What changed in this filing

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Item 1. Financial Statements

2022-08-25 compared with 2022-05-26 · 170 added, 124 removed, 571 unchanged (34% of the section changed)

3 unchanged sentences

(in thousands)

April 30, 2022 January 31, 2022

July 31, 2022 January 31, 2022

Current assets:

38 unchanged sentences

(in thousands, except per share data)

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2022 2021 2022 2021

Subscription services $ 1,367,335 $ 1,113,454 $ 2,639,411 $ 2,145,623

13 unchanged sentences

Net income (loss) $ ( 64,158 ) $ 105,736 $ ( 166,331 ) $ 59,214

Net income (loss) per share, basic and diluted $ ( 0.41 ) $ ( 0.19 )

Weighted-average shares used to compute net income (loss) per share, basic and diluted 251,743 243,739

Net income (loss) per share, basic $ ( 0.25 ) $ 0.43 $ ( 0.66 ) $ 0.24

Net income (loss) per share, diluted $ ( 0.25 ) $ 0.41 $ ( 0.66 ) $ 0.23

Weighted-average shares used to compute net income (loss) per share, basic 254,355 246,943 253,071 245,308

Weighted-average shares used to compute net income (loss) per share, diluted 254,355 260,016 253,071 252,900

(1) Costs and expenses include share-based compensation expenses as follows:

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2022 2021 2022 2021

Costs of subscription services $ 25,090 $ 20,421 $ 51,320 $ 41,138

8 unchanged sentences

(in thousands)

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2022 2021 2022 2021

Net income (loss) $ ( 64,158 ) $ 105,736 $ ( 166,331 ) $ 59,214

9 unchanged sentences

(in thousands)

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2022 2021 2022 2021

Common stock:

24 unchanged sentences

Total stockholders’ equity $ 5,127,808 $ 3,867,990 $ 5,127,808 $ 3,867,990

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2022 2021 2022 2021

Common stock (in shares):

3 unchanged sentences

Purchase of treasury stock from the exercise of convertible senior notes hedges — — ( 1 ) —

Other — — — 82

Balance, end of period 255,485 248,087 255,485 248,087

3 unchanged sentences

(in thousands)

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2022 2021 2022 2021

Cash flows from operating activities:

38 unchanged sentences

See Notes to Condensed Consolidated Financial Statements

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2022 2021 2022 2021

Supplemental cash flow data:

3 unchanged sentences

Purchases of property and equipment, accrued but not paid 67,447 36,823 67,447 36,823

As of April 30,

As of July 31,

Reconciliation of cash, cash equivalents, and restricted cash as shown in the Condensed Consolidated Statements of Cash Flows:

1 unchanged sentence

Restricted cash included in Prepaid expenses and other current assets 10,503 5,859

Restricted cash included in Other assets — 698

Total cash, cash equivalents, and restricted cash $ 2,497,043 $ 1,092,929

17 unchanged sentences

All such adjustments are of a normal, recurring nature.

The results of operations for the three months ended April 30, 2022, shown in this report are not necessarily indicative of the results to be expected for the full fiscal year ending January 31, 2023.

The results of operations for the three and six months ended July 31, 2022, shown in this report are not necessarily indicative of the results to be expected for the full fiscal year ending January 31, 2023.

The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended January 31, 2022, filed with the SEC on February 28, 2022.

8 unchanged sentences

Operating segments are defined as components of an enterprise where separate financial information is evaluated regularly by a chief operating decision maker (“CODM”) in deciding how to allocate resources and assessing performance.

For the three months ended April 30, 2022, our CODM was our Co-Chief Executive Officer and Chairman, Aneel Bhusri, and our Co-Chief Executive Officer, Chano Fernandez.

For the six months ended July 31, 2022, our CODM was our Co-Chief Executive Officer and Chairman, Aneel Bhusri, and our Co-Chief Executive Officer, Chano Fernandez.

Our CODM allocates resources and assesses performance based upon discrete financial information at the consolidated level.

5 unchanged sentences

Our deposits exceed federally insured limits.

No customer individually accounted for more than 10% of trade and other receivables, net as of April 30, 2022, or January 31, 2022.

No customer individually accounted for more than 10% of total revenues during the three months ended April 30, 2022, or 2021.

Other than the United States, no country individually accounted for more than 10% of total revenues during the three months ended April 30, 2022, or 2021.

No customer individually accounted for more than 10% of trade and other receivables, net as of July 31, 2022, or January 31, 2022.

No customer individually accounted for more than 10% of total revenues during the three and six months ended July 31, 2022, or 2021.

Other than the United States, no country individually accounted for more than 10% of total revenues during the three and six months ended July 31, 2022, or 2021.

In order to reduce the risk of down-time of our cloud applications, we have established data centers in various geographic regions.

4 unchanged sentences

Given this, any disruption of or interference at our hosted infrastructure partners would impact our operations and our business could be adversely impacted.

We are also exposed to concentration of risk in our equity investments portfolio, which consists of marketable equity investments and non-marketable equity investments measured using the measurement alternative.

As of both July 31, 2022, and January 31, 2022, we held one marketable equity investment with a carrying value that was individually greater than 10% of our total equity investments portfolio.

Recently Adopted Accounting Pronouncements

5 unchanged sentences

2021-08 on a prospective basis effective February 1, 2022.

