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Item 7. Management’s Discussion and Analysis

2025-03-21 compared with 2024-03-26 · 157 added, 129 removed, 400 unchanged (42% of the section changed)

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and its consolidated subsidiaries.

Unless otherwise noted, all references in this report to our common stock refer to our Class A common stock.

A discussion regarding our financial condition and results of operations for the fiscal year ended January 31, 2025 compared to the fiscal year ended January 31, 2024 is presented below.

A discussion regarding our financial condition and results of operations for the fiscal year ended January 31, 2024 compared to the fiscal year ended January 31, 2023 can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended January 31, 2024 filed with the SEC on March 26, 2024.

We believe that a cloud computing platform that puts data and AI at its core will offer great benefits to organizations by allowing them to realize the value of the data that powers their businesses.

We believe that a cloud computing platform that puts data and artificial intelligence (AI) at its core will offer great benefits to organizations by allowing them to realize the value of the data that powers their businesses.

By offering rich primitives for data and applications, we believe that we can create a data connected world where organizations have seamless access to explore, share, and unlock the value of data.

To realize this vision, we deliver the Data Cloud, a network where Snowflake customers, partners, developers, data providers, and data consumers can break down data silos and derive value from rapidly growing data sets in secure, governed, and compliant ways.

Our platform is the innovative technology that powers the Data Cloud, enabling customers to consolidate data into a single source of truth to drive meaningful insights, apply AI to solve business problems, build data applications, and share data and data products.

To realize this vision, we deliver the AI Data Cloud, a network where Snowflake customers, partners, developers, data providers, and data consumers can break down data silos and derive value from a growing number of data sets in secure, governed, and compliant ways.

Our platform is the innovative technology that powers the AI Data Cloud, enabling customers to consolidate data into a single source of truth to drive meaningful insights, apply AI to solve business problems, build data applications, and share data and data products.

We provide our platform through a customer-centric, consumption-based business model, only charging customers for the resources they use.

Our cloud-native architecture consists of three independently scalable but logically integrated layers across compute, storage, and cloud services.

Our cloud-native architecture includes three independently scalable but logically integrated layers across compute, storage, and cloud services.

The compute layer provides dedicated resources to enable users to simultaneously access common data sets for many use cases with minimal latency.

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This architecture is built on three major public clouds across 47 regional deployments around the world.

These deployments are generally interconnected to deliver the Data Cloud, enabling a consistent, global user experience.

We generate the substantial majority of our revenue from fees charged to our customers based on the compute, storage, and data transfer resources consumed on our platform as a single, integrated offering.

For compute resources, consumption fees are based on the type of compute resource used and the duration of use or, for some features, the volume of data processed.

For storage resources, consumption fees are based on the average terabytes per month of all of the customer’s data stored in our platform.

For data transfer resources, consumption fees are based on terabytes of data transferred, the public cloud provider used, and the region to and from which the transfer is executed.

These deployments are generally interconnected to deliver the AI Data Cloud, enabling a consistent, global user experience.

We generate the substantial majority of our revenue from fees charged to our customers based on the compute, storage, and data transfer resources consumed on our platform.

Customers are allowed to select compute, storage, and data transfer resources separately, at their discretion.

For compute resources, consumption is based on the type of compute resource used and the duration of use or, for some features, the volume of data processed.

For storage resources, consumption for a given customer is based on the average terabytes per month of all of such customer’s data stored in our platform.

For data transfer resources, consumption is based on terabytes of data transferred, the public cloud provider used, and the region to and from which the transfer is executed.

Our customers typically enter into capacity arrangements with a term of one to four years, or consume our platform under on-demand arrangements in which we charge for use of our platform monthly in arrears.

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Impact of Macroeconomic Conditions

Our business and financial condition have been, and may continue to be, impacted by adverse macroeconomic conditions, including inflation, higher interest rates, and fluctuations or volatility in capital markets or foreign currency exchange rates.

Our business and financial condition have been, and may continue to be, impacted by adverse macroeconomic conditions, including inflation, high interest rates, and fluctuations or volatility in capital markets or foreign currency exchange rates.

These conditions have caused, and may continue to cause, customers to rationalize budgets, prioritize cash flow management, including through shortened contract duration, and optimize consumption, including by reducing storage through shorter data retention policies.

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For additional details, see the section titled “Risk Factors.”

Convertible Senior Notes

In September 2024, we completed a private offering of $1.15 billion aggregate principal amount of 0% convertible senior notes due 2027 (2027 Notes) and $1.15 billion aggregate principal amount of 0% convertible senior notes due 2029 (2029 Notes, and together with the 2027 Notes, the Notes).

The total proceeds from the issuance of the Notes were approximately $2.27 billion, net of $31.2 million of debt issuance costs.

We used a portion of the net proceeds from the offering to (i) pay the $195.5 million cost of the privately negotiated capped call transactions relating to each series of the Notes (Capped Calls) and (ii) repurchase $399.6 million of our common stock from purchasers of the Notes in the offering in privately negotiated transactions entered into in connection with the Notes offering at a purchase price of $112.50 per share.

See Note 10, “Convertible Senior Notes,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.

Stock Repurchase Program

In February 2023, our board of directors authorized a stock repurchase program of up to $2.0 billion of our outstanding common stock.

The program is funded using our working capital and will expire in March 2025.

During the fiscal year ended January 31, 2024, we repurchased approximately 4.0 million shares of our outstanding common stock for an aggregate purchase price of $591.7 million, including transaction costs, at a weighted-average price of $147.50 per share.

All repurchases were made in open market transactions (including via pre-set trading plans).

As of January 31, 2024, $1.4 billion remained available for future repurchases under the stock repurchase program.

See Note 11, “Equity,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.

In August 2024, our board of directors authorized the repurchase of an additional $2.5 billion of our outstanding common stock and extended the expiration date of the stock repurchase program from March 2025 to March 2027.

During the fiscal year ended January 31, 2025, we repurchased 14.8 million shares of our outstanding common stock for an aggregate purchase price of $1.9 billion, excluding transaction costs associated with the repurchases, at a weighted-average price of $130.87 per share.

All repurchases were made in open market transactions, except for the 3.6 million shares of our outstanding common stock that were repurchased for $399.6 million from purchasers of the Notes in the offering in privately negotiated transactions entered into in connection with the Notes offering at a purchase price of $112.50 per share.

As of January 31, 2025, $2.0 billion remained available for future repurchases under the stock repurchase program (exclusive of transaction costs associated with repurchases).

See Note 10, “Convertible Senior Notes,” and Note 12, “Equity,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.

The timing and amount of any repurchases will be determined by management based on an evaluation of market conditions and other factors.

The program does not obligate us to acquire any particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at our discretion.

Business Combinations

During the three months ended January 31, 2024, we acquired all outstanding stock of Samooha, Inc.

(Samooha), a privately-held company which developed data clean room technology that enabled multiple parties to securely collaborate on sensitive data.

