What changed in this filing

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Item 7. Management’s Discussion and Analysis

2022-03-18 compared with 2021-03-16 · 74 added, 69 removed, 324 unchanged (31% of the section changed)

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COVID-19 Update

In March 2020, the World Health Organization ("WHO") declared the coronavirus disease ("COVID-19") as a pandemic.

The COVID-19 pandemic has disrupted business operations for us and our customers, suppliers, and other parties with whom we do business and such disruptions are expected to continue for an indefinite period of time.

In an effort to control the spread of COVID-19, governments and municipalities around the world instituted restrictive measures, including orders to shelter-in-place, travel restrictions, and mandated business closures.

As a result of the COVID-19 pandemic, we temporarily closed our offices requiring all of our employees globally to work remotely.

We restricted non-essential business travel, and canceled in-person marketing events, including our annual industry and customer event, ONWARD20.

We continue to monitor regional developments relating to the COVID-19 pandemic to inform decisions on phased office re-openings and lifting of travel restrictions.

The COVID-19 pandemic has significantly disrupted business operations for us and our customers, as well as suppliers, and other parties with whom we do business.

Such disruptions are expected to continue for an indefinite period of time.

We have adopted several measures in response to the COVID-19 pandemic and continue to monitor regional developments to inform our operational decisions.

Our offices have been open on a voluntary basis in accordance with guidance provided by government agencies, although currently the majority of our employees are still working remotely.

While we continue to hold virtual events, we have also resumed in-person marketing events.

The uncertain duration of these measures have had and may continue to have negative effects on our sales efforts and revenue growth rates.

Despite the economic challenges brought on by the COVID-19 pandemic, we are committed to our business, the strength of our platform, and our ability to continue to execute on our strategy.

During the fiscal year ended January 31, 2021, some business highlights included our collaborations with the WHO and other government agencies to launch comprehensive information hubs powered by Yext Answers, expanding Yext Answers into additional languages, including French, German, Italian, Spanish, and Japanese, and launching Hitchhikers, a comprehensive training program and community for professionals to develop the skills to build custom search solutions for their business using our platform.

We may continue to see some existing and potential customers, in particular customers in industries highly impacted by the pandemic such as retail and food services as well as certain geographies such as Europe, reduce, suspend or delay technology spending, request to renegotiate contracts to obtain concessions such as, extended billing and payment terms;

We continue to be committed to our business, the strength of our platform, our ability to continue to execute on our strategy, and our efforts to support our customers.

We may continue to see some existing and potential customers, in particular customers in industries that have been highly impacted by the pandemic such as retail and food services as well as certain geographies such as Europe, reduce, suspend or delay technology spending, request to renegotiate contracts to obtain concessions such as, extended billing and payment terms;

shorten the duration of contracts;

or elect not to renew their subscriptions which could materially adversely impact our business, financial condition and results of operations in future periods.

The ultimate extent of the impact of the pandemic will depend on future developments, which continue to be highly uncertain and cannot be predicted, including the severity and duration of the COVID-19 pandemic and the actions taken to contain and address its impact, among others.

The ultimate extent of the impact of the pandemic will depend on future developments, which continue to be highly uncertain and cannot be predicted, including the severity and duration of the COVID-19 pandemic and its variants, vaccination rates and efficacy and the actions taken to contain and address the impact of the pandemic, among others.

However, because we generally recognize revenue from our customer contracts ratably over the term of the contract, changes in our contracting activity in the near term may not be fully reflected in our results of operations and overall financial performance until future periods.

See Part I Item 1A “Risk Factors” for further discussion of the possible impact of the COVID-19 pandemic on our business.

Recent Developments

On March 7, 2022, Howard Lerman notified our Board of Directors of his intention to step down from his position as Chief Executive Officer of the Company effective March 25, 2022.

Michael Walrath, the Chairman of the Board of Directors, will succeed Mr.