The adoption had no impact on our condensed consolidated financial statements during the three months ended April 30, 2022, and any financial impact will be dependent on the magnitude and nature of future business combinations.

The adoption had no impact on our condensed consolidated financial statements during the three and six months ended July 31, 2022, and any financial impact will be dependent on the magnitude and nature of future business combinations.

Debt Securities

As of April 30, 2022, debt securities consisted of the following (in thousands):

As of July 31, 2022, debt securities consisted of the following (in thousands):

Amortized Cost Unrealized Gains Unrealized Losses Aggregate Fair Value

16 unchanged sentences

We classify our debt securities as available-for-sale at the time of purchase and reevaluate such classification as of each balance sheet date.

We consider all debt securities as available for use in current operations, including those with maturity dates beyond one year, and therefore classify these securities as current assets on the Condensed Consolidated Balance Sheets.

We consider all debt securities as funds available for use in current operations, including those with maturity dates beyond one year, and therefore classify these securities as current assets on the Condensed Consolidated Balance Sheets.

Debt securities included in Marketable securities on the Condensed Consolidated Balance Sheets consist of securities with original maturities at the time of purchase greater than three months, and the remaining securities are included in Cash and cash equivalents.

No debt securities held as of April 30, 2022, and January 31, 2022, were in a continuous unrealized loss position for greater than 12 months, and we did not recognize any credit losses related to our debt securities during the periods presented.

We did not have any sales of debt securities during the three months ended April 30, 2022.

We sold $ 10 million of debt securities during the three months ended April 30, 2021, and the realized gains and losses from the sales were immaterial.

No debt securities held as of July 31, 2022, and January 31, 2022, were in a continuous unrealized loss position for greater than 12 months, and we did not recognize any credit losses related to our debt securities during the periods presented.

We sold $ 28 million of debt securities during the three and six months ended July 31, 2022.

We did not have any material sales of debt securities during the three months ended July 31, 2021.

We sold $ 10 million of debt securities during the six months ended July 31, 2021.

The realized gains and losses from the sales were immaterial.

Equity Investments

Equity investments consisted of the following (in thousands):

Condensed Consolidated Balance Sheets Location April 30, 2022 January 31, 2022

Condensed Consolidated Balance Sheets Location July 31, 2022 January 31, 2022

Money market funds Cash and cash equivalents $ 630,698 $ 607,640

3 unchanged sentences

Total realized and unrealized gains and losses associated with our equity investments consisted of the following (in thousands):

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2022 2021 2022 2021

Net realized gains (losses) recognized on equity investments sold (1)

5 unchanged sentences

Non-marketable equity investments measured using the measurement alternative include investments in privately held companies without readily determinable fair values in which we do not own a controlling interest or exercise significant influence.

These investments are recorded at cost and are adjusted for observable transactions for same or similar securities of the same issuer or impairment events.

The carrying values for our non-marketable equity investments are summarized below (in thousands):

April 30, 2022 January 31, 2022

July 31, 2022 January 31, 2022

Total initial cost $ 206,617 $ 192,694

1 unchanged sentence

Carrying value $ 262,597 $ 256,643

During the three months ended April 30, 2022, we recorded upward adjustments to the carrying value of non-marketable equity investments of $ 3 million and impairment losses of $ 14 million.

During the three months ended April 30, 2021, we recorded upward adjustments to the carrying value of these investments of $ 8 million and impairment losses of $ 2 million.

During the three months ended July 31, 2022, and 2021, we recorded upward adjustments to the carrying value of non-marketable equity investments of $ 3 million and $ 6 million, respectively, and no material impairment losses.

During the six months ended July 31, 2022, and 2021, we recorded upward adjustments to the carrying value of these investments of $ 6 million and $ 14 million, respectively, and impairment losses of $ 14 million and $ 2 million, respectively.

Marketable Equity Investments

1 unchanged sentence

The carrying values for our marketable equity investments are summarized below (in thousands):

April 30, 2022 January 31, 2022

July 31, 2022 January 31, 2022

Total initial cost $ 38,936 $ 40,739

2 unchanged sentences

$ 82,672 $ 104,318

During the three months ended April 30, 2022, we sold marketable equity investments for proceeds of $ 5 million with a corresponding realized gain of $ 1 million.

During the three months ended April 30, 2021, we sold marketable equity investments for proceeds of $ 2 million with a corresponding realized loss of $ 2 million.

During the three months ended April 30, 2022, and 2021, we recorded unrealized gains on marketable equity investments of $ 3 million and unrealized losses of $ 7 million, respectively.

During the three months ended July 31, 2022, we did no t sell any marketable equity investments.

During the three months ended July 31, 2021, we sold marketable equity investments for proceeds of $ 15 million, with corresponding net realized gains of $ 3 million.

During the six months ended July 31, 2022, and 2021, we sold marketable equity investments for proceeds of $ 5 million and $ 17 million, respectively, with corresponding net realized gains of $ 1 million and losses of $ 6 million, respectively.

During the three months ended July 31, 2022, and 2021, we recorded unrealized net losses of $ 20 million and gains of $ 97 million, respectively, on marketable equity investments held as of the end of each period.

During the six months ended July 31, 2022, and 2021, we recorded unrealized net losses of $ 17 million and gains of $ 97 million, respectively, on marketable equity investments held as of the end of each period .