The acquisition date fair value of the preliminary purchase consideration was $219.0 million, which was primarily comprised of 0.9 million shares of our common stock valued at $174.2 million as of the acquisition date, $38.8 million fair value of our previously held equity interest in Samooha, and $6.0 million in cash and deferred cash consideration.

In addition, we issued to certain of Samooha’s employees a total of 0.4 million shares of our common stock in exchange for a portion of their Samooha stock.

These shares are subject to vesting agreements pursuant to which the shares will vest over four years, subject to each of these employees’ continued employment with the Company or its affiliates.

Business Combination

On November 25, 2024, we acquired all of the outstanding capital stock of Datavolo, Inc.

(Datavolo), a privately-held company that built a dataflow infrastructure to support the creation, management, and observability of multimodal data pipelines for enterprise AI.

The acquisition date fair value of the preliminary purchase consideration was $106.8 million, which was comprised of 0.5 million shares of our common stock valued at $87.7 million as of the acquisition date and $19.1 million in cash.

In addition, we issued to certain of Datavolo’s employees a total of 0.4 million shares of our common stock in exchange for a portion of their Datavolo stock.

These shares are subject to vesting agreements pursuant to which the shares will vest over four years, subject to each of these employees’ continued employment with us or our affiliates.

The $64.6 million fair value of these shares is accounted for as post-combination stock-based compensation over the requisite service period of four years.

During the three months ended July 31, 2023, we acquired all outstanding stock of Neeva Inc.

and its equity investee (collectively, Neeva), a privately-held company which developed search technology powered by artificial intelligence language models, for $185.4 million in cash.

During the three months ended April 30, 2023, we acquired (i) all outstanding stock of Mountain US Corporation (formerly known as Mobilize.Net Corporation) (Mountain), a privately-held company which provided a suite of tools for efficiently migrating databases to the Data Cloud, for $76.3 million in cash, and (ii) all outstanding stock of LeapYear Technologies, Inc.

(LeapYear), a privately-held company which provided a differential privacy platform, for $62.0 million in cash.

The results of operations of these business combinations have been included in our consolidated financial statements from the respective dates of acquisition.

See Note 7, “Business Combinations,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for details regarding these business combinations.

The results of operations of this business combination have been included in our consolidated financial statements from the date of acquisition.

See Note 7, “Business Combinations,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for details regarding this business combination.

Key Factors Affecting Our Performance

Adoption of our Platform and Expansion of the Data Cloud

Our future success depends in large part on the market adoption of our platform, including new product functionality such as Snowpark.

While we see growing demand for our platform, particularly from large enterprises, many of these organizations have invested substantial technical, financial, and personnel resources in their legacy database products or big data offerings, despite their inherent limitations.

In addition, many customers are attempting to rationalize budgets, prioritize cash flow management, and optimize consumption amidst macroeconomic uncertainty.

Adoption of our Platform and Expansion of the AI Data Cloud

Our future success depends in large part on the market adoption of our platform, including new product functionality, such as, Snowpark and our artificial intelligence and machine learning technology (AI Technology), such as Snowflake Cortex AI.

In addition, customers’ use of our AI Technology is often dependent on their ability to meet evolving regulatory standards, successfully complete internal compliance reviews, and enter into mutually acceptable contractual terms.

While this makes it difficult to predict customer adoption rates and future demand, we believe that the benefits of our platform put us in a strong position to capture the significant market opportunity ahead.

Our platform powers the Data Cloud, a network of data providers, data consumers, and data application developers that enables our customers to securely share, monetize, and acquire live data sets and data products.

The Data Cloud includes access to the Snowflake Marketplace, through which customers can access or acquire third-party data sets, data applications, and other data products.

Our future growth is increasingly dependent on our ability to increase consumption of our platform by building and expanding the Data Cloud.

Our platform powers the AI Data Cloud, a network of data providers, data consumers, and data application developers that enables our customers to securely share, monetize, and acquire live data sets and data products.

The AI Data Cloud includes access to the Snowflake Marketplace, through which customers can access or acquire third-party data sets, data applications, and other data products.

Our future growth is increasingly dependent on our ability to increase consumption of our platform by building and expanding the AI Data Cloud.

Expanding Within our Existing Customer Base

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We plan to continue investing to encourage increased consumption and adoption of new use cases among our existing customers, particularly large enterprises.

Once deployed, our customers often expand their use of our platform more broadly within the enterprise and across their ecosystem of customers and partners as they migrate more data to the public cloud, identify new use cases, and realize the benefits of our platform and the Data Cloud.

However, because we generally recognize product revenue on consumption and not ratably over the term of the contract, we do not have visibility into the timing of revenue recognition from any particular customer.

In any given period, there is a risk that customer consumption of our platform will be slower than we expect, including in response to adverse macroeconomic conditions, which may cause fluctuations in our revenue and results of operations.

New software releases or hardware improvements, like better storage compression and cloud infrastructure processor improvements, may make our platform more efficient, enabling customers to consume fewer compute, storage, and data transfer resources to accomplish the same workloads.

In addition, new product features allow customers to use our platform to provide compute services without requiring them to store data.

In addition, many customers are attempting to rationalize budgets, prioritize cash flow management, and optimize consumption amidst macroeconomic uncertainty.

In any given period, there is a risk that customer consumption of our platform will be slower than we expect, which may cause fluctuations in our revenue and results of operations.

New software releases or hardware improvements, like better storage compression, cloud infrastructure processor improvements, and compute optimization, may make our platform more efficient, enabling customers to consume fewer compute, storage, and data transfer resources to accomplish the same workloads.

In addition, new product features allow customers to use our platform for compute services without requiring storage.

To the extent these improvements do not result in an offsetting increase in new workloads, we may experience lower revenue.

Our ability to increase usage of our platform by, and sell additional contracted capacity to, existing customers, and, in particular, large enterprise customers, will depend on a number of factors, including our customers’ satisfaction with our platform, competition, pricing, macroeconomic conditions, overall changes in our customers’ spending levels, customers’ attempts to optimize their consumption, the effectiveness of our and our partners’ efforts to help our customers realize the benefits of our platform, and the extent to which customers migrate new workloads to our platform over time, including data science, artificial intelligence, and machine learning workloads.

Our ability to increase usage of our platform by, and sell additional contracted capacity to, existing customers, and, in particular, large enterprise customers, will depend on a number of factors, including our customers’ satisfaction with our platform, competition, pricing, macroeconomic conditions, overall changes in our customers’ spending levels, customers’ attempts to optimize their consumption, our customers’ confidence in the security of our platform, our ability to maintain our reputation as a trustworthy vendor, the effectiveness of our and our partners’ efforts to help our customers realize the benefits of our platform, and the extent to which customers migrate new workloads to our platform over time, including data science, artificial intelligence, and machine learning workloads.

Acquiring New Customers

We believe there is a substantial opportunity to further grow our customer base by continuing to make significant investments in sales and marketing and brand awareness.

Our ability to attract new customers will depend on a number of factors, including the productivity of our sales organization, competitive dynamics in our target markets, changes in our customers’ spending and platform consumption in response to market uncertainty, and our ability to build and maintain partner relationships, including with global system integrators, resellers, technology partners, and third-party providers of native applications on the Snowflake Marketplace.