Lerman as Chief Executive Officer, principal executive officer and principal operating officer of the Company, effective March 25, 2022.

On March 7, 2022, Steven Cakebread notified our Board of Directors of his intention to step down from his position as Chief Financial Officer of the Company effective March 25, 2022.

Darryl Bond, the Company’s Executive Vice President and Chief

Accounting Officer, will succeed Mr.

Cakebread as Chief Financial Officer and principal financial officer of the Company, effective March 25, 2022.

Bond will continue to serve as the Company’s Chief Accounting Officer.

On March 7, 2022, the Board also appointed Marc Ferrentino, the Company’s Chief Strategy Officer, as President and Chief Operating Officer of the Company.

In connection with the changes in our senior management, our Board of Directors and new management anticipate certain additional changes to our strategy and personnel that have not yet been determined.

Components of Results of Operations

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In addition, cost of revenue includes depreciation expense, including with respect to certain capitalized software development costs incurred in connection with additional functionality to our platform.

Cost of revenue also includes operating and short-term lease expenses associated with our office spaces, which are allocated based on employee headcount.

Cost of revenue also includes lease expenses associated with our office spaces, which are allocated based on employee headcount.

In addition, cost of revenue includes software expense, which relates to licenses, professional services, and other costs associated with software for use in the operations of our business, which is also allocated based on employee headcount.

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Personnel-related costs mainly consist of salaries and wages and costs of obtaining revenue contracts.

Sales and marketing expenses also include operating and short-term lease expenses associated with our office spaces, as well as software expense, each of which are allocated based on employee headcount.

Sales and marketing expenses also include lease expenses associated with our office spaces, as well as software expense, each of which are allocated based on employee headcount.

In addition, sales and marketing expenses include costs related to advertising and conferences and brand awareness events.

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Capitalized software development costs related to additional functionality to our platform are excluded from research and development expenses as they are capitalized as a component of property and equipment, net and depreciated to cost of revenue over the term of their useful life.

Research and development expenses also include operating and short-term lease expenses associated with our office spaces, as well as software expense, each of which are allocated based on employee headcount.

Research and development expenses also include lease expenses associated with our office spaces, as well as software expense, each of which are allocated based on employee headcount.

General and administrative expenses .

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Personnel-related costs mainly consist of salaries and wages.

General and administrative expenses also include operating and short-term lease expenses associated with our office spaces, as well as software expense, each of which are allocated based on employee headcount, and other professional related costs.

General and administrative expenses also include lease expenses associated with our office spaces, as well as software expense, each of which are allocated based on employee headcount, and other professional related costs.

Results of Operations

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Our revenue is predominately derived from our enterprise, mid-size, and third-party reseller customers.

Revenue from our small business customers represented less than 5% of total revenue for each period.

Revenue recognized from subscriptions and associated support to our platform was 93% and 95%, while revenue recognized from professional services was 7% and 5%, for the fiscal years ended January 31, 2021 and 2020, respectively.

Revenue recognized from subscriptions and associated support to our platform was 92% and revenue recognized from professional services was 8%, for the fiscal year ended January 31, 2022, compared to 93% and 7%, respectively, for the fiscal year ended January 31, 2021.

Cost of revenue was $98.3 million for the fiscal year ended January 31, 2022, compared to $86.4 million for the fiscal year ended January 31, 2021, an increase of $11.9 million, or 14%.

This overall increase primarily reflects the increases in costs associated with our data centers of $3.2 million, personnel-related costs of $1.6 million, stock-based compensation expense of $1.6 million, and software expense of $1.4 million.

These increases were partially offset by a decrease in Knowledge Network application provider costs of $1.0 million as a result of more favorable contract terms with certain providers.

This increase was primarily driven by employee-related costs, as personnel-related costs increased $8.8 million and stock-based compensation expense increased $1.4 million, reflecting higher headcount and employee stock grants.

In addition, depreciation expense increased $2.2 million and costs associated with our data centers increased $1.5 million.