Fair Value Measurements

7 unchanged sentences

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents information about our assets and liabilities that are measured at fair value on a recurring basis and their assigned levels within the valuation hierarchy as of April 30, 2022 (in thousands):

Level 1 Level 2 Level 3 Total

29 unchanged sentences

Deferred Costs

Deferred costs, which consist of deferred sales commissions, were $ 497 million and $ 494 million as of April 30, 2022, and January 31, 2022, respectively.

Amortization expense for the deferred costs was $ 39 million and $ 32 million for the three months ended April 30, 2022, and 2021, respectively.

Deferred costs, which consist of deferred sales commissions, were $ 519 million and $ 494 million as of July 31, 2022, and January 31, 2022, respectively.

Amortization expense for the deferred costs was $ 43 million and $ 33 million for the three months ended July 31, 2022, and 2021, respectively, and $ 82 million and $ 65 million for the six months ended July 31, 2022, and 2021, respectively.

There was no impairment loss in relation to the costs capitalized for the periods presented.

1 unchanged sentence

Property and equipment, net consisted of the following (in thousands):

April 30, 2022 January 31, 2022

July 31, 2022 January 31, 2022

Computers, equipment, and software $ 1,257,440 $ 1,071,141

6 unchanged sentences

Property and equipment, net $ 1,233,151 $ 1,123,075

Depreciation expense totaled $ 67 million and $ 63 million for the three months ended April 30, 2022, and 2021, respectively.

Depreciation expense totaled $ 71 million and $ 65 million for the three months ended July 31, 2022, and 2021, respectively, and $ 138 million and $ 128 million for the six months ended July 31, 2022, and 2021, respectively.

Acquisition-Related Intangible Assets, Net

Acquisition-related intangible assets, net consisted of the following (in thousands):

April 30, 2022 January 31, 2022

July 31, 2022 January 31, 2022

Developed technology $ 346,300 $ 346,300

5 unchanged sentences

Acquisition-related intangible assets, net $ 347,875 $ 391,002

Amortization expense related to acquisition-related intangible assets was $ 22 million and $ 18 million for the three months ended April 30, 2022, and 2021, respectively.

As of April 30, 2022, our future estimated amortization expense related to acquisition-related intangible assets was as follows (in thousands):

Amortization expense related to acquisition-related intangible assets was $ 21 million and $ 20 million for the three months ended July 31, 2022, and 2021, respectively, and $ 43 million and $ 38 million for the six months ended July 31, 2022, and 2021, respectively.

As of July 31, 2022, our future estimated amortization expense related to acquisition-related intangible assets was as follows (in thousands):

Fiscal Period:

3 unchanged sentences

Other noncurrent assets consisted of the following (in thousands):

April 30, 2022 January 31, 2022

July 31, 2022 January 31, 2022

Non-marketable equity and other investments $ 265,565 $ 256,759

Derivative assets 50,866 16,618

Prepayments for goods and services 24,028 25,927

Technology patents and other intangible assets, net 21,062 22,792

Prepayments for goods and services 20,377 25,927

Net deferred tax assets 10,109 11,642

3 unchanged sentences

Technology patents and other intangible assets with estimable useful lives are amortized on a straight-line basis.

As of April 30, 2022, the future estimated amortization expense was as follows (in thousands):

As of July 31, 2022, the future estimated amortization expense was as follows (in thousands):

Fiscal Period:

13 unchanged sentences

Gains or losses resulting from changes in the fair value of these hedges are recorded in Accumulated other comprehensive income (loss) (“AOCI”) on the Condensed Consolidated Balance Sheets and are subsequently reclassified to the same line item as the hedged transaction on the Condensed Consolidated Statements of Operations in the same period that the hedged transaction affects earnings.

As of April 30, 2022, we estimate that $ 5 million of net gains recorded in AOCI related to our cash flow hedges will be reclassified into income within the next 12 months.

As of April 30, 2022, and January 31, 2022, the notional values of the forward contracts designated as cash flow hedges that we held to buy U.S.

As of July 31, 2022, we estimate that $ 17 million of net gains recorded in AOCI related to our cash flow hedges will be reclassified into income within the next 12 months.

As of July 31, 2022, and January 31, 2022, the notional values of the forward contracts designated as cash flow hedges that we held to buy U.S.

dollars in exchange for other currencies were $ 1.6 billion and $ 1.4 billion, respectively.

The notional values of the forward contracts designated as cash flow hedges that we held to sell U.S.

dollars in exchange for other currencies were $ 300 million and $ 355 million as of April 30, 2022, and January 31, 2022, respectively.

dollars in exchange for other currencies were $ 329 million and $ 355 million as of July 31, 2022, and January 31, 2022, respectively.

All contracts had maturities of less than 48 months.

4 unchanged sentences

Cash flows from such forward contracts are classified as operating activities.

As of April 30, 2022, and January 31, 2022, the notional values of the forward contracts not designated as hedges that we held to buy U.S.

As of July 31, 2022, and January 31, 2022, the notional values of the forward contracts not designated as hedges that we held to buy U.S.

dollars in exchange for other currencies were $ 136 million and $ 217 million, respectively, and the notional values of the forward contracts not designated as hedges that we held to sell U.S.