Our ability to attract new customers will depend on a number of factors, including the productivity of our sales organization, competitive dynamics in our target markets, changes in our customers’ spending and platform consumption in response to market uncertainty, our ability to mitigate reputational damage following cybersecurity threat activity directed at our customers, and our ability to build and maintain partner relationships, including with global system integrators, resellers, technology partners, and third-party providers of native applications on the Snowflake Marketplace.

While our platform is built for organizations of all sizes, we focus our selling efforts on large enterprise customers, customers with vast amounts of data, and customers requiring industry-specific solutions.

We may not achieve anticipated revenue growth if we are unable to hire, develop, integrate, and retain talented and effective sales personnel;

We may not achieve anticipated revenue growth if we are unable to attract, hire, develop, integrate, and retain talented and effective sales personnel;

if our sales personnel are unable to achieve desired productivity levels in a reasonable period of time and maintain productivity;

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We are focused on our long-term revenue potential and believe our market opportunity is large.

We will continue to invest significantly in research and development to improve our platform, including in the areas of data science, artificial intelligence, and machine learning.

We will continue to invest significantly in research and development to improve our platform, including in the areas of data science and AI Technology.

In addition, we are focused on expanding our business both domestically and internationally.

As part of these efforts, we are investing in meeting the needs of organizations in geographies and specialized industries that have heightened data requirements, including with respect to data localization, privacy, and security.

We intend to continue to invest heavily to grow our business to take advantage of our expansive market opportunity, while also focusing on profitability and cash flow.

As part of these efforts, we are investing in meeting the needs of organizations in geographies and government and regulated industries that have heightened requirements, including with respect to data localization, privacy, and security.

We intend to continue to invest heavily to grow our business to take advantage of our expansive market opportunity, while also focusing on cash flow and long-term profitability.

Key Business Metrics

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The calculation of the key business metrics discussed below may differ from other similarly titled metrics used by other companies, securities analysts, or investors.

The following tables present a summary of key business metrics for the periods presented:

The following tables present a summary of key business metrics, including the most directly comparable financial measure calculated in accordance with GAAP, for the periods presented:

Fiscal Year Ended January 31,

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Product revenue (in millions) $ 3,462.4 $ 2,666.8 $ 1,938.8

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

$ 959.8 $ 848.1 $ 545.6

Free cash flow (non-GAAP) (in millions) (2)(3)

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________________

(1) Net cash provided by operating activities is not a key business metric but is included in this table as the most directly comparable GAAP financial measure to free cash flow.

(2) Free cash flow for the fiscal years ended January 31, 2025, 2024, and 2023 included the effect of $57.5 million, $31.3 million, and $23.9 million, respectively, in the net cash paid on payroll tax-related items on employee stock transactions.

See the section titled “Free Cash Flow” for a reconciliation of free cash flow to the most directly comparable financial measure calculated in accordance with GAAP.

(2) Cash outflows for employee payroll tax items related to the net share settlement of equity awards, which were $380.8 million and $184.6 million for the fiscal years ended January 31, 2024 and 2023, respectively, are included in cash flow for financing activities and, as a result, do not have an effect on the calculation of free cash flow.

No equity awards were net settled prior to the fiscal year ended January 31, 2023.

See the section titled “Free Cash Flow” for a reconciliation of net cash provided by operating activities, which is the most directly comparable financial measure calculated in accordance with GAAP, to free cash flow.

(3) Cash outflows for employee payroll tax items related to the net share settlement of equity awards, which were $489.1 million, $380.8 million, and $184.6 million for the fiscal years ended January 31, 2025, 2024, and 2023, respectively, are included in cash flow for financing activities and, as a result, do not have an effect on the calculation of free cash flow.

(4) Historical numbers for (i) net revenue retention rate, (ii) customers with trailing 12-month product revenue greater than $1 million, and (iii) Forbes Global 2000 customers reflect any adjustments for acquisitions, consolidations, spin-offs, and other market activity.

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Product revenue is a key metric for us because we recognize revenue based on platform consumption, which is inherently variable at our customers’ discretion, and not based on the amount and duration of contract terms.

Product revenue is primarily derived from the consumption of compute, storage, and data transfer resources, which are consumed by customers on our platform as a single, integrated offering.

Product revenue is primarily derived from the consumption of compute, storage, and data transfer resources by customers on our platform.

Customers have the flexibility to consume more than their contracted capacity during the contract term and may have the ability to roll over unused capacity to future periods, generally upon the purchase of additional capacity at renewal.

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We believe information regarding free cash flow provides useful supplemental information to investors because it is an indicator of the strength and performance of our core business operations.

The following table presents a reconciliation of net cash provided by operating activities to free cash flow, the most directly comparable financial measure calculated in accordance with GAAP, for the periods presented (in millions):

The following table presents a reconciliation of net cash provided by operating activities, which is the most directly comparable financial measure calculated in accordance with GAAP, to free cash flow for the periods presented (in millions):

Fiscal Year Ended January 31,

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$ 884.1 $ 778.9 $ 496.5

Net cash provided by (used in) investing activities $ 190.6 $ 832.3 $ (597.9)

Net cash used in financing activities $ (226.5) $ (854.1) $ (92.6)

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(1) Free cash flow for the fiscal years ended January 31, 2025, 2024, and 2023 included the effect of $57.5 million, $31.3 million, and $23.9 million, respectively, in the net cash paid on payroll tax-related items on employee stock transactions.

No equity awards were net settled prior to the fiscal year ended January 31, 2023.

(2) Cash outflows for employee payroll tax items related to the net share settlement of equity awards, which were $489.1 million, $380.8 million, and $184.6 million for the fiscal years ended January 31, 2025, 2024, and 2023, respectively, are included in cash flow for financing activities and, as a result, do not have an effect on the calculation of free cash flow.

Historically, we have received a higher volume of orders from new and existing customers in the fourth fiscal quarter of each year.

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However, in future periods, we expect to see an increase in capacity contracts providing for quarterly upfront billings and monthly in arrears billings as our customers increasingly want to align consumption and timing of payments.

Revenue from on-demand arrangements typically relates to customers with lower usage levels or overage consumption beyond a customer’s contracted usage amount or following the expiration of a customer’s contract.

Revenue from on-demand arrangements typically relates to customers with lower usage levels or overage consumption beyond a customer’s contracted usage amount under a capacity contract or following the expiration of a customer’s capacity contract.

Revenue from on-demand arrangements represented approximately 2%, 3%, and 2% of our revenue for the fiscal years ended January 31, 2025, 2024, and 2023, respectively.

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For those customers who do not have a capacity arrangement, our on-demand arrangements generally have a monthly stated contract term and can be terminated at any time by either the customer or us.

We do not make any one of these resources available for consumption without the others.

Instead, each of compute, storage, and data transfer work together to drive consumption on our platform.

We generate the substantial majority of our revenue from fees charged to our customers based on the compute, storage, and data transfer resources consumed on our platform.

Customers are allowed to select compute, storage, and data transfer resources separately, at their discretion.