These increases were partially offset by Knowledge Network application provider fees which decreased $5.1 million due to favorable contract renewal terms with certain providers in the prior year.

Gross margin was 74.8% for the fiscal year ended January 31, 2022, compared to 75.6% for the fiscal year ended January 31, 2021 as reflected in the discussion above.

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Sales and marketing expense was $230.5 million for the fiscal year ended January 31, 2022, compared to $228.4 million for the fiscal year ended January 31, 2021, an increase of $2.1 million, or 1%.

The increase was primarily due to a $23.6 million increase in personnel-related costs, reflecting higher headcount, which mainly consisted of salaries and wages and costs to obtain revenue contracts, a $2.8 million increase in software expense, a $1.4 million increase in operating and short-term lease expenses, a $1.3 million increase in depreciation expense, and a $1.2 million increase in stock-based compensation expense.

These increases were partially offset by reductions in light of the COVID-19 pandemic and leveraging costs, including a $10.8 million decrease in employee travel and a $7.6 million decrease in conferences and events.

The increase reflected a $5.5 million increase in personnel-

related costs, inclusive of a $3.5 million increase in costs to obtain revenue contracts.

In addition, there was a $2.3 million increase in depreciation expense and a $0.9 million increase in advertising costs associated with certain brand media campaigns.

These increases were largely offset by a $6.1 million decrease in stock-based compensation expense, which is lower in the current period reflecting the impact of certain departures of senior management in the prior periods.

Research and development expense was $68.4 million for the fiscal year ended January 31, 2022, compared to $58.1 million for the fiscal year ended January 31, 2021, an increase of $10.2 million, or 18%.

The increase was primarily due to a $3.9 million increase in stock-based compensation expense, a $3.0 million increase in personnel-related costs, reflecting higher headcount, which mainly consisted of salaries and wages, and a $0.8 million increase in software expense.

General and administrative expense was $76.0 million for the fiscal year ended January 31, 2021, relatively consistent compared to $77.2 million for the fiscal year ended January 31, 2020, as decreases of $2.1 million in stock-based compensation expense and $2.0 million in employee travel, were generally offset by a $1.3 million increase in the allowance for doubtful accounts and a $0.8 million increase in software expense.

The increase was primarily driven by a $3.6 million increase in stock-based compensation expense due to employee stock grants, a $3.6 million increase in personnel-related costs, reflecting higher headcount, which mainly consisted of salaries and wages, as well as a $0.8 million increase in depreciation expense.

General and administrative expense was $83.4 million for the fiscal year ended January 31, 2022, compared to $76.0 million for the fiscal year ended January 31, 2021, an increase of $7.4 million or 10%.

The increase was primarily driven by a $2.6 million increase in personnel-related costs, a $2.3 million increase in stock-based compensation due to employee stock grants, as well as a $0.9 million increase in depreciation expense.

This was partially offset by a $1.3 million decrease in bad debt expense as the prior year period had higher expense to reflect the initial impacts of the COVID-19 pandemic.

Fiscal Year Ended January 31, 2021 Compared to Fiscal Year Ended January 31, 2020

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75.6 % 74.2 %

Total revenue was $298.8 million for the fiscal year ended January 31, 2020, compared to $228.3 million for the fiscal year ended January 31, 2019, an increase of $70.5 million or 31%.

This increase was primarily due to new customers and expanded subscriptions sold to existing customers.

Revenue from our enterprise and mid-size customers, which include third-party reseller customers, grew 34% from approximately $213 million to $286 million, and excludes revenue from small business customers, which by their nature have inherently high turnover.

Total revenue was $354.7 million for the fiscal year ended January 31, 2021, compared to $298.8 million for the fiscal year ended January 31, 2020, an increase of $55.8 million or 19%, primarily driven by new customer subscriptions to our platform, and to a lesser extent included expanded subscriptions for existing customers.

