the U.S. dollar. The change in functional currency is due to increased exposure to the U.S. dollar as a result of a change in facts and circumstances in the primary economic environment in which these subsidiaries operate. The effects of the change in functional currency were not significant to our consolidated financial statements. Subsequent to the change, our reporting currency and the functional currency of our foreign subsidiaries is the U.S. dollar. Foreign currency transaction gains and losses are recorded in other income (expense), net in the consolidated statements of operations and were not material for any periods presented. Revenue Recognition We recognize revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers. Revenue is recognized when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration that we expect to be entitled to receive in exchange for the subscriptions and services. We apply the following five-step approach to recognize revenue: (i) Identification of the Contract, or Contracts, with the Customer —We determine that we have a contract with a customer when the contract is approved, the payment terms for the services can be identified, each party’s rights regarding the services to be transferred can be identified, the customer has the ability and intent to pay, and the contract has commercial substance. We apply judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s historical payment experience or, in the case of a new customer, credit and financial information of the customer. We sell through our indirect relationships with our channel partners or direct relationships with end customers through our internal sales force. Apart from certain sales arrangements where channel partners are determined to be our customers, we have concluded that the end customer is our customer. (ii) Identification of the Performance Obligations in the Contract —Performance obligations in a contract are identified based on the services that will be transferred to a customer that are both capable of being distinct, where the customer can benefit from the service either on its own or together with other resources that are readily available to the customer, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, we apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met, the promised services are accounted for as a combined performance obligation. 93 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS We have concluded that our contracts with customers do not contain warranties that give rise to a separate performance obligation. (iii) Determination of the Transaction Price —The transaction price is the amount of consideration we expect to be entitled from a customer in exchange for providing the subscriptions and services. Variable consideration is included in the transaction price if, in our judgment, it is probable that no significant future reversal of cumulative revenue under the contract will occur. Some of our end customers are entitled to receive service level commitment credits, in which we may be contractually obligated to provide partial refunds, and in rare instances, each representing a form of variable consideration. We have historically not experienced any significant incidents affecting the defined guarantees of performance levels or service response affecting the defined guarantees of performance levels or service response rates, and accordingly, estimated refunds related to service level commitment credits in the consolidated financial statements were not material during fiscal 2022, 2021 and 2020. None of our contracts contain a significant financing component. The transaction price excludes amounts collected on behalf of third parties, such as sales taxes. (iv) Allocation of the Transaction Price to the Performance Obligations in the Contract —If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on relative SSP. (v) Recognition of Revenue when, or as, Performance Obligations are Satisfied —Revenue is recognized when control of the related performance obligation is transferred to the customer in an amount that reflects the consideration expected to be received in exchange for the subscriptions or services. We generate substantially all of our revenue from subscriptions to our Singularity Platform. Our Singularity Platform delivers artificial intelligence-powered threat prevention, detection, and response capabilities, enabling an automatic protection against a full spectrum of cyber threats. We built our Singularity Platform to be deployed as a cloud service or in private and hybrid clouds. Customers can extend the functionality of their subscription to our platform by subscribing to additional Singularity Modules. The nature of our promise to the customer under the subscription is to stand ready to provide protection for the duration of the contractual term. As a result, we recognize revenue for these performance obligations ratably over the contractual term. Premium support and maintenance and other Singularity Modules are distinct from subscriptions and are recognized ratably over the term as the performance obligations are satisfied. We generally invoice our customers upfront upon signing for the entire term of the contract, periodically, or in arrears. Most of our subscription contracts have a term of one to three years. Our payment terms typically range between 30 to 45 days. The invoiced amounts are treated as deferred revenue on the consolidated balance sheets and are recognized ratably over the term of the contract beginning on the date the customer is given access to our platform. Our contracts are generally non-cancelable over the contractual term. Contracts with Multiple Performance Obligations Our contracts with customers may contain multiple promised services consisting of subscriptions to our Singularity Platform, premium support and maintenance, and other Singularity Modules that are distinct and accounted for separately. The transaction price is allocated to separate performance obligations on a relative SSP basis. Our best evidence for SSP is the price we charge for the subscription or service when we sell it separately in similar circumstances to similar customers. In instances where performance obligations do not have observable standalone sales, we utilize available information that may include, but is not limited to, product groupings or applying the expected cost-plus margin approach to estimate the price we would charge if the service was sold separately. 94 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Cost of Revenue Cost of revenue consists primarily of third-party cloud infrastructure expenses incurred in connection with the hosting and maintenance of our platform, personnel-related costs associated with our customer support and services organization, including salaries, benefits, bonuses, and stock-based compensation, amortization of capitalized internal-use software, software and subscription services used by our customer support and services team, and allocated overhead costs. Research and Development Research and development costs are expensed as incurred, unless they qualify for recognition as capitalized internal-use software. Research and development expenses consist primarily of personnel-related costs, including salaries, benefits, bonuses, and stock-based compensation, consulting fees, software and subscription services, third-party cloud infrastructure expenses incurred in developing our platform and modules, and allocated overhead costs. Advertising Expenses Advertising costs are expensed as incurred and included in sales and marketing expenses in the consolidated statements of operations. Advertising expenses were $ 7.8 million, $ 6.2 million, and $ 4.2 million, for fiscal 2022, 2021 and 2020, respectively. Stock-Based Compensation We account for stock-based awards issued to employees and directors based on the fair value of the awards at grant date. The fair value of stock option awards granted and rights to purchase shares under our employee stock purchase plan (ESPP) are generally estimated using the Black-Scholes option pricing model. Stock-based compensation expense for awards with only service-based vesting conditions is recognized on a straight-line basis over the requisite service period of the awards. Forfeitures are accounted for in the period in which they occur. We granted certain awards that have both a service-based and achievements of certain milestones. We recognize stock-based compensation expense on a graded basis over the total requisite service period for each separately vesting portion of the performance tranches related to these performance milestone options. We also granted stock option awards with a service-based, performance-based, and market-based vesting conditions to our Chief Executive Officer and Chief Financial Officer, These stock options will vest 100% upon the occurrence of our IPO (the performance-based vesting condition) and the achievement of certain milestone events and our share price targets (the market-based vesting conditions), subject to the executive’s continued service to us from the grant date through the milestone events. For these options, we used a Monte Carlo simulation to determine the fair value at the grant date and the implied service period. For these awards, stock-based compensation expense is recognized using the accelerated attribution method over the requisite implied service period when it is probable the performance-based vesting condition will be achieved. Income Taxes We are subject to income taxes in the United States and other foreign jurisdictions. We utilize the asset and liability method of accounting for income taxes whereby deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, as well as from net operating loss carryforwards, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. We consider all available evidence, both positive and negative, including historical levels of income, expectations, and risks associated with estimates of future taxable income in assessing the need for a valuation allowance. 