For compute resources, consumption is based on the type of compute resource used and the duration of use or, for some features, the volume of data processed.

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Cost of product revenue.

Cost of product revenue consists primarily of (i) third-party cloud infrastructure expenses incurred in connection with our customers’ use of our platform and the deployment and maintenance of our platform on public clouds, including different regional deployments, and (ii) personnel-related costs associated with customer support and maintaining service availability and security of our platform, including salaries, benefits, bonuses, and stock-based compensation.

Cost of product revenue consists primarily of (i) third-party cloud infrastructure expenses, including those related to graphics processing units (GPUs), incurred in connection with our customers’ use of our platform and the deployment and maintenance of our platform on public clouds, including different regional deployments, and (ii) personnel-related costs associated with customer support and maintaining service availability and security of our platform, including salaries, benefits, bonuses, and stock-based compensation.

We periodically receive credits from third-party cloud providers that are recorded as a reduction to the third-party cloud infrastructure expenses.

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Sales and marketing expenses also include sales commissions and draws paid to our sales force and certain referral fees paid to third parties, including amortization of deferred commissions.

A portion of the sales commissions paid to the sales force is earned based on the level of the customers’ consumption of our platform, and a portion of the commissions paid to the sales force is earned upon the origination of the customer contracts.

Sales commissions tied to customers’ consumption are expensed in the same period as they are earned.

Sales commissions and referral fees earned upon the origination of the new customer or customer expansion contracts are deferred and then amortized over a period of benefit that we determined to be five years.

As our go-to-market motion evolves, more sales personnel will be compensated based on the level of the customers’ consumption of our platform.

As a result, we will defer less sales commissions, and we expect that our expenses associated with sales commissions tied to customers’ consumption will increase during the fiscal year ending January 31, 2025.

Sales and marketing expenses also include advertising costs and other expenses associated with our sales, marketing and business development programs, including our user conferences such as Data Cloud Summit and Data Cloud World Tour, offset by proceeds from such conferences and programs.

In addition, sales and marketing expenses are comprised of travel-related expenses, software and subscription services dedicated for use by our sales and marketing organizations, amortization of an acquired intangible asset, and outside services contracted for sales and marketing purposes.

Sales commissions and referral fees earned upon the origination or expansion of customer contracts that are not commensurate with those earned upon the renewal of contracts are capitalized and then amortized over a period of benefit that we determined to be five years.

Sales commissions earned upon the renewal of customer contracts, as well as sales commissions earned upon the origination or expansion of customer contracts that are commensurate with those for renewal contracts, are capitalized and then amortized over the respective weighted-average contractual term of the related contracts.

Sales and marketing expenses also include advertising costs and other expenses associated with our sales, marketing and business development programs, including our user conferences, offset by proceeds from such conferences and programs.

In addition, sales and marketing expenses are comprised of travel-related expenses, software and subscription services dedicated for use by our sales and marketing organizations, amortization of acquired intangible assets, and outside services contracted for sales and marketing purposes.

We expect that our sales and marketing expenses will increase in absolute dollars and continue to be our largest operating expense for the foreseeable future as we grow our business.

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Research and development expenses consist primarily of personnel-related expenses associated with our research and development staff, including salaries, benefits, bonuses, and stock-based compensation.

Research and development expenses also include contractor or professional services fees, third-party cloud infrastructure expenses incurred in developing our platform, amortization of acquired intangible assets, and software and subscription services dedicated for use by our research and development organization.

Research and development expenses also include contractor or professional services fees, third-party cloud infrastructure expenses incurred primarily in developing our platform (including with respect to GPUs to develop AI Technology), amortization of acquired intangible assets, and software and subscription services dedicated for use by our research and development organization.

We expect that our research and development expenses will increase in absolute dollars as our business grows, particularly as we incur additional costs related to continued investments in our platform.

However, we expect that our research and development expenses will decrease as a percentage of our revenue over time, although the percentage may fluctuate from period to period depending on the timing and the extent of these expenses.

In addition, research and development expenses that qualify as internal-use software development costs are capitalized, the amount of which may fluctuate significantly from period to period.

In addition, research and development expenses that qualify as internal-use software development costs are capitalized.

General and Administrative

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We expect that our general and administrative expenses will increase in absolute dollars as our business grows but will decrease as a percentage of our revenue over time, although the percentage may fluctuate from period to period depending on the timing and the extent of these expenses.

In addition, we expect our general and administrative expenses to increase during fiscal 2026 due to anticipated asset impairment charges upon the cease-use of our San Mateo office facility.

Interest Income

Interest income consists primarily of interest income earned on our cash and cash equivalents and short-term and long-term investments, including amortization of premiums and accretion of discounts related to our available-for-sale marketable debt securities, net of associated fees.

Interest Expense

Interest expense consists of amortization of debt issuance costs incurred in connection with the issuance of our convertible senior notes.

Other Income (Expense), Net

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Interest income 209,009 200,663 73,839

Interest expense (2,759) — —

Other income (expense), net (35,339) 44,887 (47,565)

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Total stock-based compensation $ 1,479,314 $ 1,168,015 $ 861,533

The increase in stock-based compensation for the fiscal year ended January 31, 2024, compared to the fiscal year ended January 31, 2023, was primarily attributable to additional equity awards granted to new and existing employees, partially offset by a decrease in stock-based compensation associated with restricted stock unit awards (RSUs) granted prior to our Initial Public Offering (IPO).

The overall increase in stock-based compensation for the fiscal year ended January 31, 2025, compared to the fiscal year ended January 31, 2024, was primarily attributable to additional equity awards granted to new and existing employees, partially offset by the effects of equity awards that became forfeited or fully vested.

As of January 31, 2025, total compensation cost related to unvested awards not yet recognized was $3.5 billion, which will be recognized over a weighted-average period of 2.8 years.

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Interest income 6 7 3

Interest expense — — —

Other income (expense), net (1) 2 (2)

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Total stock-based compensation 41 % 42 % 42 %

Stock-based compensation is impacted by our future hiring and retention needs, which are difficult to predict and subject to constant change.

We expect that our stock-based compensation will increase in absolute dollars as we continue to issue equity awards to our new and existing employees, but will decrease as a percentage of our revenue in fiscal 2026 and continue to decrease over time as we grow.

Comparison of the Fiscal Years Ended January 31, 2025 and 2024

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Product revenue increased $795.6 million for the fiscal year ended January 31, 2025, compared to the prior fiscal year, primarily due to increased consumption of our platform by existing customers, as evidenced by our net revenue retention rate of 126% as of January 31, 2025.

The increase in product revenue was also driven by an increase in capacity consumption prices of approximately 3% for the fiscal year ended January 31, 2024, compared to the prior fiscal year, primarily due to increased consumption of higher-priced editions of our platform and better discipline over discounting.

We had 580 customers with product revenue of greater than $1 million for the trailing 12 months ended January 31, 2025, an increase from 455 customers as of January 31, 2024.

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Within these customers, we had 110 and 39 customers with product revenue of greater than $5 million and $10 million, respectively, for the trailing 12 months ended January 31, 2025.