Our revenue is predominately derived from our enterprise, mid-size, and third-party reseller customers.

Revenue from our small business customers represented less than 5% of total revenue for each period.

Cost of revenue was $86.4 million for the fiscal year ended January 31, 2021, compared to $77.0 million for the fiscal year ended January 31, 2020, an increase of $9.4 million, or 12%.

This increase was primarily due to employee-related costs reflecting higher headcount, including a $9.0 million increase in personnel-related costs, which mainly consisted of salaries and wages, and a $1.2 million increase stock-based compensation expense.

In addition, there was a $2.7 million increase in operating and short-term lease expenses, mainly as a result of our new operating lease arrangements for office space, including in New York, NY, as well as a $2.1 million increase in costs associated with our data centers, and a $1.2 million increase in depreciation expense.

Gross margin was 74.2% for the fiscal year ended January 31, 2020, compared to 74.9% for the fiscal year ended January 31, 2019, a decrease of 70 basis points.

These increases were partially offset by a decrease in Knowledge Network application provider costs of $1.0 million as a result of more favorable contract terms with certain providers.

Gross margin was 75.6% for the fiscal year ended January 31, 2021, compared to 74.2% for the fiscal year ended January 31, 2020 as reflected in the discussion above.

Operating Expenses

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Sales and marketing expense was $228.4 million for the fiscal year ended January 31, 2021, compared to $218.1 million for the fiscal year ended January 31, 2020, an increase of $10.3 million, or 5%.

The increase was primarily due to employee-related costs reflecting higher headcount, including a $30.7 million increase in personnel-related costs, which mainly consisted of salaries and wages and costs to obtain revenue contracts, and a $8.9 million increase in stock-based compensation expense.

In addition, there was a $5.7 million increase in operating and short-term lease expenses, mainly as a result of our new operating lease arrangements for office space, including in New York, NY.

Research and development expense was $58.1 million for the fiscal year ended January 31, 2021, compared to $49.4 million for the fiscal year ended January 31, 2020, an increase of $8.7 million, or 18%.

The increase was primarily due to employee-related costs reflecting higher headcount, including a $5.8 million increase in personnel-related costs, which mainly consisted of salaries and wages, and a $4.7 million increase in stock-based compensation expense.

In addition, there was a $1.5 million increase in operating and short-term lease expenses, mainly as a result of our new operating lease arrangements for office space, including in New York, NY.

General and administrative expense was $77.2 million for the fiscal year ended January 31, 2020, compared to $51.6 million for the fiscal year ended January 31, 2019, an increase of $25.7 million, or 50%.

The increase was primarily due to employee-related costs reflecting higher headcount, including a $9.5 million increase in personnel-related costs, which mainly consisted of salaries and wages, and a $8.7 million increase in stock-based compensation expense, which included a $3.6 million one-time RSU cancellation-related expense.

In addition, there was a $1.9 million increase in operating and short-term lease expenses, mainly as a result of our new operating lease arrangements for office space, including in New York, NY.

The increase was primarily due to a $3.9 million increase

in stock-based compensation expense, a $3.0 million increase in personnel-related costs, reflecting higher headcount, which mainly consisted of salaries and wages, and a $0.8 million increase in software expense.

Net loss was $93.3 million, $94.7 million, and $121.5 million for the fiscal years ended January 31, 2022, 2021 and 2020.

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Our definition may differ from the definitions used by other companies and therefore comparability may be limited.

addition, other companies may not publish this or similar metrics.

In addition, other companies may not publish this or similar metrics.

Thus, our non-GAAP net loss should be considered in addition to, not as a substitute for, nor superior to or in isolation from, measures prepared in accordance with GAAP.

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(in thousands) 2022 2021 2020

GAAP net loss $ (94,692) $ (121,544) $ (74,837)

Net loss $ (93,259) $ (94,692) $ (121,544)

Stock-based compensation expense 73,480 72,294 67,770

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Our dollar-based net retention rate was 98%, 102%, and 106% for the fiscal years ended January 31, 2022, 2021 and 2020, respectively.