1 unchanged sentence

The fair values of outstanding derivative instruments were as follows (in thousands):

Condensed Consolidated Balance Sheets Location April 30, 2022 January 31, 2022

Condensed Consolidated Balance Sheets Location July 31, 2022 January 31, 2022

Derivative assets:

2 unchanged sentences

Non-designated hedges Prepaid expenses and other current assets 3 1,076

Non-designated hedges Other assets — —

Total derivative assets $ 110,635 $ 39,031

6 unchanged sentences

The effect of cash flow hedges on the Condensed Consolidated Statements of Operations was as follows (in thousands):

Three Months Ended April 30,

Three Months Ended July 31,

Revenues Costs and Expenses Revenues Costs and Expenses

1 unchanged sentence

Gains (losses) related to cash flow hedges 1,495 ( 5,955 ) ( 1,667 ) —

G ains (losses) associated with cash flow hedges were as follows (in thousands):

Consolidated Statements of Operations and Statements of Comprehensive Income (Loss) Locations Three Months Ended April 30,

Six Months Ended July 31,

Revenues Costs and Expenses Revenues Costs and Expenses

Total $ 2,970,455 $ 3,077,376 $ 2,435,394 $ 2,474,827

Gains (losses) related to cash flow hedges 338 ( 6,784 ) ( 1,149 ) —

Gains (losses) associated with cash flow hedges were as follows (in thousands):

Consolidated Statements of Operations and Statements of Comprehensive Income (Loss) Locations Three Months Ended July 31, Six Months Ended July 31,

2022 2021 2022 2021

Gains (losses) recognized in OCI Net change in unrealized gains (losses) on cash flow hedges $ 17,734 $ 16,031 $ 61,994 $ 11,778

1 unchanged sentence

Gains (losses) reclassified from AOCI into income (effective portion) Costs and expenses ( 5,955 ) — ( 6,784 ) —

Gains (losses) associated with non-designated as hedges were as follows (in thousands):

Condensed Consolidated Statements of Operations Location Three Months Ended April 30,

Gains (losses) associated with non-designated hedges were as follows (in thousands):

Condensed Consolidated Statements of Operations Location Three Months Ended July 31, Six Months Ended July 31,

2022 2021 2022 2021

Gains (losses) related to non-designated hedges Other income (expense), net $ 2,135 $ 2,011 $ 6,101 $ 1,819

3 unchanged sentences

We manage our exposure to counterparty risk by entering into contracts with a diversified group of major financial institutions and by actively monitoring outstanding positions.

As of April 30, 2022, information related to these offsetting arrangements was as follows (in thousands):

As of July 31, 2022, information related to these offsetting arrangements was as follows (in thousands):

Gross Amounts of Recognized Assets Gross Amounts Offset on the Condensed Consolidated Balance Sheets Net Amounts of Assets Presented on the Condensed Consolidated Balance Sheets Gross Amounts Not Offset on the Condensed Consolidated Balance Sheets Net Assets Exposed

17 unchanged sentences

Outstanding debt consisted of the following (in thousands):

April 30, 2022 January 31, 2022

July 31, 2022 January 31, 2022

2022 Notes $ 1,149,583 $ 1,149,817

8 unchanged sentences

Debt, noncurrent $ 2,974,023 $ 617,354

As of April 30, 2022, the future principal payments for the outstanding debt were as follows (in thousands):

As of July 31, 2022, the future principal payments for the outstanding debt were as follows (in thousands):

Fiscal Period:

1 unchanged sentence

Thereafter 3,000,000

Total $ 4,149,613

Total principal amount $ 4,149,583

In April 2022, we issued $ 3.0 billion aggregate principal amount of senior notes, consisting of $ 1.0 billion aggregate principal amount of 3.500 % notes due April 1, 2027 (“2027 Notes”), $ 750 million aggregate principal amount of 3.700 % notes due April 1, 2029 (“2029 Notes”), and $ 1.25 billion aggregate principal amount of 3.800 % notes due April 1, 2032 (“2032 Notes,” and together with the 2027 Notes and the 2029 Notes, “Senior Notes”).

4 unchanged sentences

The indenture governing the Senior Notes also includes covenants (including certain limited covenants restricting our ability to incur certain liens and enter into certain sale and leaseback transactions), events of default, and other customary provisions.

As of April 30, 2022, we were in compliance with all covenants associated with the Senior Notes.

As of July 31, 2022, we were in compliance with all covenants associated with the Senior Notes.

We incurred debt discount and issuance costs of approximately $ 27 million in connection with the Senior Notes offering, which were allocated on a pro rata basis to the 2027 Notes, 2029 Notes, and 2032 Notes.

1 unchanged sentence

The effective interest rates on the 2027 Notes, 2029 Notes, and 2032 Notes, which are calculated as the contractual interest rates adjusted for the debt discount and issuance costs, are 3.67 %, 3.82 %, and 3.90 %, respectively.

As of April 30, 2022, the total estimated fair value of the Senior Notes was $ 2.9 billion.

As of July 31, 2022, the total estimated fair value of the Senior Notes was $ 2.9 billion.

The estimated fair values of the Senior Notes, which we have classified as Level 2 financial instruments, were determined based on quoted bid prices in an over-the-counter market on the last trading day of the reporting period.

3 unchanged sentences

Concurrently with entering into the 2022 Credit Agreement, we paid off the remaining principal balance of $ 694 million on the term loan under the 2020 Credit Agreement and terminated the revolving credit facility under the 2020 Credit Agreement which had no outstanding balance.

The modification to our revolving credit facility and extinguishment of the term loan under the 2020 Credit Agreement did not have a material impact to our Condensed Consolidated Statements of Operations for the three months ended April 30, 2022.