The substantial majority of our revenue was derived from existing customers under capacity arrangements, which represented approximately 97% and 96% of our revenue for the fiscal years ended January 31, 2024 and 2023, respectively.

The remainder was derived from new customers under capacity arrangements and on-demand arrangements.

The substantial majority of our revenue was derived from existing customers under capacity arrangements, which represented approximately 97% of our revenue for each of the fiscal years ended January 31, 2025 and 2024.

The remainder was derived from on-demand arrangements and new customers under capacity arrangements.

The preceding historical metrics reflect any adjustments for acquisitions, consolidations, spin-offs, and other market activity.

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Total headcount 1,084 939

Cost of product revenue increased $153.7 million for the fiscal year ended January 31, 2024, compared to the prior fiscal year, primarily due to an increase of $78.2 million in third-party cloud infrastructure expenses as a result of increased customer consumption of our platform.

Personnel-related costs and allocated overhead costs also increased $33.3 million for the fiscal year ended January 31, 2024, compared to the prior fiscal year, as a result of increased headcount and overall costs to support the growth in our business, and increased stock-based compensation primarily related to additional equity awards granted to new and existing employees.

The remaining increase in cost of product revenue was primarily driven by an increase of $34.5 million in amortization of acquired developed technology intangible assets and capitalized internal-use software development costs.

Our product gross margin was 74% for the fiscal year ended January 31, 2024, compared to 72% for the prior fiscal year, primarily due to (i) higher volume-based discounts for our purchases of third-party cloud infrastructure, and (ii) increased cost efficiency as a result of cloud infrastructure processor improvements.

While we expect our product gross margin to slightly improve for the fiscal year ending January 31, 2025, a number of factors could hinder any improvement in our product gross margin, including (i) fluctuations in the mix and timing of customers’ consumption, which is inherently variable at our customers’ discretion, (ii) whether or not a customer contracts with us through public cloud marketplaces, (iii) our discounting practices, including as a result of changes to the competitive environment, and (iv) the extent of our investments in our operations, including performance improvements that may make our platform or the underlying cloud infrastructure more efficient.

Cost of professional services and other revenue increased $27.4 million for the fiscal year ended January 31, 2024, compared to the prior fiscal year, primarily due to an increase of $26.0 million in personnel-related costs and allocated overhead costs, as a result of increased headcount and overall costs to support the growth in our business, and increased stock-based compensation primarily related to additional equity awards granted to existing and new employees.

The overall increase in cost of professional services and other revenue was also driven by increased amortization of an acquired developed technology intangible asset as a result of the Mountain business combination completed in February 2023, partially offset by a decrease in costs associated with contracted third-party partners.

Professional services and other gross margin declined for the fiscal year ended January 31, 2024, compared to the prior fiscal year, primarily due to overall increased costs from scaling our professional services organization, including increased headcount and amortization of an acquired developed technology intangible asset as a result of the Mountain business combination.

However, we do not believe the year-over-year changes in professional services and other gross margins are meaningful given that our professional services and other revenue represents a small percentage of our revenue.

Cost of product revenue increased $290.9 million for the fiscal year ended January 31, 2025, compared to the prior fiscal year.

The increase was primarily due to an increase of $176.8 million in third-party cloud infrastructure expenses (including those related to GPUs), mainly as a result of increased customer consumption of our platform.

Personnel-related costs and allocated overhead costs also increased $45.3 million for the fiscal year ended January 31, 2025, compared to the prior fiscal year, as a result of increased headcount and overall costs to support the growth in our business, and increased stock-based compensation primarily related to additional equity awards granted to existing and new employees.

Additionally, amortization of capitalized internal-use software development costs and acquired developed technology intangible assets also increased $37.5 million and $11.1 million, respectively, for the fiscal year ended January 31, 2025, compared to the prior fiscal year.

The remaining increase in cost of product revenue was primarily attributable to $7.7 million in costs incurred by us during fiscal 2025 in connection with a restructuring plan for a majority-owned subsidiary.

Our product gross margin was 71% for the fiscal year ended January 31, 2025, compared to 74% for the prior fiscal year.

This decline is primarily attributable to newly launched product capabilities and features that have not yet reached economies of scale.

We expect our product gross margin to fluctuate from period to period due to a number of factors, including, but not limited to:

(i) fluctuations in the mix and timing of customers’ consumption, which is inherently variable at our customers’ discretion, (ii) our pricing model and discounting practices, (iii) the extent of our investments in new product capabilities, features, and operations, such as investments in AI Technology and performance improvements that may make our platform or the underlying cloud infrastructure more efficient, and (iv) stock-based compensation.

Cost of professional services and other revenue increased $25.2 million for the fiscal year ended January 31, 2025, compared to the prior fiscal year, primarily due to an increase of $12.9 million in personnel-related costs and allocated overhead costs as a result of increased headcount.

The remaining increase in cost of professional services and other revenue was primarily driven by an increase of $10.9 million in costs of contracted third-party partners and software tools to support the growth in our business.

Professional services and other gross margin was (36%) and (41%) for the fiscal years ended January 31, 2025 and 2024, respectively.

We do not believe the year-over-year changes in professional services and other gross margins are meaningful given that our professional services and other revenue represents a small percentage of our revenue.

Sales and Marketing

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Sales and marketing expenses increased $280.3 million for the fiscal year ended January 31, 2025, compared to the prior fiscal year, primarily due to an increase of $131.7 million in personnel-related costs (excluding commission expenses) and allocated overhead costs, as a result of increased headcount, stock-based compensation, and overall costs to support the growth in our business.

The increase in personnel-related costs included a $52.8 million increase in stock-based compensation for the fiscal year ended January 31, 2024, compared to the prior fiscal year, primarily related to additional equity awards granted to existing and new employees, partially offset by a decrease in stock-based compensation related to RSUs granted prior to our IPO that is recognized using an accelerated attribution method.

See Note 11, “Equity,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.

Expenses associated with sales commissions and draws paid to our sales force and certain referral fees paid to third parties, including amortization of deferred commissions, increased $46.1 million for the fiscal year ended January 31, 2024, compared to the prior fiscal year, primarily due to increases in customers’ consumption of our platform.

The increase in personnel-related costs included a $32.1 million increase in stock-based compensation for the fiscal year ended January 31, 2025, compared to the prior fiscal year, primarily related to additional equity awards granted to existing and new employees, partially offset by the effects of equity awards that became forfeited or fully vested.

Expenses associated with sales commissions and draws paid to our sales force and certain referral fees paid to third parties, including amortization of deferred commissions, also increased $86.0 million for the fiscal year ended January 31, 2025, compared to the prior fiscal year, primarily attributable to sales commissions tied to customers’ consumption.

In addition, advertising costs and other expenses associated with our sales, marketing and business development programs increased $26.0 million for the fiscal year ended January 31, 2025, compared to the prior fiscal year.

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Research and development expenses increased $495.4 million for the fiscal year ended January 31, 2025, compared to the prior fiscal year, primarily due to an increase of $389.2 million in personnel-related costs and allocated overhead costs, as a result of increased stock-based compensation, headcount, and overall costs to support the growth in our business.