95 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS We recognize income tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained upon examination by the taxing authorities based on the technical merits of the position. We recognize penalties and accrued interest related to unrecognized tax benefits as a component of other income (expense), net and interest expense, respectively, in the consolidated statements of operations. Net Loss per Share Attributable to Common Stockholders We compute basic and diluted net loss per share attributable to common stockholders using the two-class method required for participating securities. We consider our redeemable convertible preferred stock, restricted common stock, and shares issued upon the early exercise of stock options subject to repurchase to be participating securities. Under the two-class method, net loss is not allocated to redeemable convertible preferred stock, restricted common stock, and early exercised stock options as the holders do not have a contractual obligation to share in our losses. Cash, Cash Equivalents, and Restricted Cash We consider all highly liquid investments purchased with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents consist of amounts invested in money market funds. Restricted cash consists of collateralized letters of credit established in connection with lease agreements for our office facilities. Restricted cash, current and non-current, are included within prepaid expenses and other current assets and other assets, respectively, on our consolidated balance sheets. The following table provides a reconciliation of cash, cash equivalents, and restricted cash to the total of these amounts shown in the consolidated statements of cash flows (in thousands): As of January 31, 2022 2021 Cash and cash equivalents $ 1,669,304 $ 395,472 Restricted cash, current — 946 Restricted cash, non-current 2,747 2,694 $ 1,672,051 $ 399,112 Short-Term Investments We determine the appropriate classification of our investments at the time of purchase and reevaluate such determination at each balance sheet date. We classify our investments as available-for-sale securities and present them within current assets as we may liquidate these investments at any time for use in our current operations or for any other purpose. Our investments are recorded at fair value with unrealized gains and losses, if any, reported in accumulated other comprehensive income (loss). Unrealized gains and losses and decline in value that are considered to be other-than-temporary are recognized in other income (expense), net in the consolidated statements of operations. We did not identify any investments with other-than-temporary impairments as of January 31, 2022 and 2021. Realized gains and losses on the sale of short-term investments are determined on a specific identification method and are recorded in other income (expense), net in the consolidated statements of operations. There were no realized gains or losses on the sale of short-term investments during fiscal 2022, 2021 and 2020. Strategic Investments Our strategic investments consist of non-marketable equity investments in privately held companies. We elect to apply the measurement alternative and record these investments at cost, less any impairment, plus or minus observable price changes in orderly transactions for identical or similar investments of the same issuer. Strategic investments are included within other assets on our consolidated balance sheets and adjustments to their carrying amounts are recorded in other income (expense), net in the consolidated statements of operations. There were no material events or circumstances impacting the carrying amount of our strategic investments during fiscal 2022, 2021 and 2020. 96 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Deferred Offering Costs Prior to the IPO, all deferred offering costs were capitalized in other assets on the consolidated balance sheets. Deferred offering costs of $ 7.6 million, primarily consisting of accounting, legal, and other fees related to our IPO, were offset against the IPO proceeds upon the closing of our IPO in July 2021. Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The carrying amounts reported on the consolidated balance sheets for cash equivalents, short-term investments, accounts receivable, accounts payable, accrued liabilities, and accrued payroll and benefits approximate their respective fair values due to their short-term nature. Concentrations of Credit Risk Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, short-term investments, and accounts receivable. We maintain our cash, cash equivalents, restricted cash, and short-term investments with high-credit-quality financial institutions mainly in the U.S. and Israel. We have not experienced any credit losses relating to our cash, cash equivalents, restricted cash, and short-term investments. For accounts receivable, we are exposed to credit risk in the event of nonpayment by customers to the extent of the amounts recorded on the consolidated balance sheets. We perform periodic credit evaluations of our customers and generally do not require collateral. The only channel partner that represented 10% or more of accounts receivable, net for the periods presented was as follows: As of January 31, 2022 2021 Channel partner A 18 % 23 % There were no end customers that represented 10% or more of accounts receivable as of January 31, 2022 or 2021. Channel partners that represented 10% or more of our total revenue for the periods presented were as follows: Year Ended January 31, 2022 2021 2020 Channel partner A 18 % 19 % 19 % Channel partner B * 13 % 14 % *Less than 10% There were no end customers that represented 10% or more of total revenue for fiscal 2022, 2021 and 2020. Accounts Receivable Accounts receivable are recorded at invoiced amounts and are non-interest bearing. We have a well-established collection history from our channel partners and end customers. We periodically evaluate the collectability of our accounts receivable and provide an allowance for doubtful accounts as necessary, based on the age of the receivable, expected payment ability, and collection experience. As of January 31, 2022 and 2021, the allowance for doubtful accounts was not material. Deferred Contract Acquisition Costs 97 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS We capitalize sales commissions and associated payroll taxes that are incremental to obtaining a customer contract, which are recorded as deferred contract acquisition costs on the consolidated balance sheets. Sales commissions for the renewal of a contract are not considered commensurate with commissions paid for the initial contracts, given the substantive difference in commission rates in proportion to their respective contract values. Commissions paid on a new contract are amortized on a straight-line basis over an estimated period of benefit of four years , while commissions paid on renewal contracts are amortized over the contractual term of the renewal. We determine the estimated period of benefit based on both quantitative and qualitative factors, including the duration of our relationships with customers and the estimated useful life of our technology. Amortization of deferred contract acquisition costs is included in sales and marketing expenses in the consolidated statements of operations. We periodically review these deferred contract acquisition costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit. We did not recognize any impairment of deferred contract acquisition costs during fiscal 2022, 2021 and 2020. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the assets as follows: Estimated Useful Life Office furniture and equipment 5 years Computers, software, and electronic equipment 3 years Capitalized internal-use software 4 years Leasehold improvements Shorter of useful life or remaining term of lease Costs for maintenance and repairs are expensed as incurred. Capitalized Internal-Use Software We capitalize certain internal-use software development costs related to our cloud platform. Costs incurred in the preliminary stages of development and post-development are expensed as incurred. Internal and external costs incurred during the development phase, if direct, are capitalized until the software is substantially complete and ready for our intended use. We also capitalize costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional functionality. Maintenance and training costs are expensed as incurred. Capitalized internal-use software is included in property and equipment and is amortized to cost of revenue on a straight-line basis over its expected useful life. Impairment of Long-Lived Assets (Including Goodwill and Intangible Assets) Long-lived assets, including intangible assets with finite lives, are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of asset may not be recoverable. Recoverability of assets is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the asset group. No impairment loss was recorded during fiscal 2022, 2021 and 2020. Goodwill is not amortized but tested for impairment at least annually in the fourth quarter, or more frequently if events or changes in circumstances indicate that impairment may exist. The impairment test consists of a qualitative assessment to determine if the quantitative assessment is required. Goodwill impairment is recognized when the quantitative assessment results in the carrying value of the reporting unit exceeding its fair value, net of related income tax effect, in which case an impairment charge is recorded to goodwill to the extent the carrying value exceeds the fair value, limited to the amount of goodwill. We did not recognize any impairment of goodwill during fiscal 2022. 