The decline in the net retention rate in the fiscal year ended January 31, 2021 reflects challenges in expanding our relationships with existing customers and to a lesser extent customer retention.

We believe our ability to retain and expand relationships with existing customers, and consequently improve our net retention rate, has been and may continue to be negatively impacted by the effects of COVID-19 on our customers.

The general decline in the net retention rate reflects continued challenges in our ability to retain and expand relationships with existing customers, which has been and may continue to be negatively impacted by the effects of COVID-19 on our customers.

See "—Overview — COVID-19 Update" and "Risk Factors" for the impact of COVID-19 on our business.

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However, the nature of our subscription agreements generally results in revenue recognition ratably over the contract term, thereby mitigating the effect of potential seasonality in our revenue.

Our quarterly revenue has increased sequentially for all periods presented.

Cost of revenue has generally increased over the periods presented, and in recent quarters has stabilized.

However, our data center costs have increased and we expect that to continue as we expand our capacity.

Our employee-related costs have generally increased, as have our operating and short-term lease expenses as we entered into new arrangements for office space including our transition to our new corporate headquarters in New York, NY.

We expect our Knowledge Network application provider costs to generally stabilize, although costs may increase at times as we enter new international markets, or introduce new products and features.

Gross margin has stabilized in recent periods, and may decrease at times as we enter new international markets, or introduce new products and features.

Operating expenses have fluctuated as a result of increased employee-related costs, increased operating and short-term lease expenses as we entered into new arrangements for office space including our transition to our new corporate headquarters in New York, NY, and in more recent quarters increased costs associated with software for use in the operations of our business.

Employee travel and conferences and events have decreased in recent quarters in light of the COVID-19 pandemic.

Operating expenses as a percentage of revenue have decreased in recent quarters, reflecting impacts of the COVID-19 pandemic, as well as strategically leveraging costs.

Our quarterly results may fluctuate due to various factors affecting our performance including impacts of the COVID-19 pandemic.

The ultimate extent of the impact of the pandemic on our business, financial condition and results of operations will depend on future developments, which continue to be highly uncertain and cannot be predicted, including the severity and duration of the COVID-19 pandemic and the actions taken to contain and address its impact, among others.

However, because we generally recognize revenue from our customer contracts ratably over the term of the contract, changes in our contracting activity in the near term may not

be apparent as a change to our reported revenue until future periods.

Our quarterly revenue has generally increased over the periods presented.

Cost of revenue has moved generally proportional as a percentage of revenue.

Personnel-related costs may generally continue to increase, while Knowledge Network application provider costs have become more stable and may continue to decline as a percentage of revenue, although costs may increase at times as we enter new international markets, or introduce new products and features.

Gross margin has generally stabilized in recent periods, and may decrease at times as we enter new international markets, or introduce new products and features.

Operating expenses as a percentage of revenue have generally decreased in recent quarters, reflecting COVID-19 impacts and strategically leveraging costs.

Operating expenses may increase as a result of employee-related costs, inclusive of costs to obtain revenue contracts, as well as stock-based compensation.

Our quarterly results may fluctuate due to various factors affecting our performance including impacts of the COVID-19 pandemic and its variants.

The ultimate extent of the impact of the pandemic on our business, financial condition and results of operations will depend on future developments, which continue to be highly uncertain and cannot be predicted, including the severity and duration of the COVID-19 pandemic and its variants and the actions taken to contain and address its impact, among others.

However, because we generally recognize revenue from our customer contracts ratably over the term of the contract, changes in our contracting activity in the near term may not be apparent as a change to our reported revenue until future periods.

Most of our expenses are recorded as period costs and thus factors affecting our cost structure may be reflected in our financial results sooner than changes to our revenue.

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Credit Arrangements

On March 11, 2020, we entered into a new credit agreement with Silicon Valley Bank (the “Credit Agreement”).