The increase in personnel-related costs included a $237.4 million increase in stock-based compensation, primarily related to additional equity awards granted to new and existing employees, partially offset by a decrease in stock-based compensation related to RSUs granted prior to our IPO that is recognized using an accelerated attribution method.

See Note 11, “Equity,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.

Third-party cloud infrastructure expenses incurred in developing our platform also increased $42.4 million for the fiscal year ended January 31, 2024, compared to the prior fiscal year.

The remaining increase in research and development expenses for the fiscal year ended January 31, 2024 was primarily driven by (i) impairment charges of $7.1 million, recognized during the fiscal year ended January 31, 2024, related to our capitalized internal-use software development costs previously included in construction in progress that were no longer probable of being completed, and, to a lesser extent, (ii) increased costs associated with software and subscription services dedicated for use by our research and development organization, and (iii) increased amortization of developed technology intangible assets acquired from business combinations.

The increase in personnel-related costs included a $207.1 million increase in stock-based compensation, primarily related to additional equity awards granted to existing and new employees, partially offset by the effects of equity awards that became forfeited or fully vested.

Third-party cloud infrastructure expenses, incurred primarily in developing our platform (including with respect to GPUs to develop AI Technology), also increased $92.7 million for the fiscal year ended January 31, 2025, compared to the prior fiscal year.

The remaining increase in research and development expenses for the fiscal year ended January 31, 2025 was primarily attributable to $11.0 million in costs incurred by us during fiscal 2025 in connection with a restructuring plan for a majority-owned subsidiary.

The overall increase in research and development expenses for the fiscal year ended January 31, 2025 was partially offset by impairment charges of $7.1 million recognized during fiscal 2024.

These impairment charges were related to our capitalized internal-use software development costs previously included in construction in progress that were no longer probable of being completed.

General and Administrative

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Headcount (at period end) 1,183 1,055

General and administrative expenses increased $27.2 million for the fiscal year ended January 31, 2024, compared to the prior fiscal year, primarily due to an increase of $20.0 million in personnel-related costs and allocated overhead costs, as a result of increased headcount and overall costs to support the growth in our business.

Costs associated with outside services also increased $5.6 million due to increased legal fees, accounting and other professional service fees related to the normal course of operations.

General and administrative expenses increased $89.3 million for the fiscal year ended January 31, 2025, compared to the prior fiscal year, primarily due to an increase in personnel-related costs and allocated overhead costs, as a result of increased stock-based compensation, headcount, and overall costs to support the growth in our business.

Interest Income

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Interest income $ 209,009 $ 200,663 4%

Interest income increased $126.8 million for the fiscal year ended January 31, 2024, compared to the prior fiscal year, primarily due to higher yields on our investments in available-for-sale marketable debt securities as a result of increased interest rates.

Interest income increased $8.3 million for the fiscal year ended January 31, 2025, compared to the prior fiscal year, primarily due to higher yields on our cash equivalents and investments in available-for-sale marketable debt securities.

See Note 4, “Cash Equivalents and Investments,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details on our cash equivalents and investments.

Other Income (Expense), Net

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(dollars in thousands)

Net unrealized gains (losses) on strategic investments in non-marketable equity securities:

Upward adjustments $ — $ 4,125 NM

Impairments (3,101) (38,036) (92%)

Impairments related to strategic investments in non-marketable equity securities

$ (11,578) $ (3,101) 273%

Net unrealized gains (losses) on strategic investments in marketable equity securities

(2,428) 15,197 (116%)

Realized gains on strategic investments in non-marketable equity securities

Net realized gains (losses) on strategic investments in equity securities (1)

(17,414) 34,713 (150%)

Other (3,919) (1,922) 104%

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$ (35,339) $ 44,887 (179%)

NM - Not meaningful.

Other income (expense), net increased $92.5 million for the fiscal year ended January 31, 2024, compared to the prior fiscal year, primarily due to (i) a decrease in impairments recorded on our strategic investments in non-marketable equity securities, (ii) a remeasurement gain recognized on a previously held equity interest as a result of a business combination completed during the fiscal year ended January 31, 2024, and (iii) changes in net unrealized gains or losses on our strategic investments in marketable equity securities.

See Note 5, “Fair Value Measurements,” and Note 7, “Business Combinations,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.

Benefit from Income Taxes

________________

(1) The net realized gains on strategic investments in equity securities for the fiscal year ended January 31, 2024 include primarily a remeasurement gain of $34.0 million recognized on a previously held equity interest as a result of a business combination completed during fiscal 2024.

See Note 7, “Business Combinations,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.

For strategic investments in equity securities sold, the realized gains or losses represent the difference between the sale proceeds and the carrying value of the securities at the beginning of the period or the purchase date, if later.

Other income (expense), net decreased $80.2 million for the fiscal year ended January 31, 2025, compared to the prior fiscal year, primarily due to changes in net realized and unrealized gains (losses) and impairments on our strategic investments in equity securities.

See Note 5, “Fair Value Measurements,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.

Provision for (Benefit from) Income Taxes

Fiscal Year Ended January 31,

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Loss before income taxes $ (1,285,099) $ (849,223) 51%

Benefit from income taxes

Provision for (benefit from) income taxes

4,113 (11,233) (137%)

Effective tax rate (0.3%) 1.3%

Our benefit from income taxes decreased $7.2 million for the fiscal year ended January 31, 2024, compared to the prior fiscal year, primarily due to a $7.7 million decrease in partial releases of valuation allowances as a result of the business combinations completed during the periods.

Our provision for income taxes was $4.1 million for the fiscal year ended January 31, 2025, compared to our benefit from income taxes of $11.2 million for the fiscal year ended January 31, 2024, primarily due to partial releases of valuation allowances from the business combinations completed during fiscal 2024.

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

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As of January 31, 2025, our principal sources of liquidity were cash, cash equivalents, and short-term and long-term investments totaling $5.3 billion.

Our investments primarily consist of U.S.

government and agency securities, corporate notes and bonds, money market funds, commercial paper, certificates of deposit, and time deposits.

Our cash equivalents and investments primarily consist of money market funds, corporate notes and bonds, U.S.

government and agency securities, commercial paper, certificates of deposit, and time deposits.

As of January 31, 2025, our RPO was $6.9 billion.

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dollars each period based on the applicable period-end exchange rates.

Since inception, we have financed operations primarily through proceeds received from sales of equity securities and payments received from our customers.

Our IPO resulted in aggregate net proceeds of $3.7 billion, after underwriting discounts of $121.7 million.

We also received aggregate proceeds of $500.0 million related to certain concurrent private placements, and did not pay any underwriting discounts or commissions with respect to the shares that were sold in these private placements.

Our primary uses of cash include personnel-related expenses, third-party cloud infrastructure expenses, sales and marketing expenses, overhead costs, acquisitions and strategic investments we may make from time to time, and repurchases of our common stock under our authorized stock repurchase program.