98 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Business Combinations We account for our acquisitions using the acquisition method of accounting. We allocate the fair value of purchase consideration to the tangible and intangible assets acquired, and liabilities assumed, based on their estimated fair values. The excess of the fair value of purchase consideration over the values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair value of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain identifiable assets include, but are not limited to, the selection of valuation methodologies, future expected cash flows, discount rates, and useful lives. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Acquisition costs, such as legal and consulting fees, are expensed as incurred and are included in general and administrative expenses in the consolidated statements of operations. During the measurement period, which is up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded in the consolidated statements of operations. See Note 17 for additional information regarding our acquisitions. Leases In accordance with ASC 842, we determine if an arrangement is or contains a lease at inception by evaluating various factors, including if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration and other facts and circumstances. Operating lease right-of-use (ROU) assets and operating lease liabilities are recognized on the consolidated balance sheets at the lease commencement date based on the present value of lease payments over the lease term, which is the non-cancelable period stated in the contract adjusted for any options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease payments consist of the fixed payments under the arrangement, less any lease incentives, such as tenant improvement allowances. Variable costs, such as maintenance and utilities based on actual usage, are not included in the measurement of operating lease ROU assets and operating lease liabilities and are expensed when the event determining the amount of variable consideration to be paid occurs. When the implicit rate of the leases is not determinable, we use an IBR based on the information available at the lease commencement date in determining the present value of lease payments. Lease cost for lease payments is recognized on a straight-line basis over the lease term. We account for lease components and non-lease components as a single lease component. In addition, we do not recognize operating lease ROU assets and operating lease liabilities for leases with lease terms of 12 months or less. In addition, we sublease certain of our unoccupied facilities to third parties. We recognize sublease income on a straight-line basis over the sublease term. We did not have any material finance leases during fiscal 2022, 2021, and 2020. Recently Adopted Accounting Pronouncement s In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes . This guidance simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in Topic 740 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. The guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill and the allocation of consolidated income taxes to separate financial statements of entities not subject to income tax. We early adopted this guidance on August 1, 2021, which did not have a material impact on our consolidated financial statements. 99 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . This ASU simplifies the measurement of goodwill by eliminating step two of the two-step impairment test. Step two measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. This ASU 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. We adopted this guidance on February 1, 2021, which did not have a material impact on our consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which provides new authoritative guidance with respect to the measurement of credit losses on financial instruments. This update changes the impairment model for most financial assets and certain other instruments by introducing a current expected credit loss (CECL) model. The CECL model is a more forward-looking approach based on expected losses rather than incurred losses, requiring entities to estimate and record losses expected over the remaining contractual life of an asset. We adopted this guidance on February 1, 2021, which did not have a material impact on our consolidated financial statements. Recent Accounting Pronouncements Not Yet Adopted In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers . The new guidance requires contract assets and contract liabilities acquired in a business combination to be recognized in accordance with Accounting Standards Codification (ASC) Topic 606 as if the acquirer had originated the contracts. The guidance is effective for us on February 1, 2023. We are currently evaluating the impact of this guidance on our consolidated financial statements. In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Among other changes, ASU 2020-06 removes the liability and equity separation model for convertible instruments with a cash conversion feature, and as a result, after adoption, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost and convertible preferred stock will be accounted for as a single equity instrument measured at its historical cost, as long as no other features require bifurcation and recognition as derivatives. Additionally, ASU 2020-06 requires the application of the if-converted method for all convertible instruments in the diluted earnings per share calculation and the inclusion of the effect of share settlement for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards. The guidance is effective for us on February 1, 2024. We are currently evaluating the impact of this guidance on our consolidated financial statements. 3. REVENUE AND CONTRACT BALANCES Disaggregation of Revenue The following table summarizes revenue by geography based on the shipping address of end customers who have contracted to use our platform for the periods presented (in thousands, except percentages): Year Ended January 31, 2022 2021 2020 Amount % of Revenue Amount % of Revenue Amount % of Revenue United States $ 140,034 68 % $ 65,497 70 % $ 33,972 73 % International 64,765 32 27,559 30 12,502 27 Total $ 204,799 100 % $ 93,056 100 % $ 46,474 100 % 100 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS No single country other than the United States represented 10% or more of our revenue during fiscal 2022, 2021 and 2020. The following table summarizes revenue from contracts by type of customer for the periods presented (in thousands, except percentages): Year Ended January 31, 2022 2021 2020 Amount % of Revenue Amount % of Revenue Amount % of Revenue Channel partners $ 187,541 92 % $ 88,954 96 % $ 42,881 92 % Direct customers 17,258 8 4,102 4 $ 3,593 8 Total $ 204,799 100 % $ 93,056 100 % $ 46,474 100 % Contract Balances Contract assets consist of unbilled accounts receivable, which arise when a right to consideration for our performance under the customer contract occurs before invoicing the customer. The amount of unbilled accounts receivable included within accounts receivable, net on the consolidated balance sheets was $ 1.5 million as of both January 31, 2022 and 2021. Contract liabilities consist of deferred revenue, which represents invoices billed in advance of performance under a contract. Deferred revenue is recognized as revenue over the contractual period. The deferred revenue balance was $ 262.0 million and $ 141.8 million as of January 31, 2022 and 2021, respectively. We recognized revenue of $ 95.5 million, $ 53.8 million and $ 25.9 million for fiscal 2022, 2021 and 2020, respectively, that was included in the corresponding contract liability balance at the beginning of the period. Remaining Performance Obligations Our contracts with customers typically range from one to three years . Revenue allocated to remaining performance obligations represents non-cancelable contract revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced in future periods. As of January 31, 2022, our remaining performance obligations were $ 345.4 million, of which we expect to recognize 90 % as revenue over the next 24 months, with the remainder to be recognized thereafter. We periodically review deferred contract acquisition costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit. We did no t recognize any impairment of deferred contract acquisition costs during fiscal 2022, 2021 and 2020. . 