On March 11, 2020, we entered into a credit agreement with Silicon Valley Bank (the “Credit Agreement”).

No significant debt issuance costs were incurred in association with the Credit Agreement.

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Loans based on the base rate shall bear interest at a rate between the base rate minus 0.50% and the base rate plus 0.00%, depending on our average daily usage of the revolving loan facility.

See Part I Item 1A “Risk Factors - Our new credit facility contains restrictive covenants that may limit our operating flexibility" for discussion of LIBOR being phased out.

See Part I Item 1A “Risk Factors - Our credit facility contains restrictive covenants that may limit our operating flexibility" for discussion of LIBOR being phased out.

The obligations under the Credit Agreement are secured by a lien on substantially all of our tangible and intangible property and by a pledge of all of our equity interests of material direct and indirect domestic subsidiaries and 66% of each class of capital stock of any material first-tier foreign subsidiaries, subject to limited exceptions.

The Credit Agreement contains customary affirmative and negative covenants and restrictions, as well as financial covenants that require us to maintain the year-over-year growth rate of its ordinary course recurring revenue for a trailing four fiscal quarter period above specified rates when certain liquidity thresholds are not met and to maintain a consolidated quick ratio of at least 1.50 to 1.00 tested on a monthly basis.

As of January 31, 2020, we had back-to-back standby letters of credit for $12.1 million, which were fully secured by a $12.1 million cash deposit.

The $12.1 million was classified as restricted cash on our consolidated balance sheet.

In connection with the Credit Agreement, the $12.1 million cash deposit was released and is no longer classified as restricted cash on our consolidated balance sheet as of January 31, 2021.

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

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Net cash provided by operating activities of $21.8 million for the fiscal year ended January 31, 2022 was primarily due to positive adjustments in reconciling our net loss of $93.3 million to net cash provided by operating activities.

These adjustments included stock-based compensation expense of $73.5 million, depreciation and amortization expense of $16.8 million, amortization of operating lease right-of-use assets of $9.3 million, and bad debt expense of $1.3 million.

In addition, there were changes in unearned revenue of $33.3 million and changes in prepaid expenses and other current assets of $4.2 million.

These increases were partially offset by changes in costs to obtain revenue contracts of $9.1 million, operating lease liabilities of $6.6 million, and accounts receivable of $6.1 million, mainly due to timing of billing and cash collections during the period.

Net cash provided by operating activities of $1.2 million for the fiscal year ended January 31, 2021 was primarily due to positive adjustments in reconciling our net loss of $94.7 million to net cash provided by operating activities.

These adjustments included stock-based compensation expense of $72.3 million, amortization of operating lease right-of-use assets of $12.2 million, depreciation and amortization expense of $10.6 million, and bad debt expense of $2.5 million, reflecting an increase in the allowance for doubtful accounts in light of impacts from the COVID-19 pandemic.

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In addition, net cash used in operating activities was also partially offset by changes in unearned revenue of $42.3 million and accounts payable, accrued expenses and other liabilities of $8.3 million.

Net cash provided by operating activities of $5.2 million for the fiscal year ended January 31, 2019 was primarily due to a change in unearned revenue of $47.0 million and non-cash charges related to stock-based compensation expense of $44.2 million, as well as a change in accounts payable, accrued expenses and other current liabilities of $17.6 million and non-cash charges related to depreciation and amortization expense of $6.8 million.

These increases were partially offset by the net loss of $74.8 million, as well as changes in costs to obtain revenue contracts of $16.8 million, accounts receivable of $11.6 million, mainly due to timing of billing and cash collections during the period, and prepaid expenses and other current assets of $6.7 million.

Investing Activities

Net cash used in investing activities of $13.4 million for the fiscal year ended January 31, 2022 reflected capital expenditures primarily associated with our new corporate headquarters in New York, NY.

Net cash used in investing activities of $65.1 million for the fiscal year ended January 31, 2021 reflected capital expenditures primarily associated with our new corporate headquarters in New York, NY, and our office spaces in Rosslyn, VA and Tokyo, Japan, among others.

Net cash provided by investing activities of $39.3 million for the fiscal year ended January 31, 2020 was due to maturities of marketable securities of $51.2 million, partially offset by capital expenditures of $11.9 million.

Net cash provided by investing activities of $28.1 million for the fiscal year ended January 31, 2019 was due to maturities of marketable securities of $86.3 million, partially offset by purchases of marketable securities of $52.9 million, and capital expenditures of $5.3 million.

Financing Activities

Net cash provided by financing activities of $24.6 million for the fiscal year ended January 31, 2022 was primarily related to proceeds from exercise of stock options of $19.2 million, and net proceeds from employee stock purchase plan withholdings of $5.7 million, partially offset by payments of deferred financing costs of $0.3 million.

Net cash provided by financing activities of $22.5 million for the fiscal year ended January 31, 2021 was primarily related to proceeds from exercise of stock options of $16.5 million, and net proceeds from employee stock purchase plan withholdings of $7.0 million, partially offset by payments of deferred financing costs of $0.9 million.

Net cash provided by financing activities of $168.4 million for the fiscal year ended January 31, 2020 was primarily related to proceeds from our common stock offering of $147.0 million, net of underwriting discounts and commissions, and to a lesser extent proceeds from exercises of stock options of $14.9 million, and $7.3 million of net proceeds from employee stock purchase plan withholdings.

Net cash provided by financing activities of $24.4 million for the fiscal year ended January 31, 2019 was primarily related to proceeds from exercises of stock options of $18.9 million, and $5.7 million of net proceeds from employee stock purchase plan withholdings.

Contractual Obligations

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See Note 13 "Commitments and Contingencies" to our consolidated financial statements for further discussion on contractual obligations.

Off-Balance Sheet Arrangements

We do not engage in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, as part of our ongoing business.

Accordingly, our operating results, financial condition and cash flows are not subject to off-balance sheet risks.

Critical Accounting Policies and Estimates

Our management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with GAAP.

Our management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").

The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods.

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Revenue is generally recognized ratably over the contract term beginning on the commencement date of each contract, which is the date our platform is made available to our customers.

Amounts that have been invoiced for non-cancelable contracts are recorded in accounts receivable and unearned revenue or revenue.

See to Note 2 "Summary of Significant Accounting Policies" and Note 3 "Revenue" to our consolidated financial statements for further discussion on our revenue recognition.

Amounts that have been invoiced for non-cancelable contracts are recorded

in accounts receivable and unearned revenue or revenue.

See Note 2 "Summary of Significant Accounting Policies" and Note 3 "Revenue" to our consolidated financial statements for further discussion on our revenue recognition.

Costs Capitalized to Obtain Revenue Contracts

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We reduce deferred tax assets, if necessary, by a valuation allowance if it is more likely than not that we will not realize some or all of our deferred tax assets.

In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.

In making such a determination, we consider all available positive and negative evidence, including results of operations, future reversals of existing taxable temporary differences, projected future taxable income, and tax-planning strategies.

We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position.

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The incremental borrowing rate is determined based on what we would estimate to pay for a collateralized loan over a similar term and economic environment for each lease arrangement.

As of January 31, 2021, a hypothetical 100 basis point change in our estimated incremental borrowing rates for our respective leases would have a less than 10% impact to the aggregated total operating lease liability on the consolidated balance sheet.

As of January 31, 2022, a hypothetical 100 basis point change in our estimated incremental

borrowing rates for our respective leases would have a less than 10% impact to the aggregated total operating lease liability on the consolidated balance sheet.

With respect to our operating lease arrangements, we account for lease components, and non-lease components that are fixed, as a single lease component in the measurement of operating lease liabilities and right-of-us assets.

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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