As of April 30, 2022, we had no outstanding revolving loans under the 2022 Credit Agreement.

As of July 31, 2022, we had no outstanding revolving loans under the 2022 Credit Agreement.

The revolving loans under the 2022 Credit Agreement may be borrowed, repaid, and reborrowed until April 6, 2027, at which time all amounts borrowed must be repaid.

4 unchanged sentences

The financial covenant, based on a quarterly financial test, requires that we do not exceed a maximum leverage ratio of 3.50 :1.00, subject to a step-up to 4.50 :1.00 at our election for a certain period following an acquisition.

As of April 30, 2022, we were in compliance with all covenants.

As of July 31, 2022, we were in compliance with all covenants.

Convertible Senior Notes

6 unchanged sentences

The initial conversion rate for the 2022 Notes is 6.7982 shares of Class A common stock per $ 1,000 principal amount, which is equal to an initial conversion price of approximately $ 147.10 per share of Class A common stock, subject to adjustment.

Prior to the close of business on May 31, 2022, conversion of the 2022 Notes is subject to the satisfaction of certain conditions, as described below.

Prior to the close of business on May 31, 2022, conversion of the 2022 Notes was subject to the satisfaction of certain conditions, as described below.

Holders of the 2022 Notes who convert their 2022 Notes in connection with certain corporate events that constitute a make-whole fundamental change (as defined in the Indenture) are, under certain circumstances, entitled to an increase in the conversion rate.

Additionally, in the event of a corporate event that constitutes a fundamental change (as defined in the Indenture), holders of the 2022 Notes may require us to repurchase all or a portion of their 2022 Notes at a price equal to 100 % of the principal amount of the 2022 Notes, plus any accrued and unpaid interest.

Holders of the 2022 Notes may convert all or a portion of their 2022 Notes prior to the close of business on May 31, 2022, in multiples of $1,000 principal amount, only under the following circumstances:

• if the last reported sale price of our Class A common stock for at least 20 trading days during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130 % of the conversion price of the 2022 Notes on each applicable trading day;

Holders of the 2022 Notes could convert all or a portion of their 2022 Notes prior to the close of business on May 31, 2022, in multiples of $1,000 principal amount, only under the following circumstances:

• if the last reported sale price of our Class A common stock for at least 20 trading days during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter was greater than or equal to 130 % of the conversion price of the 2022 Notes on each applicable trading day;

• during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of the 2022 Notes for each day of that five day consecutive trading day period was less than 98 % of the product of the last reported sale price of Class A common stock and the conversion rate of the 2022 Notes on such trading day;

• upon the occurrence of specified corporate events, as noted in the Indenture.

On or after June 1, 2022, holders of the 2022 Notes may convert their 2022 Notes at any time until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2022 Notes.

The 2022 Notes were convertible at the option of the holders during the first quarter of fiscal 2023 and continue to be convertible in the second quarter of fiscal 2023 since the trigger for early conversion was met.

Specifically, the last reported sale price of our Class A common stock exceeded 130 % of the conversion price of the 2022 Notes for more than 20 trading days during the 30 consecutive trading days ended April 30, 2022.

The 2022 Notes were convertible at the option of the holders during the second quarter of fiscal 2023, prior to the close of business on May 31, 2022, since the trigger for early conversion was met.

Beginning on June 1, 2022, holders of the 2022 Notes may convert their 2022 Notes at any time until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2022 Notes.

Through the date of this filing, the amount of the principal balance of the 2022 Notes that has been converted or for which conversion has been requested was not material.

The 2022 Notes are classified as current on the Condensed Consolidated Balance Sheets as of April 30, 2022, and January 31, 2022.

The 2022 Notes are classified as current on the Condensed Consolidated Balance Sheets as of July 31, 2022, and January 31, 2022.

The effective interest rate on the 2022 Notes is 0.56 %.

As of April 30, 2022, and January 31, 2022, the estimated fair value of the 2022 Notes was $ 1.7 billion and $ 1.9 billion, respectively.

As of July 31, 2022, and January 31, 2022, the estimated fair value of the 2022 Notes was $ 1.3 billion and $ 1.9 billion, respectively.

The estimated fair value of the 2022 Notes, which we have classified as a Level 2 financial instrument, was determined based on the quoted bid price in an over-the-counter market on the last trading day of each applicable reporting period.

12 unchanged sentences

The following table sets forth total interest expense recognized related to our debt (in thousands):

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2022 2021 2022 2021

Contractual interest expense $ 28,281 $ 3,174 $ 39,666 $ 6,322

2 unchanged sentences

We have entered into operating lease agreements for our office space, data centers, and other property and equipment.

Operating lease right-of-use assets were $ 252 million and $ 248 million as of April 30, 2022, and January 31, 2022, respectively, and operating lease liabilities were $ 263 million as of both April 30, 2022, and January 31, 2022.

Operating lease right-of-use assets were $ 286 million and $ 248 million as of July 31, 2022, and January 31, 2022, respectively, and operating lease liabilities were $ 305 million and $ 263 million as of July 31, 2022, and January 31, 2022, respectively.

We have also entered into finance lease agreements for other property and equipment.

As of April 30, 2022, and January 31, 2022, finance leases were not material.

As of July 31, 2022, and January 31, 2022, finance leases were not material.