As of January 31, 2024, our material cash requirements from known contractual obligations and commitments related primarily to (i) third-party cloud infrastructure agreements, (ii) operating leases for office facilities, and (iii) subscription arrangements used to facilitate our operations at the enterprise level.

Our primary source of cash is payments received from our customers as well as net proceeds from the issuance of the Notes.

Our primary uses of cash include personnel-related expenses, third-party cloud infrastructure expenses (including with respect to GPUs to develop AI Technology), sales and marketing expenses, overhead costs, acquisitions and strategic investments we may make from time to time, and repurchases of our common stock under our authorized stock repurchase program.

As of January 31, 2025, our material cash requirements from known contractual obligations and commitments relate primarily to (i) third-party cloud infrastructure agreements, (ii) the Notes, (iii) operating leases for office facilities, and (iv) subscription arrangements used to facilitate our operations at the enterprise level.

These agreements are enforceable and legally binding and specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts.

For more information regarding our contractual obligations and commitments as of January 31, 2024, see Note 10, “Commitments and Contingencies,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

For more information regarding our contractual obligations and commitments (excluding the Notes) as of January 31, 2025, see Note 11, “Commitments and Contingencies,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Our long-term purchase commitments may be satisfied earlier than the payment periods presented as we continue to grow and scale our business.

Convertible Senior Notes

In September 2024, we issued an aggregate principal amount of $2.3 billion of the Notes in a private placement to qualified institutional buyers, comprising of (i) $1.15 billion aggregate principal amount of the 2027 Notes and (ii) $1.15 billion aggregate principal amount of the 2029 Notes.

Each series of Notes was issued pursuant to separate indentures, as supplemented (each an Indenture and together, the Indentures), between us and U.S.

Bank Trust Company, National Association, as trustee.

The Notes are general, senior unsecured obligations.

The 2027 Notes will mature on October 1, 2027 and the 2029 Notes will mature on October 1, 2029, in each case unless earlier converted, redeemed, or repurchased.

Neither the 2027 Notes nor the 2029 Notes bear regular interest, and the principal amount of the Notes will not accrete.

We may elect or be required to pay special interest on the Notes under certain circumstances in accordance with the terms of the applicable Indenture.

Special interest, if any, will be payable semiannually in arrears on April 1 and October 1 of each year, beginning on April 1, 2025.

The total proceeds from the issuance of the Notes were approximately $2.27 billion, net of $31.2 million of debt issuance costs.

In connection with the Notes offering, we entered into Capped Calls with certain of the initial purchasers or affiliates thereof and certain other financial institutions for a cost of $195.5 million.

The Capped Calls are generally expected to reduce the potential dilution to our common stock upon any conversion of the relevant series of the Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted Notes of such series, as the case may be, with such reduction and/or offset subject to a cap based on a cap price initially equal to $225.00 per share.

We used a portion of the net proceeds from the Notes offering to (i) pay the $195.5 million cost of the Capped Calls and (ii) repurchase $399.6 million of our common stock from purchasers of the Notes in the offering in privately negotiated transactions e ntered into in connection with the Notes offering at a purchase price of $112.50 per share.

We expect to use the remainder of the net proceeds for general corporate purposes, which may include other repurchases of our common stock from time to time under our existing or any future stock repurchase program, as well as acquisitions or strategic investments in complementary businesses or technologies.

See Note 10, “Convertible Senior Notes,” and Note 12, “Equity,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional details.

Stock Repurchase Program

In February 2023, our board of directors authorized a stock repurchase program of up to $2.0 billion of our outstanding common stock.

Repurchases may be effected, from time to time, either on the open market (including via pre-set trading plans), in privately negotiated transactions, or through other transactions in accordance with applicable securities laws.

The program is funded using our working capital and will expire in March 2025.

The timing and amount of any repurchases will be determined by management based on an evaluation of market conditions and other factors.

The program does not obligate us to acquire any particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at our discretion.

During the fiscal year ended January 31, 2024, we repurchased 4.0 million shares of our outstanding common stock for an aggregate purchase price of $591.7 million, including transaction costs, at a weighted-average price of $147.50 per share.

All repurchases were made in open market transactions (including via pre-set trading plans).

As of January 31, 2024, $1.4 billion remained available for future repurchases under the stock repurchase program.

See Note 11, “Equity,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional details.

We believe that our existing cash, cash equivalents, and short-term and long-term investments, as well as cash flows expected to be generated by our operations, will be sufficient to support our working capital and capital expenditure requirements, acquisitions and strategic investments we may make from time to time, and repurchases of our common stock under our authorized stock repurchase program, for the next 12 months and beyond.

As of January 31, 2025, $2.0 billion remained available for future repurchases under the stock repurchase program (exclusive of transaction costs associated with repurchases).

See Note 10, “Convertible Senior Notes,” and Note 12, “Equity,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional details.

Subsequent to January 31, 2025, and through March 21, 2025, we repurchased 3.2 million shares of our outstanding common stock for an aggregate purchase price of $490.6 million, excluding transaction costs associated with the repurchases, at a weighted-average price of $152.63 per share.

All repurchases were made in open market transactions.

We believe that our existing cash, cash equivalents, and short-term and long-term investments, as well as cash flows expected to be generated by our operations, will be sufficient to support our working capital and capital expenditure requirements, convertible senior notes repayment requirements, acquisitions and strategic investments we may make from time to time, and repurchases of our common stock under our existing or any future stock repurchase program, for the next 12 months and beyond.

Our future capital requirements will depend on many factors, including our revenue growth rate, expenditures related to our headcount growth, the timing and the amount of cash received from customers, the expansion of sales and marketing activities, the timing and extent of spending to support development efforts, the price at which we are able to purchase public cloud capacity, our existing commitments to our third-party cloud providers, expenses associated with our international expansion, the introduction of platform enhancements, the continuing market adoption of our platform, and the volume and timing of our stock repurchases.

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Net cash provided by (used in) investing activities $ 190,646 $ 832,258 $ (597,885)

Net cash provided by (used in) financing activities $ (854,103) $ (92,624) $ 178,198

Net cash used in financing activities $ (226,523) $ (854,103) $ (92,624)

Operating Activities

Net cash provided by operating activities mainly consists of our net loss adjusted for certain non-cash items, primarily consisting of (i) stock-based compensation, net of amounts capitalized, (ii) depreciation and amortization of property and equipment and amortization of acquired intangible assets, (iii) amortization of deferred commissions, (iv) net amortization (accretion) of premiums (discounts) on investments, (v) amortization of operating lease right-of-use assets, (vi) net unrealized gains or losses on strategic investments in equity securities, and (vii) deferred income tax benefit or expense, and changes in operating assets and liabilities during each period.

For the fiscal year ended January 31, 2024, net cash provided by operating activities was $848.1 million, primarily consisting of our net loss of $838.0 million, adjusted for non-cash charges of $1.3 billion, and net cash inflows of $390.7 million provided by changes in our operating assets and liabilities, net of the effects of business combinations.