4. FAIR VALUE MEASUREMENTS We measure fair value based on a three-level hierarchy, maximizing the use of observable inputs, where available, and minimizing the use of unobservable inputs, as follows: Level 1: Assets and liabilities whose values are based on observable inputs such as quoted (unadjusted) prices in active markets for identical assets or liabilities. Level 2: Assets and liabilities whose values are based on inputs from quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the asset or liability. Level 3: Assets and liabilities whose values are based on unobservable inputs that are supported by little or no market activity and that are significant to the overall fair value measurement. 101 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table summarizes the respective fair value and the classification by level within the fair value hierarchy (in thousands): As of January 31, 2022 Level 1 Level 2 Level 3 Total Assets Cash equivalents: Money market funds $ 1,641,642 $ — $ — $ 1,641,642 Short-term investments: Certificates of deposit — 375 — 375 Total assets measured and recorded at fair value $ 1,641,642 $ 375 $ — $ 1,642,017 As of January 31, 2021 Level 1 Level 2 Level 3 Total Assets Cash equivalents: Money market funds $ 40,518 $ — $ — $ 40,518 Short-term investments: Certificates of deposit — 364 — 364 Total assets measured and recorded at fair value $ 40,518 $ 364 $ — $ 40,882 There were no transfers between the levels of the fair value hierarchy during fiscal 2022, 2021 and 2020. As of January 31, 2022 and 2021, the aggregate fair value of our cash equivalents and short-term investments approximated amortized cost and, as such, there were no unrealized gains or losses, either individually or in the aggregate. As of January 31, 2022 and 2021, our cash and cash equivalents had contractual maturities of three months or less and short-term investments had contractual maturities within one year of each respective date. The table above does not include our strategic investments in privately held equity securities, which are measured using the alternative measurement method. As of January 31, 2022, our non-marketable equity investments of $ 6.0 million was included in other assets on the consolidated balance sheets. We did no t have any strategic investments as of January 31, 2021. 5. PROPERTY AND EQUIPMENT, NET Property and equipment, net consisted of the following (in thousands): As of January 31, 2022 2021 Office furniture and equipment $ 1,318 $ 837 Computers, software, and electronic equipment 4,895 3,489 Capitalized internal-use software 17,917 6,959 Leasehold improvements 7,490 4,568 Construction in progress 3,108 2,925 Total property and equipment 34,728 18,778 Less: Accumulated depreciation and amortization ( 9,810 ) ( 5,405 ) Total property and equipment, net $ 24,918 $ 13,373 We capitalized internal-use software costs of $ 10.6 million, $ 2.8 million and $ 1.7 million during fiscal 2022, 2021 and 2020, respectively. 102 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Depreciation and amortization expense related to property and equipment was $ 4.6 million, $ 2.8 million and $ 1.9 million for fiscal 2022, 2021 and 2020, respectively, including amortization expense related to capitalized internal-use software of $ 2.1 million, $ 1.3 million and $ 0.7 million for fiscal 2022, 2021 and 2020, respectively. 6. INTANGIBLE ASSETS Intangible assets, net as of January 31, 2022 consisted of the following (in thousands): As of January 31, 2022 Developed technology $ 15,500 Customer relationship 1,500 Non-compete agreements 650 Trademarks 150 Patents 1,094 Total finite-lived intangible assets 18,894 Less: accumulated amortization ( 3,342 ) Total finite-lived intangible assets, net $ 15,552 Indefinite-lived intangible assets - domain names $ 255 Total intangible assets, net $ 15,807 Intangible assets, net as of January 31, 2021 were not material. Amortization expense of intangible assets was $ 3.3 million for fiscal 2022. Amortization expense of intangible assets was no t material for fiscal 2021 and 2020. As of January 31, 2022, estimated future amortization expense is as follows (in thousands): Fiscal Year Ending January 31, 2023 3,381 2024 2,578 2025 2,353 2026 2,341 2027 2,341 Thereafter 2,558 Total $ 15,552 7. LONG-TERM DEBT In May 2018, we entered into a loan and security agreement with a certain lender, which was restated in May 2020, or the Amended Loan and Security Agreement. The Amended Loan and Security Agreement provided a revolving line of credit of up to $ 45.0 million, maturing in May 2023. In June 2021, we repaid all outstanding indebtedness owed pursuant to the Amended Loan and Security Agreement, terminated the agreement, and closed our revolving line of credit. Pursuant to our termination of the Amended Loan and Security Agreement, the related security interests have been removed and the covenants shall be of no further force and effect. In connection with the initial term loan, we issued warrants to purchase shares of common stock with an exercise price of $ 0.62 per share. The remaining warrants to purchase 954,884 shares of common stock were outstanding and exercisable as of January 31, 2021. Upon the closing of the IPO, we issued 940,953 shares of Class B common stock in connection with the cashless exercise of all outstanding warrants to purchase common stock. 103 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS We incurred interest expense associated with our long-term debt of $ 0.4 million, $ 1.4 million and $ 2.0 million for fiscal 2022, 2021 and 2020, respectively. 8. LEASES We have entered into non-cancelable operating lease agreements with various expiration dates through fiscal 2029. Our operating lease arrangements do not contain any restrictive covenants or residual value guarantees. Supplemental cash flow information related to our operating leases for fiscal 2022 and 2021 as well as the weighted-average remaining lease term and weighted-average discount rate as of January 31, 2022 and 2021 were as follows: Year Ended January 31, 2022 2021 Supplemental Cash Flow Information Cash paid for amount included in the measurement of operating lease liabilities $ 4,596 $ 3,999 Operating lease ROU assets obtained in exchange for operating lease liabilities $ 8,558 $ 6,579 As of January 31, 2022 2021 Lease Term and Discount Rate Weighted-average remaining lease term (years) 6.56 7.42 Weighted-average discount rate 4.3 % 4.3 % The components of lease costs consisted of the following (in thousands): Year Ended January 31, 2022 2021 Operating lease costs $ 4,027 $ 3,844 Short-term lease costs 2,248 509 Variable lease costs 1,124 702 Total lease costs $ 7,399 $ 5,055 Sublease income was $ 0.6 million, $ 0.9 million and $ 1.0 million for fiscal 2022, 2021 and 2020, respectively, and was recorded as a reduction of lease costs. As of January 31, 2022, we had total undiscounted future payments of $ 3.6 million under an operating lease that had not yet commenced, which were not included on the consolidated balance sheets. This operating lease commenced in February 2022 and has a lease term of 6 years. 104 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The maturities of our non-cancelable operating lease liabilities as of January 31, 2022 were as follows (in thousands): Fiscal Year Ending January 31, Amount 2023 4,926 2024 5,188 2025 5,109 2026 5,168 2027 5,229 Thereafter 7,845 Total operating lease payments $ 33,465 Less: Imputed interest ( 4,385 ) Present value of operating lease liabilities $ 29,080 9. PREFERRED STOCK Redeemable Convertible Preferred Stock Upon the closing of the IPO, all 167,058,113 shares of our then-outstanding redeemable convertible preferred stock automatically converted to an aggregate of 169,787,200 shares of class B common stock. All of our redeemable convertible preferred stock converted on a one-to-one basis, other than 31,405,183 shares of our then-outstanding Series E redeemable convertible preferred stock, which converted into 34,134,270 shares of Class B common stock. Our redeemable convertible preferred stock as of January 31, 2021 consisted of the following (in thousands, except share and per share data): As of January 31, 2021 Shares Authorized Shares Issued and Outstanding Liquidation Amount Carrying Value Original Issuance Price per Share Series Seed 10,962,327 10,962,327 $ 2,577 $ 2,553 $ 0.2351 Series A 12,855,123 12,855,123 10,000 9,948 0.7779 Series B 20,288,700 20,288,700 24,338 24,241 1.1996 Series C 40,338,867 40,338,867 70,433 69,845 1.7460 Series D 29,078,931 29,078,931 95,476 95,239 3.2833 Series E 31,405,183 31,405,183 152,683 152,539 4.8617 Series F 24,056,282 22,128,982 266,907 266,774 12.0614 Total 168,985,413 167,058,113 $ 622,414 $ 621,139 During fiscal 2021, we issued 31,405,183 shares of Series E Preferred Stock at a price of $ 4.8617 per share for aggregate proceeds of $ 152.5 million, net of issuance costs of $ 0.1 million and 22,128,982 shares of Series F Preferred Stock at a price of $ 12.0614 per share for aggregate proceeds of $ 266.8 million, net of issuance costs of $ 0.1 million. Preferred Stock In connection with the IPO, we amended and restated our certificate of incorporation, which became effective immediately prior to the closing of the IPO, which authorized 50,000,000 shares of undesignated preferred stock, with a par value of $ 0.0001 . As of January 31, 2022, there were 50,000,000 shares of preferred stock authorized and no shares of preferred stock outstanding. 105 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 10. COMMON STOCK We have two classes of common stock: Class A common stock and Class B common stock. In connection with the IPO, we amended and restated our certificate of incorporation and authorized 1,500,000,000 shares of Class A common stock and 300,000,000 shares of Class B common stock. The shares of Class A common stock and Class B common stock are identical, except with respect to voting rights. Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to twenty votes. Class A and Class B common stock each have a par value of $ 0.0001 per share, and are referred to collectively as our common stock throughout the notes to the consolidated financial statements, unless otherwise noted. Holders of common stock are entitled to receive any dividends as may be declared from time to time by the board of directors. Shares of Class B common stock may be converted to Class A common stock at any time at the option of the stockholder. Shares of Class B common stock automatically convert to Class A common stock at the earlier of: (i) the date specified by a vote of the holders of 66 2/3% of the then outstanding shares of Class B common stock, (ii) seven years from the date of our Final Prospectus, or June 29, 2028, (iii) the first date following the completion of our IPO on which the number of shares of outstanding Class B common stock (such calculations shall include shares of Class B common stock subject to outstanding stock options) held by Tomer Weingarten, including certain permitted entities that Mr. Weingarten controls, is less than 25 % of the number of shares of outstanding Class B common stock (such calculation shall include shares of Class B common stock subject to outstanding stock options) that Mr. Weingarten originally held as of the date of our Final Prospectus, (iv) the date fixed by our board of directors, following the first date following the completion of our IPO when Mr. Weingarten is no longer providing services to us as an officer, employee, consultant or member of our board of directors, (v) the date fixed by our board of directors following the date on which, if applicable, Mr. Weingarten is terminated for cause, as defined in our restated certificate of incorporation, and (vi) the date that is 12 months after the death or disability, as defined in our restated certificate of incorporation, of Mr. Weingarten. Our common stock reserved for future issuance on an as-converted basis as of January 31, 2022 and 2021 were as follows: As of January 31, 2022 2021 Conversion of redeemable convertible preferred stock — 168,951,059 Exercise of common stock warrants — 954,884 Stock options outstanding 42,422,473 37,231,191 RSUs outstanding 1,770,304 — ESPP reserved for future issuance 6,674,603 — 2021 Plan available for future grants 38,055,572 5,642,142 Total shares of common stock reserved 88,922,952 212,779,276 11. STOCK-BASED COMPENSATION 2021 Equity Incentive Plan In May 2021, our board of directors and in June 2021, our stockholders approved our 2021 Equity Incentive Plan (2021 Plan) as a successor to our 2013 Equity Incentive Plan (2013 Plan) and 2011 Stock Incentive Plan (2011 Plan) with the purpose of granting stock-based awards to employees, directors, officers and consultants, including stock options, restricted stock awards and restricted stock units (RSUs). A total of 35,281,596 shares of Class A common stock were initially available for issuance under the 2021 Plan. Our compensation committee administers the 2021 Plan. The number of shares of our Class A common stock available for issuance under the 2021 Plan is subject to an annual increase on the first day of each fiscal year beginning on February 1, 2022, equal to the lesser of: (i) five percent ( 5 %) of the aggregate number of outstanding shares of all classes of our common stock as of the last day of the immediately preceding fiscal year or (ii) such other amount as our board of directors may determine. 106 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The 2013 Plan and 2011 Plan (together, the Prior Plans) were terminated in July 2021, in connection with the adoption of our 2021 Plan, and stock-based awards are no longer granted under the Prior Plans. However, the Prior Plans will continue to govern the terms and conditions of the outstanding awards previously granted thereunder. Any shares underlying stock options that are expired, canceled, forfeited or repurchased under the Prior Plans will be automatically transferred to the 2021 Plan and be available for issuance as Class A common stock. Restricted Stock Units A summary of our RSUs under the 2021 Plan is as follows: Number of Shares Weighted-Average Grant Date Fair Value Outstanding as of January 31, 2021 — $ — Granted 1,491,253 $ 57.17 Released ( 11,902 ) $ 62.60 Forfeited ( 41,998 ) $ 54.29 Outstanding as of January 31, 2022 1,437,353 $ 57.21 As of January 31, 2022, we had unrecognized stock-based compensation expense related to unvested RSUs of $ 77.0 million that is expected to be recognized on a straight-line basis over a weighted-average period of 3.7 years. 2013 Equity Incentive Plan Our 2013 Plan was adopted by our board of directors in June 2013 and approved by our stockholders in July 2013. The 2013 Plan provides for the grant of stock-based awards to employees, officers, directors, and other service providers. Options granted under the 2013 Plan expire ten years from the date of grant. The options generally vest 25 % on the first anniversary of the grant date and monthly over the course of the following three years . A summary of our stock option plan activity under the 2013 Plan is as follows: Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Outstanding as of January 31, 2021 37,231,191 $ 1.68 8.34 $ 442,515 Granted 14,048,623 $ 9.66 Exercised ( 8,406,950 ) $ 1.52 Forfeited ( 1,131,723 ) $ 3.34 Outstanding as of January 31, 2022 41,741,141 $ 4.34 7.95 $ 1,686,738 Expected to vest as of January 31, 2022 41,741,141 $ 4.34 7.95 $ 1,686,738 Vested and exercisable as of January 31, 2022 17,467,223 $ 2.47 7.16 $ 738,584 The weighted-average grant-date fair value of options granted during fiscal 2022, 2021 and 2020 were $ 13.14 , $ 1.63 and $ 0.43 per share, respectively. The aggregate grant-date fair value of options vested during fiscal 2022, 2021 and 2020 was $ 32.0 million, $ 5.1 million and $ 1.5 million, respectively. The aggregate intrinsic value is the difference between the exercise price and the estimated fair value of the underlying common stock. The aggregate intrinsic value of options exercised during fiscal 2022, 2021 and 2020 was $ 333.7 million, $ 27.0 million and $ 1.7 million, respectively. 107 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of January 31, 2022, we had unrecognized stock-based compensation expense related to unvested options of $ 148.6 million that is expected to be recognized on a straight-line basis over a weighted-average period of 2.8 years. Restricted Stock Units A summary of our RSUs under the 2013 Plan is as follows: Number of Shares Weighted-Average Grant Date Fair Value Outstanding as of January 31, 2021 — $ — Granted 346,483 $ 32.39 Released ( 3,316 ) $ 32.69 Forfeited ( 10,216 ) $ 32.48 Outstanding as of January 31, 2022 332,951 $ 32.38 As of January 31, 2022, we had unrecognized stock-based compensation expense related to unvested RSUs of $ 6.8 million that is expected to be recognized on a straight-line basis over a weighted-average period of 1.6 years. Performance Milestone Options In February 2021, we granted 1,243,636 performance milestone options to purchase shares of common stock under the 2013 Plan. The performance milestone options are subject to service-based vesting conditions and achievements of certain milestones. We recognize compensation cost on a graded basis over the total requisite service period for each separately vesting portion of the performance tranches related to these performance milestone options. The grant-date fair value of the performance milestone options was $ 10.25 , $ 10.37 , and $ 10.49 per share for each of the performance tranches using the Black-Scholes option-pricing model. We assess the probability that the performance condition will be met for each of the performance tranches at the end of each reporting period, and recognize cumulative expense only for the performance tranches that are assessed to be probable of vesting. During fiscal 2022, we recorded $ 12.8 million of stock-based compensation expense. As of January 31, 2022, we had fully recognized stock-based compensation expense related to performance milestone options. Milestone Options In March 2021, we granted 1,404,605 options to purchase shares of common stock subject to service-based, performance-based, and market-based vesting conditions to our Chief Executive Officer and Chief Financial Officer under the 2013 Plan. These stock options will vest 100 % upon the occurrence of our IPO (the performance-based vesting condition) and the achievement of certain milestone events and our share price targets (the market-based vesting conditions), subject to the executive’s continued service to us from the grant date through the milestone events. For these options, we used a Monte Carlo simulation to determine the fair value at the grant date and the implied service period. During fiscal 2022, we recorded $ 3.1 million of stock-based compensation expense. As of January 31, 2022, we had unrecognized stock-based compensation expense related to unvested milestone options of $ 16.3 million, that is expected to be recognized over the remaining implied service period of 4.6 years. Restricted Common Stock In connection with the Scalyr acquisition, we granted 1,315,099 shares of restricted common stock with a fair value of $ 14.59 per share at the time of grant, that vest over a period of two years . During fiscal 2022, we recorded $ 10.9 million of stock-based compensation expense. As of January 31, 2022, we had unrecognized stock-based 108 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS compensation expense related to this unvested restricted common stock of $ 8.7 million that is expected to be recognized over the remaining vesting period of 1.0 years. 2011 Stock Incentive Plan As part of the Scalyr acquisition, we assumed 2,138,347 options to purchase shares of common stock under the 2011 Plan, at a weighted-average exercise price of $ 1.74 per share and weighted-average fair value of $ 13.10 per share, of which 681,332 options remained outstanding with a weighted-average exercise price of $ 1.72 per share as of January 31, 2022. As of January 31, 2022, 148,499 options were vested and exercisable with a weighted-average exercise price of $ 1.72 per share. The aggregate grant-date fair value of options vested during fiscal 2022 was $ 10.8 million. The total unrecognized stock-based compensation expense related to these options was $ 4.1 million, that is expected to be recognized on a straight-line basis over a weighted-average period of 1.2 years. During fiscal 2022, 1,386,381 options were exercised with an aggregate intrinsic value of $ 33.4 million. Secondary Stock Sales In May 2021, we facilitated a secondary sale of our common stock. Under the terms of the sale, certain preferred stock investors purchased 85,403 shares of common stock from an employee at $ 23.00 per share for an aggregate purchase price of $ 2.0 million. We did no t recognize any stock-based compensation expense during fiscal 2022 in connection with this sale. In June 2021, we facilitated certain secondary sales of our common stock. Under the terms of the sales, certain preferred stock investors purchased 305,724 shares of common stock from certain employees at prices ranging from $ 21.00 to $ 52.00 per share for an aggregate purchase price of $ 8.7 million. The stock-based compensation expense recognized in connection with these sales were not material. Common Stock Subject to Repurchase Common stock purchased by employees pursuant to an early exercise of stock options are not deemed, for accounting purposes, to be outstanding until those shares vest according to their respective vesting schedules and accordingly, the consideration received for early exercises are initially recorded as a liability and reclassified to common stock and additional paid-in capital as the underlying awards vest. These unvested shares may be repurchased by us in case of employment termination at the price paid by the purchaser for such shares. As of January 31, 2022 and 2021, the balance of common stock subject to repurchase was not material. Stock-Based Compensation Expense We estimate the fair value of stock options granted using the Black-Scholes option pricing model based on the following assumptions: Expected term – We determine expected term based on the average period the options are expected to remain outstanding using the simplified method, calculated as the midpoint of the options’ vesting term and contractual expiration period, until sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior becomes available. Expected volatility – Since there is little trading history of our common stock, expected volatility is estimated based on the historical volatilities of a group of comparable publicly traded companies. Risk-free interest rate – The risk-free interest rate is based on U.S. Treasury yields for a period that corresponds with the expected term of the award. Dividend yield – As we do not currently issue dividends and do not expect to issue dividends on our common stock in the foreseeable future, the expected dividend yield is zero . Fair value of underlying common stock – Prior to the completion of our IPO, the fair value of our common stock was determined by the board of directors by considering a number of objective and subjective factors 109 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS including input from management and contemporaneous third-party valuations. After the completion of our IPO, the fair value of our Class A common stock is determined by the closing price of our Class A common stock, which is traded on the New York Stock Exchange. Year Ended January 31, 2022 2021 Expected term (in years) 6.0 6.0 Expected volatility 62.3 % - 66.0 % 47.3 % - 48.7 % Risk-free interest rate 0.8 % - 1.1 % 0.4 % - 0.6 % Dividend yield — % — % The components of stock-based compensation expense recognized in the consolidated statements of operations consisted of the following (in thousands): Year Ended January 31, 2022 2021 Cost of revenue $ 3,618 $ 308 Research and development 35,358 6,590 Sales and marketing 15,460 3,835 General and administrative 33,453 5,179 Total $ 87,889 $ 15,912 Employee Stock Purchase Plan In May 2021, our board of directors, and in June 2021, our stockholders approved our ESPP, which became effective on the date of effectiveness of our Final Prospectus, or June 29, 2021. The ESPP initially reserved and authorized the issuance of up to a total of 7,056,319 shares of common stock to eligible employees. The number of shares reserved for issuance and sale under the ESPP will automatically increase on the first day of each fiscal year, starting on February 1, 2022 for the first ten calendar years after the first offering date, in an amount equal to (i) 1 % of the aggregate number of outstanding shares of all class our common stock on the last day of the immediately preceding fiscal year, or (ii) such other amount as the administrator of the ESPP may determine. The ESPP generally provides for six-month offering periods beginning January 6 and July 6 of each year, with each offering period consisting of single six-month purchase periods, except for the initial offering period which began on July 1, 2021, and will end on July 5, 2023 and the second offering period will begin on January 6, 2022. On each purchase date, eligible employees will purchase the shares at a price per share equal to 85 % of the lesser of (1) the fair market value of our common stock as of the beginning of the offering period or (2) the fair market value of our common stock on the purchase date, as defined in the ESPP except for the initial offering period that has a 24-months look back to the IPO price of $ 35 . The following table summarizes assumptions used in estimating the fair value of employee stock purchase rights for the initial and second offering period under the 2021 ESPP using the Black-Scholes option pricing model: Year Ended January 31, 2022 Expected term (in years) 0.5 - 2 Expected volatility 52.3 % - 70.5 % Risk-free interest rate 0.1 % - 0.3 % Dividend yield — % 110 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS We recognized stock-based compensation expense related to ESPP of $ 5.5 million during fiscal 2022. As of January 31, 2022, $ 1.6 million amount has been withheld on behalf of employees for a future purchase under the ESPP due to the timing of payroll deductions. During fiscal 2022, 381,716 shares were issued under the ESPP for $ 11.4 million. 12. INCOME TAXES Our loss before provision for income taxes for fiscal 2022, 2021 and 2020 consisted of the following (in thousands) : Year Ended January 31, 2022 2021 2020 Domestic $ ( 274,270 ) $ ( 18,159 ) $ ( 1,700 ) Foreign 4,173 ( 98,954 ) ( 74,630 ) Loss before provision for income taxes $ ( 270,097 ) $ ( 117,113 ) $ ( 76,330 ) The components of provision for income taxes for fiscal 2022, 2021, and 2020 consisted of the following (in thousands): Year Ended January 31, 2022 2021 2020 Current: State 82 62 52 Foreign 1,011 398 185 Total current 1,093 460 237 Deferred: Foreign ( 89 ) — — Total deferred ( 89 ) — — Total provision for income taxes $ 1,004 $ 460 $ 237 A reconciliation of the expected provision for (benefit from) income taxes at the statutory federal income tax rate to our recorded provision for income taxes consisted of the following (in thousands): Year Ended January 31, 2022 2021 2020 Benefit from income taxes at U.S. federal statutory rate $ ( 56,720 ) $ ( 24,594 ) $ ( 16,029 ) State taxes, net of federal benefit 82 49 41 Foreign tax rate differential ( 1,297 ) ( 1,836 ) ( 6,852 ) Stock-based compensation ( 23,442 ) 1,195 771 Non-deductible expenses 322 84 109 Change in valuation allowance 81,739 25,564 22,857 Other 320 ( 2 ) ( 660 ) Total provision for income taxes $ 1,004 $ 460 $ 237 111 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Significant components of our net deferred tax assets and liabilities as of January 31, 2022 and 2021 consisted of the following (in thousands): As of January 31, 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 174,646 $ 70,735 Research and development expenses 36,989 11,479 Accruals and reserves 18,708 12,986 Operating lease liabilities 11,158 5,416 Stock-based compensation 7,936 140 Other 2,012 532 Gross deferred tax assets 251,449 101,288 Valuation allowance ( 218,981 ) ( 86,032 ) Total deferred tax assets 32,468 15,256 Deferred tax liabilities: Acquired intangibles, property and equipment ( 6,235 ) ( 1,217 ) Deferred contract acquisition costs ( 16,722 ) ( 9,697 ) Operating lease right-of-use assets ( 9,422 ) ( 4,342 ) Total deferred tax liabilities ( 32,379 ) ( 15,256 ) Net deferred tax assets $ 89 $ — Based upon available objective evidence, we believe it is more likely than not that the net U.S. and Israel deferred tax assets will not be fully realizable. Accordingly, we have established a valuation allowance for the U.S. and Israel gross deferred tax assets. As of January 31, 2022 and 2021, we had a valuation allowance of $ 219.0 million and $ 86.0 million, respectively, against our deferred tax assets. During fiscal 2022 and 2021, total valuation allowance increased by $ 132.9 million and $ 28.0 million, respectively, primarily due to additional net operating losses. As of January 31, 2022, we had federal net operating loss carryforwards of $ 436.8 million, which will begin to expire in 2031, and state net operating loss carryforwards of $ 268.9 million, which will begin to expire in 2023. We also had foreign net operating loss carryforwards of $ 281.9 million, which do not expire. In addition, we had federal research and development credit carryforwards of $ 1.1 million, which will begin to expire in 2037, and state research and development credit carryforwards of $ 1.1 million, which do not expire. Federal and state tax laws impose substantial restrictions on the utilization of the net operating loss carryforwards and tax credit carryforwards in the event of an ownership change as defined in Section 382 of the Internal Revenue Code of 1986, as amended. Accordingly, our ability to utilize these carryforwards may be limited as a result of such ownership change. Such a limitation could result in the expiration of carryforwards before they are utilized. The carryforwards are currently subject to a valuation allowance. Foreign withholding taxes have not been provided for the cumulative undistributed earnings of certain foreign subsidiaries of us as of January 31, 2022 and 2021 due to our intention to permanently reinvest such earnings. Determination of the amount of unrecognized deferred tax liability related to these earnings is not practicable. As of January 31, 2022 and 2021, we do not have any material uncertain tax positions. As of and for fiscal 2022 and 2021, no interest and penalties have been accrued with respect to unrecognized tax benefits. We file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. Our tax years generally remain open and subject to examination by federal, state, or foreign tax authorities. We are currently under examination by the Israel Tax Authorities for the 2016 through 2020 tax years. We are not currently under audit in any other tax jurisdictions. 112 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 13. NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS Basic and diluted net loss per share attributable to common stockholders is computed in conformity with the two-class method required for participating securities. Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potentially dilutive common stock equivalents to the extent they are dilutive. For purposes of this calculation, redeemable convertible preferred stock, stock options, restricted common stocks, RSUs, ESPP, early exercised stock options, and common stock warrants are considered to be common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is anti-dilutive for all periods presented. The rights, including the liquidation and dividend rights, of the holders of Class A and Class B common stock are identical, except with respect to voting, conversion, and transfer rights. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis to each class of common stock and the resulting basic and diluted net loss per share attributable to common stockholders are, therefore, the same for both Class A and Class B common stock on both individual and combined basis. Basic and diluted net loss per share attributable to common stockholders was as follows (in thousands, except share and per share data): Year Ended January 31, 2022 2021 2020 Numerator: Net loss attributable to Class A and Class B common stockholders $ ( 271,101 ) $ ( 117,573 ) $ ( 76,567 ) Denominator: Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted 174,051,203 35,482,444 32,712,350 Net loss per share attributable to Class A and Class B common stockholders, basic and diluted $ ( 1.56 ) $ ( 3.31 ) $ ( 2.34 ) The following potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders because their inclusion would have been anti-dilutive: As of January 31, 2022 2021 2020 Redeemable convertible preferred stock — 168,951,059 113,523,948 Stock options 42,422,473 37,231,191 26,892,219 Common stock warrants — 954,884 1,276,686 Shares subject to repurchase 20,091 37,500 42,500 RSUs 1,770,304 — — ESPP 52,381 — — Restricted common stock 1,142,496 — — Contingently issuable shares 1,317,079 — — Total 46,724,824 207,174,634 141,735,353 113 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 14. GEOGRAPHIC INFORMATION Long-lived assets, consisting of property and equipment, net, and operating lease right-of-use assets, by geography were as follows (in thousands): As of January 31, 2022 2021 United States $ 21,176 $ 10,386 Israel 26,646 20,987 Rest of world 980 26 Total $ 48,802 $ 31,399 See Note 3 for revenue by geography. 15. COMMITMENTS AND CONTINGENCIES Legal Contingencies From time to time, we may be a party to various legal proceedings and subject to claims in the ordinary course of business. BlackBerry Litigation Starting in October 2019, BlackBerry Corp. and its subsidiary Cylance, Inc. (BlackBerry) filed a total of nine proceedings ( seven lawsuits and two arbitrations) against us and certain former BlackBerry employees who joined our company. In these proceedings, BlackBerry alleges that it has viable legal claims as a result of its former employees joining us. Many of these proceedings have now been dismissed. The status of each of the currently pending proceedings is discussed below. We have defended against these claims and expect to continue to defend against these claims. BlackBerry Corp., et al. v. Coulter, et al. On October 17, 2019, BlackBerry commenced an action captioned BlackBerry Corp., et al. v. Coulter, et al., No. 953-10-19 (Vt. Super. Ct.) (Vermont Action) against Chris Coulter, an employee on our Vigilance services team. On October 23, 2019, BlackBerry filed an amended complaint that added us as a defendant. The amended complaint asserts claims against us for conspiracy, tortious interference with contract, aiding and abetting breach of fiduciary duties, and misappropriation of trade secrets. The court entered a preliminary injunction order enjoining Mr. Coulter from working for us through February 2021. As a result of the court’s order, Mr. Coulter chose to seek other employment and is no longer employed by us. On January 15, 2021, the court entered an order narrowing the scope of the case and limiting the claims against us in order to avoid conflict with a similar action that was previously filed in California and was dismissed. The Vermont Action is currently pending. On October 25, 2019, BlackBerry commenced an action captioned BlackBerry Corp., et al v. Coulter, et al., No. 2019-0854-JTL (Del. Ch.) against Mr. Coulter and us in Delaware Chancery Court. The court stayed this case pending resolution of the Vermont Action, and on February 7, 2020, BlackBerry voluntarily dismissed without prejudice all claims against Mr. Coulter and us. On December 3, 2019, BlackBerry initiated a largely duplicative action in arbitration solely against Mr. Coulter administered by JAMS, an alternative dispute resolution provider. That arbitration action, however, was dismissed on or about March 30, 2021, with JAMS informing us that they had closed their files on this matter on April 30, 2021. BlackBerry Corp., et al. v. Page, et al. On November 18, 2019, BlackBerry commenced an action captioned BlackBerry Corp., et al. v. Page, et al., No. 2019-CP-07-2552 (S.C. Cir. Ct.) against Barnaby Page, a go-to-market employee, and us, in a South Carolina state court. The complaint asserts claims against us for aiding and abetting breach of fiduciary duties, tortious interference with contract, and misappropriation of trade secrets. Following initial discovery, on August 27, 2020, we and Mr. Page filed a joint motion for judgment on the pleadings. Following initial discovery, the parties agreed to stipulate to a dismissal of this lawsuit without prejudice, and a dismissal order was entered by the court on January 31, 2022. 114 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Blackberry Corp. et al. v. Sentinel Labs, Inc., et al. On January 16, 2020, BlackBerry commenced the action captioned, BlackBerry Corp., et al. v. Sentinel Labs, Inc., et al., No. 20CV361950 (Cal. Super. Ct. Santa Clara Cnty.) (Current California Action), against us and unnamed “Doe” defendants, asserting claims against us for trade secret misappropriation and unfair business practices. We filed counterclaims that, in part, seek to invalidate any agreements allegedly supporting BlackBerry’s claims against its former employees. On December 14, 2020, we filed a motion requesting that BlackBerry sufficiently identify any trade secrets it alleges we misappropriated in accordance with California law. On February 12, 2021, the court granted that motion in part, including striking BlackBerry’s expert testimony, and limiting the scope of discovery to customer lists and sales-related information. On March 15, 2021, BlackBerry re-filed a statement identifying its trade secrets to pursue broader claims and discovery. In response, on April 5, 2021, we again filed a motion requesting that BlackBerry sufficiently identify any trade secrets under California law. On June 2, 2021, the court granted the motion in our favor, absent a few discrete areas permitted by the court. On July 2, 2021, Blackberry filed its third amended trade secret identification. In response, on July 16, 2021, we submitted a motion challenging these claims. In its third trade secret statement, in response to our motion again challenging the sufficiency of its trade secret disclosures, Blackberry voluntarily dropped various claims. The parties are currently in the early stages of discovery over the revised trade secret disclosures approved by the court on August 31, 2021. We continue to litigate this action, including actively pursuing our counterclaims against them. BlackBerry Corp., et al. v. Quinn, et al. On February 17, 2020, BlackBerry commenced the action captioned BlackBerry Corp., et al. v. Quinn, et al., No. D-1-GN-20-00096 (Tex. Civ. Ct. – Travis Cnty.) against Sean Quinn, a go-to-market employee, and us, in Texas state court. On August 8, 2020, we and Mr. Quinn moved to stay or dismiss the case in light of the overlapping issues between this case and the Current California Action. On September 21, 2020, the court stayed this case pending resolution of the Current California Action. This lawsuit remains stayed and is pending in abeyance before the Texas court. We have not recorded any accruals for loss contingencies associated with these legal proceedings, determined that an unfavorable outcome is probable, nor have we determined that the amount or range of any possible loss is reasonably estimable. We believe that there are no other pending or threatened legal proceedings that are likely to have a material adverse effect on our consolidated financial statements. Warranties and Indemnification Our services are generally warranted to deliver and operate in a manner consistent with general industry standards that are reasonably applicable and materially conform with our documentation under normal use and circumstances. Our contracts generally include certain provisions for indemnifying customers against liabilities if our products or services infringe a third party’s intellectual property rights. We also offer a limited warranty to certain customers, subject to certain conditions, to cover certain costs incurred by the customer in case of a cybersecurity breach on us. We have entered into an insurance policy to cover our potential liability arising from this limited warranty arrangement. We have not incurred any material costs related to such obligations and have not accrued any liabilities related to such obligations in the consolidated financial statements as of January 31, 2022 and 2021. In addition, we also indemnify certain of our directors and executive officers against certain liabilities that may arise while they are serving in good faith in their company capacities. We maintain director and officer insurance coverage that would generally enable us to recover a portion of any future amounts paid. 16. EMPLOYEE BENEFIT PLAN Our U.S. employees participate in a 401(k) defined contribution plan sponsored by us. Contributions to the plan are discretionary. There were no matching contributions by us for fiscal 2022, 2021, and 2020. 115 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Israeli Severance Pay Israeli labor law generally requires payment of severance pay upon dismissal of an employee or upon termination of employment in certain other circumstances. Pursuant to Section 14 of the Severance Compensation Act, 1963 (Section 14), all of our employees in Israel are entitled to monthly deposits made in their name with insurance companies, at a rate of 8.33% of their monthly salary. These payments release us from any future severance payment obligation with respect to these employees; as such, any liability for severance pay due to these employees and the deposits under Section 14 are not recorded as an asset on our consolidated balance sheets. For fiscal 2022, 2021, and 2020, we recorded $ 3.7 million, $ 2.7 million, and $ 1.7 million, respectively, in severance expenses related to these employees. 17. ACQUISITIONS On February 6, 2021, we executed a merger agreement to acquire 100 % of the issued and outstanding equity securities of Scalyr, a leading cloud-native, cloud-scale data analytics platform. This acquisition allows us to advance our data ingestion, search, and retention capabilities. This acquisition closed on February 9, 2021. The aggregate consideration transferred was $ 125.3 million, of which $ 5.0 million was paid in cash, $ 106.2 million was comprised of 7,277,214 shares of common stock, and $ 14.1 million was comprised of assumed options to purchase 2,138,347 shares of common stock. As part of the merger agreement, we entered into non-compete agreements with the founder and the co-founder of Scalyr with a term of three years and a fair value of $ 0.7 million. The fair value of the non-compete agreements was excluded from the purchase consideration and the net assets acquired, resulting in purchase consideration of $ 124.6 million. The assets acquired and liabilities assumed in connection with the acquisition were recorded at their fair value on the date of acquisition as follows (in thousands): Amount Cash and cash equivalents $ 699 Accounts receivable 3,665 Restricted cash 444 Prepaid expense 277 Intangible assets 17,150 Goodwill 108,193 Accounts payable ( 412 ) Deferred revenue ( 5,041 ) Other liabilities ( 347 ) Total purchase consideration $ 124,628 The excess of the purchase price over the fair value of net tangible and intangible assets acquired has been assigned to goodwill. Goodwill represents the future benefits as a result of the acquisition that will enhance our product available to both new and existing customers and increase our competitive position. Goodwill is not deductible for tax purposes. 116 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table sets forth the amounts allocated to the intangible assets identified and their estimated useful lives as of the date of acquisition: Fair Value Useful Life (in thousands) (in years) Developed technology $ 15,500 7 Customer relationships 1,500 2 Trademarks 150 2 Total intangible assets acquired $ 17,150 The fair value assigned to the developed technology was determined using the multi-period excess earnings method of the income approach. The fair value assigned to the customer relationships was determined using the distributor method under the income approach, which includes estimates of customer attrition rates. The intangible assets acquired are expected to be amortized over their useful lives on a straight-line basis. As part of the consideration transferred, we withheld 1,317,079 shares of our common stock with a fair value of $ 14.59 per share at the time of grant (Holdback Shares) and $ 0.4 million of cash related to certain obligations, including indemnification for potential breach of general representations and warranties of the sellers. The Holdback Shares and cash are expected to be released 18 months from the acquisition closing date, subject to claims for any obligations. In connection with the acquisition, we granted 1,315,099 shares of restricted common stock that vest over a period of two years contingent on continued employment, for which stock-based compensation expense will be recognized ratably over the vesting period. There was no other contingent consideration or cash consideration expected to be paid out subsequent to the acquisition. The results of operations of Scalyr have been included in our consolidated financial statements from the date of acquisition. We incurred $ 1.4 million of transaction costs in connection with the acquisition during fiscal 2022. These costs were recorded as general and administrative expenses in the consolidated statements of operations. The following unaudited pro forma financial information summarizes the results of operations of SentinelOne and Scalyr as if the acquisition occurred on February 1, 2020 (in thousands): Year Ended January 31, 2022 2021 Revenue $ 204,874 $ 101,875 Net loss $ ( 262,145 ) $ ( 171,321 ) Our consolidated statements of operations from the acquisition date to the period ended January 31, 2022 includes revenue and net income of Scalyr of $ 13.4 million and $ 0.2 million, respectively. The pro forma results reflect certain adjustments for the amortization of acquired intangible assets, adjustments to revenue resulting from the fair value adjustment to deferred revenue, recognition of stock-based compensation, and acquisition-related costs. Such pro forma amounts are not necessarily indicative of the results that actually would have occurred had the acquisition been completed on the date indicated, nor is it indicative of our future operating results. 18. SUBSEQUENT EVENTS On March 15, 2022, we signed a definitive merger agreement to acquire 100 % of the issued and outstanding equity securities of Attivo Networks, Inc. (Attivo), a leading identity security and lateral movement protection company. The aggregate consideration will be approximately 58 % cash and approximately 42 % in shares of our Class A common stock for a total consideration of $ 616.5 million, subject to adjustments. The number of shares to be issued in connection with the stock consideration will be based on a fixed value of $ 40.49 per share, which 117 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS represents the average of the daily volume weighted average sales price of a share of our Class A common stock for the 30 consecutive trading days ending on March 14, 2022, subject to adjustments. This acquisition is expected to close in the second fiscal quarter of 2023, subject to regulatory approval and customary closing conditions. 118 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES None .