The components of operating lease expense were as follows (in thousands):

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2022 2021 2022 2021

Operating lease cost $ 24,773 $ 22,743 $ 48,417 $ 47,016

3 unchanged sentences

Supplemental cash flow information related to our operating leases was as follows (in thousands):

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2022 2021 2022 2021

Cash paid for operating lease liabilities $ 19,538 $ 19,951 $ 45,196 $ 46,573

1 unchanged sentence

Other information related to our operating leases was as follows:

April 30, 2022 January 31, 2022

July 31, 2022 January 31, 2022

Weighted average remaining lease term (in years) 5 5

Weighted average discount rate 2.65 % 2.35 %

As of April 30, 2022, maturities of operating lease liabilities were as follows (in thousands):

As of July 31, 2022, maturities of operating lease liabilities were as follows (in thousands):

Fiscal Period:

4 unchanged sentences

Total operating lease liabilities $ 305,018

As of April 30, 2022, we have additional operating leases for office space and data centers that had not yet commenced with total undiscounted lease payments of $ 12 million.

These operating leases will commence in fiscal 2023, with lease terms ranging from five to seven years .

As of July 31, 2022, we have additional operating leases for data centers that had not yet commenced with total undiscounted lease payments of $ 53 million.

These operating leases will commence in fiscal 2023 and fiscal 2024, with lease terms ranging from five to six years .

Commitments and Contingencies

1 unchanged sentence

Our purchase obligations are primarily related to agreements for third-party hosted infrastructure platforms, data center equipment and software, business technology software and support, and sales and marketing activities.

During the three months ended April 30, 2022, there were no material changes outside the ordinary course of business to our non-cancelable purchase obligations disclosed in our Annual Report on Form 10-K for the fiscal year ended January 31, 2022.

During the six months ended July 31, 2022, there were no material changes outside the ordinary course of business to our non-cancelable purchase obligations disclosed in our Annual Report on Form 10-K for the fiscal year ended January 31, 2022.

Legal Matters

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These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular matter.

In our opinion, as of April 30, 2022, there was not at least a reasonable possibility that we had incurred a material loss, or a material loss in excess of a recorded accrual, with respect to such loss contingencies.

In our opinion, as of July 31, 2022, there was not at least a reasonable possibility that we had incurred a material loss, or a material loss in excess of a recorded accrual, with respect to such loss contingencies.

Stockholders’ Equity

As of April 30, 2022, there were 199 million shares of Class A common stock, net of treasury stock, and 55 million shares of Class B common stock outstanding.

As of July 31, 2022, there were 200 million shares of Class A common stock, net of treasury stock, and 55 million shares of Class B common stock outstanding.

The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion.

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Employee Equity Plans

Our 2012 Equity Incentive Plan (“EIP”) serves as the successor to our 2005 Stock Plan (together with the EIP, the “Stock Plans”).

As of April 30, 2022, we had 52 million shares of Class A common stock available for future grants.

We also have a 2012 Employee Stock Purchase Plan (“ESPP”).

On June 22, 2022, our stockholders approved the 2022 Equity Incentive Plan (“2022 Plan”), with a reserve of 30 million shares for issuance.

The 2022 Plan serves as the successor to our 2012 Equity Incentive Plan (“2012 Plan” and, together with the 2022 Plan, “Stock Plans”).

Awards that are granted on or after the effective date of the 2022 Plan will be granted pursuant to and subject to the terms and provisions of the 2022 Plan.

Prior awards granted under the 2012 Plan continue to be subject to the terms and provisions of the 2012 Plan.

As of July 31, 2022, we had 30 million shares of Class A common stock available for future grants.

On June 22, 2022, our stockholders approved the Amended and Restated 2012 Employee Stock Purchase Plan (“ESPP”).

Under the ESPP, eligible employees are granted options to purchase shares at the lower of 85 % of the fair market value of the stock at the time of grant or 85 % of the fair market value at the time of exercise.

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Pursuant to the terms of the ESPP, the share reserve increased by 2 million shares on March 31, 2022.

As of April 30, 2022, 6 million shares of Class A common stock were available for issuance under the ESPP.

As of July 31, 2022, 5 million shares of Class A common stock were available for issuance under the ESPP.

Restricted Stock Units

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RSUs generally vest over four years .

A summary of information related to RSU activity during the three months ended April 30, 2022, is as follows (in thousands, except per share data):

A summary of information related to RSU activity during the six months ended July 31, 2022, is as follows (in thousands, except per share data):

Number of Shares Weighted-Average Grant Date Fair Value

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RSUs forfeited ( 780 ) 203.45

Balance as of April 30, 2022 15,510 214.46

As of April 30, 2022, there was a total of $ 2.6 billion in unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested RSUs, which is expected to be recognized over a weighted-average period of approximately three years .

Balance as of July 31, 2022 15,234 211.30

As of July 31, 2022, there was a total of $ 2.5 billion in unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested RSUs, which is expected to be recognized over a weighted-average period of approximately three years .

Performance-Based Restricted Stock Units

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These performance conditions were met and the PRSUs vested on March 15, 2022.

During the three months ended April 30, 2022, we recognized $ 16 million in compensation cost related to these PRSUs.

We will not continue our company-wide PRSU program in fiscal 2023.

During the six months ended July 31, 2022, we recognized $ 16 million in compensation cost related to these PRSUs.

We did no t grant any company-wide PRSUs in fiscal 2023.

Stock Options

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Stock options issued under the Stock Plans generally are exercisable for periods not to exceed ten years and generally vest over five years .

A summary of information related to stock option activity during the three months ended April 30, 2022, is as follows (in millions, except number of shares which are reflected in thousands and per share data):

A summary of information related to stock option activity during the six months ended July 31, 2022, is as follows (in millions, except number of shares which are reflected in thousands and per share data):

Outstanding Stock Options Weighted-Average Exercise Price Aggregate Intrinsic Value

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Stock options canceled ( 14 ) 30.93

Balance as of April 30, 2022 261 23.53 48

Vested and expected to vest as of April 30, 2022 261 23.62 48

Exercisable as of April 30, 2022 260 23.56 48

As of April 30, 2022, unrecognized compensation cost related to unvested stock options was not material.

Balance as of July 31, 2022 195 26.79 25

Vested and expected to vest as of July 31, 2022 195 26.79 25

Exercisable as of July 31, 2022 195 26.74 25

As of July 31, 2022, unrecognized compensation cost related to unvested stock options was not material.

Unearned Revenue and Performance Obligations

Subscription services revenues of $ 1.1 billion and $ 930 million were recognized during the three months ended April 30, 2022, and 2021, respectively, that were included in the unearned revenue balances as of January 31, 2022, and 2021, respectively.

Subscription services revenues of $ 1.2 billion and $ 970 million were recognized during the three months ended July 31, 2022, and 2021, respectively, that were included in the unearned revenue balances as of April 30, 2022, and 2021, respectively.

Subscription services revenues of $ 2.0 billion and $ 1.7 billion were recognized during the six months ended July 31, 2022, and 2021, respectively, that were included in the unearned revenue balances as of January 31, 2022, and 2021, respectively.

Professional services revenues recognized in the same periods from unearned revenue balances at the beginning of the respective periods were not material.

Transaction Price Allocated to the Remaining Performance Obligations

As of April 30, 2022, approximately $ 12.7 billion of revenues are expected to be recognized from remaining performance obligations for subscription contracts.

As of July 31, 2022, approximately $ 13.5 billion of revenues are expected to be recognized from remaining performance obligations for subscription contracts.

We expect to recognize revenues on approximately $ 8.4 billion of these remaining performance obligations over the next 24 months, with the balance recognized thereafter.

Revenues from remaining performance obligations for professional services contracts as of April 30, 2022, were not material.

Revenues from remaining performance obligations for professional services contracts as of July 31, 2022, were not material.

Other Income (Expense), Net

Other income (expense), net consisted of the following (in thousands):

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2022 2021 2022 2021

Interest income $ 15,214 $ 1,333 $ 19,221 $ 3,336

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For further information, see Note 3, Investments .

We reported an income tax provision of $ 9 million and an income tax benefit of $ 1 million for the three months ended April 30, 2022, and 2021, respectively.

The income tax provision for the three months ended April 30, 2022, was primarily attributable to a taxable gain recognized from an intercompany sale of intellectual property, income tax expenses in profitable foreign jurisdictions, and an increase in state taxes due to capitalized research and development expenditures.

The income tax benefit for the three months ended April 30, 2021, was primarily attributable to excess tax benefit from stock option deductions in foreign jurisdictions.

We reported an income tax provision of $ 6 million and an income tax benefit of $ 5 million for the six months ended July 31, 2022, and 2021, respectively.

The income tax provision for the six months ended July 31, 2022, was primarily attributable to a taxable gain recognized from integrating intellectual property, income tax expenses in profitable foreign jurisdictions, and an increase in state taxes due to capitalized research and development expenditures.

The income tax benefit for the six months ended July 31, 2021, was primarily attributable to excess tax benefit from stock option deductions in foreign jurisdictions and reversal of previously accrued tax liabilities upon favorable tax audit results.

The 2017 Tax Cuts and Jobs Act requires research and development expenditures incurred for the tax year beginning after December 31, 2021, to be capitalized and amortized ratably over five years for domestic research and fifteen years for international research.

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The realization of net deferred tax assets is dependent on our ability to generate sufficient future taxable income during periods prior to the expiration of tax attributes to fully utilize these assets.

As of April 30, 2022, we continue to maintain a full valuation allowance on our deferred tax assets except in certain jurisdictions.

Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period, net of treasury stock.

Diluted net loss per share is computed by giving effect to all potentially dilutive shares of common stock, including our convertible senior notes, outstanding warrants related to the issuance of the convertible senior notes, and outstanding share-based awards consisting primarily of unvested RSUs and ESPP obligations.

The net loss per share is allocated based on the contractual participation rights of the Class A common shares and Class B common shares as if the loss for the period had been distributed.

As the liquidation and dividend rights are identical, the net loss is allocated on a proportionate basis.

Basic and diluted net loss per share was the same for each period presented, as the inclusion of all potential common shares outstanding would have been anti-dilutive.

The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data):

Three Months Ended April 30,

Class A Class B Class A Class B

Net loss per share, basic and diluted:

Net loss $ ( 79,738 ) $ ( 22,435 ) $ ( 35,385 ) $ ( 11,137 )

Weighted-average shares outstanding 196,466 55,277 185,397 58,342

Net loss per share, basic and diluted $ ( 0.41 ) $ ( 0.41 ) $ ( 0.19 ) $ ( 0.19 )

The computation of diluted net loss per share does not include the effect of the following potentially outstanding weighted-average shares of common stock.

The effects of these potentially outstanding shares were not included in the calculation of diluted net loss per share because the effect would have been anti-dilutive (in thousands):

Three Months Ended April 30,

As of July 31, 2022, we continue to maintain a full valuation allowance on our deferred tax assets in certain jurisdictions.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period, net of treasury stock.

Diluted net income (loss) per share is computed by giving effect to all potentially dilutive shares of common stock, including our convertible senior notes, outstanding warrants related to the issuance of the convertible senior notes, and outstanding share-based awards consisting primarily of unvested RSUs and ESPP obligations.

The net income (loss) per share is allocated based on the contractual participation rights of the Class A common shares and Class B common shares as if the income (loss) for the period had been distributed.

As the liquidation and dividend rights are identical, the net income (loss) is allocated on a proportionate basis.

The computation of the diluted net income (loss) per share of Class A common stock assumes the conversion of our Class B common stock to Class A common stock, while the diluted net income (loss) per share of Class B common stock does not assume the conversion of those shares.

Basic and diluted net loss per share was the same for the three and six months ended July 31, 2022, as the inclusion of all potential common shares outstanding would have been anti-dilutive.

The following table presents the calculation of basic and diluted net income (loss) per share (in thousands, except per share data):

Three Months Ended July 31, Six Months Ended July 31,

2022 2021 2022 2021

Class A Class B Class A Class B Class A Class B Class A Class B

Net income (loss) per share, basic:

Net income (loss) $ ( 50,282 ) $ ( 13,876 ) $ 80,955 $ 24,781 $ ( 130,088 ) $ ( 36,243 ) $ 45,188 $ 14,026

Weighted-average shares outstanding, basic 199,342 55,013 189,069 57,874 197,928 55,143 187,204 58,104

Net income (loss) per share, basic $ ( 0.25 ) $ ( 0.25 ) $ 0.43 $ 0.43 $ ( 0.66 ) $ ( 0.66 ) $ 0.24 $ 0.24

Net income (loss) per share, diluted:

Net income (loss) $ ( 50,282 ) $ ( 13,876 ) $ 80,955 $ 24,781 $ ( 130,088 ) $ ( 36,243 ) $ 45,188 $ 14,026

Interest expense on convertible senior notes, net of tax — — 1,229 376 — — — —

Reallocation of net income and interest expense as a result of conversion of Class B to Class A common stock — — 25,157 — — — 14,026 —

Reallocation of net income and interest expense to Class B common stock — — — ( 1,265 ) — — — ( 421 )

Net income (loss) for diluted calculation ( 50,282 ) ( 13,876 ) 107,341 23,892 ( 130,088 ) ( 36,243 ) 59,214 13,605

Weighted-average shares outstanding, basic 199,342 55,013 189,069 57,874 197,928 55,143 187,204 58,104

Conversion of Class B to Class A common stock — — 57,874 — — — 58,104 —

Dilutive effect of share-based awards — — 4,606 — — — 6,611 —

Dilutive effect of convertible senior notes — — 7,817 — — — — —

Dilutive effect of warrants related to the issuance of convertible senior notes — — 650 — — — 981 —

Weighted-average shares outstanding, diluted 199,342 55,013 260,016 57,874 197,928 55,143 252,900 58,104

Net income (loss) per share, diluted $ ( 0.25 ) $ ( 0.25 ) $ 0.41 $ 0.41 $ ( 0.66 ) $ ( 0.66 ) $ 0.23 $ 0.23

The computation of diluted net income (loss) per share does not include the effect of the following potentially outstanding weighted-average shares of common stock.

The effects of these potentially outstanding shares were not included in the calculation of diluted net income (loss) per share because the effect would have been anti-dilutive (in thousands):

Three Months Ended July 31, Six Months Ended July 31,

2022 2021 2022 2021

Shares related to outstanding share-based awards 16,599 4,400 15,127 2,626

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The following table sets forth revenues by geographic area (in thousands):

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2022 2021 2022 2021

United States $ 1,152,362 $ 942,561 $ 2,227,407 $ 1,826,002

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Aggregate Property and equipment, net and Operating lease right-of-use assets by geographic area was as follows (in thousands):

April 30, 2022 January 31, 2022

July 31, 2022 January 31, 2022

United States $ 1,281,075 $ 1,174,371

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We have based these forward-looking statements largely on our current expectations, beliefs, and projections about future events, conditions, and trends that we believe may affect our financial condition, operating results, business strategy, short-term and long-term business operations and objectives, and financial needs.

These forward-looking statements are subject to a number of risks, uncertainties, assumptions, and changes in circumstances that are difficult to predict and many of which are outside of our control, including those arising from the impact of the coronavirus pandemic (“COVID-19 pandemic”) and Russia-Ukraine conflict, as well as those described in the “ Risk Factors ” section, which we encourage you to read carefully.

These forward-looking statements are subject to a number of risks, uncertainties, assumptions, and changes in circumstances that are difficult to predict and many of which are outside of our control, including those arising from the impact of the coronavirus ( “ COVID-19 ” ) pandemic and recent macroeconomic events, as well as those described in the “ Risk Factors ” section, which we encourage you to read carefully.

Moreover, we operate in a very competitive and rapidly changing environment.

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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-Q

Item 1. Financial Statements