The main drivers of the changes in operating assets and liabilities during the fiscal year ended January 31, 2024 were (i) a $528.0 million increase in deferred revenue due to invoicing for prepaid capacity agreements outpacing revenue recognition, (ii) a $171.0 million increase in accrued expenses and other liabilities primarily due to increased headcount, growth in our business and the timing of accruals and payments, and (iii) a $59.8 million decrease in prepaid expenses and other assets primarily driven by a decrease in prepaid third-party cloud infrastructure expenses, partially offset by (a) a $212.1 million increase in accounts receivable primarily due to growth in our business, (b) a $134.8 million increase in deferred commissions earned upon the origination of customer contracts, and (c) a $40.5 million decrease in operating lease liabilities due to payments related to our operating lease obligations.

For the fiscal year ended January 31, 2023, net cash provided by operating activities was $545.6 million, primarily consisting of our net loss of $797.5 million, adjusted for non-cash charges of $1.1 billion, and net cash inflows of $289.5 million provided by changes in our operating assets and liabilities, net of the effects of business combinations.

Net cash provided by operating activities increased $302.5 million for the fiscal year ended January 31, 2024, compared to the fiscal year ended January 31, 2023, primarily due to an increase of $751.1 million in cash collected from customers resulting from increased sales.

Net cash provided by operating activities mainly consists of our net loss adjusted for certain non-cash items, primarily consisting of (i) stock-based compensation, net of amounts capitalized, (ii) depreciation and amortization of property and equipment and amortization of acquired intangible assets, (iii) amortization of deferred commissions, (iv) amortization of operating lease right-of-use assets, (v) net amortization (accretion) of premiums (discounts) on investments, (vi) net realized and unrealized gains and losses on strategic investments in equity securities, and (vii) deferred income tax benefit or expense, and changes in operating assets and liabilities during each period.

For the fiscal year ended January 31, 2025, net cash provided by operating activities was $959.8 million, consisting of our net loss of $1.3 billion, adjusted for non-cash charges of $1.8 billion, and net cash inflows of $443.6 million provided by changes in our operating assets and liabilities, net of the effects of business combinations.

The main drivers of the changes in operating assets and liabilities during fiscal 2025 were (i) a $382.8 million increase in deferred revenue due to invoicing for prepaid capacity agreements outpacing revenue recognition, (ii) a $108.9 million increase in accounts payable due to timing of invoices and payments, (iii) a $70.9 million increase in accrued expenses and other liabilities primarily due to the timing of accruals and payments, and (iv) a $29.9 million decrease in prepaid expenses and other assets primarily driven by a decrease in prepaid third-party cloud infrastructure expenses, partially offset by (a) a $101.6 million increase in deferred commissions earned upon the origination of customer contracts, and (b) a $47.7 million decrease in operating lease liabilities due to payments related to our operating lease obligations.

For the fiscal year ended January 31, 2024, net cash provided by operating activities was $848.1 million, consisting of our net loss of $838.0 million, adjusted for non-cash charges of $1.3 billion, and net cash inflows of $390.7 million provided by changes in our operating assets and liabilities, net of the effects of business combinations.

Net cash provided by operating activities increased $111.6 million for the fiscal year ended January 31, 2025, compared to the fiscal year ended January 31, 2024, primarily due to an increase in cash collected from customers resulting from increased sales.

This was partially offset by increased expenditures due to an increase in headcount and growth in our business.

We expect to continue to generate positive net cash flows from operating activities for the fiscal year ending January 31, 2025.

We expect to continue to generate positive net cash flows from operating activities for fiscal 2026.

Investing Activities

Net cash provided by investing activities for the fiscal year ended January 31, 2025 was $190.6 million, primarily driven by proceeds of $297.4 million from net sales, maturities and redemptions of investments.

The increase is partially offset by (i) $46.3 million in purchases of property and equipment to support our office facilities, (ii) an aggregate of $30.3 million in cash paid for Datavolo and other business combinations, net of cash and cash equivalents acquired, and (iii) $29.4 million in capitalized internal-use software development costs.

Net cash provided by investing activities for the fiscal year ended January 31, 2024 was $832.3 million, primarily driven by proceeds of $1.2 billion from net sales, maturities and redemptions of investments, partially offset by an aggregate of $275.7 million in cash paid for the Neeva, Mountain, LeapYear and other business combinations, net of cash, cash equivalents, and restricted cash acquired, and, to a lesser extent, purchases of property and equipment to support our office facilities, capitalized internal-use software development costs, and purchases of intangible assets.

Net cash used in investing activities for the fiscal year ended January 31, 2023 was $597.9 million, primarily as a result of an aggregate of $362.6 million in cash paid for Streamlit, Applica and other business combinations, net of cash and cash equivalents acquired, $185.4 million in net purchases of investments, and, to a lesser extent, purchases of property and equipment to support our office facilities and capitalized internal-use software development costs.

Financing Activities

Net cash used in financing activities for the fiscal year ended January 31, 2025 was $226.5 million, primarily driven by (i) $1.9 billion in repurchases of our common stock under our authorized stock repurchase program, (ii) $489.1 million in taxes paid related to net share settlement of equity awards, and (iii) $195.5 million in purchases of the Capped Calls, partially offset by (a) proceeds of approximately $2.27 billion from the issuance of the Notes, net of $31.2 million in cash paid for issuance costs, and (b) proceeds of $121.9 million from the issuance of equity securities under our equity incentive plans.

Net cash used in financing activities for the fiscal year ended January 31, 2024 was $854.1 million, primarily as a result of $591.7 million in repurchases of our common stock under our authorized stock repurchase program and $380.8 million in taxes paid related to net share settlement of equity awards, partially offset by proceeds of $118.4 million from the issuance of equity securities under our equity incentive plans.

Net cash used in financing activities for the fiscal year ended January 31, 2023 was $92.6 million, primarily as a result of taxes paid related to net share settlement of equity awards of $184.6 million, partially offset by proceeds of $80.8 million from the issuance of equity securities under our equity incentive plans, and capital contributions of $13.0 million from noncontrolling interest holders.

Critical Accounting Estimates

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The significant accounting policies and methods used in the preparation of our consolidated financial statements are discussed in Note 2, “Basis of Presentation and Summary of Significant Accounting Policies,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

We believe that the accounting policies and estimates associated with revenue recognition and business combinations involve a substantial degree of judgment and complexity and therefore are the most critical to aid in fully understanding and evaluating our financial condition and results of operations.

We believe that the accounting policy and estimate described below involves a substantial degree of judgment and complexity and therefore is the most critical to aid in fully understanding and evaluating our financial condition and results of operations.

Revenue Recognition

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These factors, among others, may adversely impact the amount of revenue and gross margin we report in a given period.

Business Combinations

When we acquire a business, we allocate the purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated respective fair values.

The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill.

Critical estimates used in valuing certain intangible assets include, but are not limited to, time and resources required to recreate the assets acquired.

These estimates are based on information obtained from the management of the acquired companies, our assessment of the information, and historical experience.

Our 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.

The amounts and estimated useful lives assigned to intangible assets acquired in business combinations impact the amount and timing of future amortization expense.

Recent Accounting Pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis