What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-03-13 compared with 2023-03-17 · 74 added, 153 removed, 282 unchanged (45% of the section changed)

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Factors that could cause or contribute to these differences include, but are not limited to, those discussed in the section titled "Risk Factors" under Part I, Item 1A in this Annual Report on Form 10-K.

Yext organizes a business's facts so it can deliver relevant, actionable answers to consumer questions throughout the digital ecosystem.

Our platform lets businesses structure the facts about their brands in a database called the Knowledge Graph.

Our platform is built to leverage the structured data stored in the Knowledge Graph to deliver a modern search experience on a business's or organization's own website, as well as across over 200 service and application providers, which we refer to as our Publisher Network and includes Amazon Alexa, Apple Maps, Bing, Cortana, Facebook, Google, Google Assistant, Google Maps, Siri and Yelp.

Our platform powers all of our key features, including Listings, Pages, and Search, along with its other features and capabilities.

Yext empowers businesses to manage their knowledge so they can deliver relevant, actionable answers to consumer questions as well as consistent, accurate and engaging experiences to customers throughout the digital ecosystem.

Our digital presence platform (also known as the Answers Platform) lets businesses structure and organize information about their brands in our knowledge graph, Yext Content (also known as the Knowledge Graph), which is then delivered across first-and third-party websites and applications through our network of over 200 service and application providers, which we refer to as our Publisher Network.

These publishers include, among others, Amazon Alexa, Apple Maps, Bing, Cortana, Facebook, Google, Google Assistant, Google Maps, Siri and Yelp.

Our platform powers all of our key products, including Listings, Reviews, Pages and Search, each with robust analytics capabilities for businesses to easily track performance across customer experiences.

It is our mission to empower businesses to easily manage every aspect of their digital presence to make meaningful connections with their customers across every digital touchpoint.

We sell our platform throughout the world to customers of all sizes, including our enterprise, mid-size, and third-party reseller customers.

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Macroeconomic Conditions

Our results of operations may be influenced by general macroeconomic conditions, including, but not limited to, the impact of foreign currency fluctuations, interest rates, inflation, recession risks and the COVID-19 pandemic.

Our results of operations have been and may continue to be influenced by general macroeconomic conditions, including, but not limited to, the impact of foreign currency fluctuations, interest rates, inflation, recession risks and public health emergencies, such as the COVID-19 pandemic.

Fluctuations in foreign exchange rates and rising inflation have had, and may continue to have an adverse impact on our financial condition and operating results in future periods.

The extent to which such disruptions will continue in future periods remains uncertain.

The uncertain duration of these measures has had and may continue to have an adverse impact on our financial condition and operating results in future periods.

The extent to which such disruptions will continue in future periods remains uncertain, which has had and may continue to have an adverse impact on our financial condition and operating results in future periods.

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.

Near-term revenues are relatively predictable as a result of our subscription-based business model.

However, if the macroeconomic uncertainty increases, we may continue to experience a negative impact on existing and potential customers that may reduce, suspend or delay technology spending, request to renegotiate contracts to obtain concessions such as, extended billing and payment terms;

However, if the macroeconomic uncertainty continues or further increases, we may continue to experience a negative impact on existing and potential customers that may 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;

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As such, customer count excludes third-party reseller customers and small business customers as well as customers only receiving free trials.

As of January 31, 2023, customer count increased 7% year-over-year to over 2,960.

From time to time, some customers previously characterized as small business customers may

transition to mid-size customers, and customer count includes these changes resulting from any recharacterization.

As of January 31, 2024, customer count was approximately 3,000.

Annual Recurring Revenue ("ARR")

Annual recurring revenue, or ARR, for Direct customers is defined as the annualized recurring amount of all contracts in our enterprise, mid-size and small business customer base as of the last day of the reporting period.

The recurring amount of a contract is determined based upon the terms of a contract and is calculated by dividing the amount of a contract by the term of the contract and

then annualizing such amount.

The recurring amount of a contract is determined based upon the terms of a contract and is calculated by dividing the amount of a contract by the term of the contract and then annualizing such amount.

The calculation assumes no subsequent changes to the existing subscription.

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It should be considered in addition to, not as a substitute for, nor superior to or in isolation from, these measures and other measures prepared in accordance with GAAP.

We believe ARR-based metrics provides insight into the performance of our recurring revenue business model while mitigating for fluctuations in billing and contract terms.

We believe ARR-based metrics provides insight into the performance of our recurring revenue business model while mitigating fluctuations in billing and contract terms.

January 31, Variance

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Direct Customers (1)

$ 315,594 $ 327,017 $ (11,423) (3) %

Third-Party Reseller Customers 71,784 73,343 (1,559) (2) %

Total Annual Recurring Revenue $ 387,378 $ 400,360 $ (12,982) (3) %

(1) ARR as of January 31, 2024 includes a decrease of $10.8 million related to the attrition of a large customer, which occurred during the three months ended January 31, 2024.

Dollar-Based Net Retention Rate

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The following table provides our dollar-based net retention rate for the fiscal years ended January 31, 2024 and 2023:

2023 2022 2021

Dollar-Based Net Retention Rate (ARR)

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Total Customers 92% 96%

Historically, we presented dollar-based net retention rate on a revenue basis whereby we first established a cohort of enterprise, mid-size, and third-party reseller customers, who had active contracts at the end of each month of the same period in the prior year.

We divided the single month revenue from each of those customer cohorts for the applicable month in the current year by the single month revenue of that same customer cohort for the corresponding month in the prior year.

We then determined the dollar-based weighted average of each of the monthly rates, which represented the dollar-based net retention rate for the period.

Under this prior methodology, our dollar-based net retention rate was 95%, 98%, and 102% for the fiscal years ended January 31, 2023, 2022 and 2021, respectively.

We believe that the change in methodology in our dollar-based net retention rate from a revenue basis to an ARR basis is more meaningful to investors as it aligns more closely with how management views growth in the business, assesses Company performance, and provides better insight into the directional movements within ARR.

(1) Dollar-Based Net Retention Rate as of January 31, 2024 reflects the attrition of a large customer, which occurred during the three months ended January 31, 2024.

Components of Results of Operations

We derive our revenue primarily from subscription and associated support to our Answers platform.

We derive our revenue primarily from subscription and associated support to our platform.

Our contracts are typically one year in length, but may be up to three years or longer in length.

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Results of Operations

In this section, we discuss the results of our operations for the fiscal year ended January 31, 2024 compared to the fiscal year ended January 31, 2023.

For a discussion of our results of operations for the fiscal year ended January 31, 2023 compared to the fiscal year ended January 31, 2022, please refer to Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended January 31, 2023.

The following table sets forth selected consolidated statement of operations data for each of the periods indicated:

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Statements of Operations Data:

2023 2022 2021

Revenue $ 404,322 $ 400,850

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$ 44,961 $ 63,078

Decreases in stock-based compensation expense for the fiscal year ended January 31, 2023, compared to the fiscal year ended January 31, 2022 are largely due to decreases in the fair value of awards granted.

The following table sets forth selected consolidated statements of operations data for each of the periods indicated as a percentage of total revenue:

Fiscal year ended January 31,

2023 2022 2021

Revenue 100 % 100 %

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78.4 % 74.1 %

Total revenue was $400.9 million for the fiscal year ended January 31, 2023, compared to $390.6 million for the fiscal year ended January 31, 2022, an increase of $10.3 million or 3%, primarily driven by new customer subscriptions to our platform, as well as expanded subscriptions for existing customers.

Total revenue was $404.3 million for the fiscal year ended January 31, 2024, compared to $400.9 million for the fiscal year ended January 31, 2023, an increase of $3.5 million or 1%, primarily driven by new customer subscriptions to our platform, expanded subscriptions for existing customers, and the impact of foreign currency exchange rates as discussed below.

Revenue recognized from subscriptions and associated support to our platform was 92% and 91%, while revenue recognized from professional services was 8% and 9%, for the fiscal years ended January 31, 2024 and 2023, respectively.

Revenue for the fiscal year ended January 31, 2023 included a negative impact from foreign currency exchange rates of approximately $10.2 million, using a constant currency basis.

We calculate constant currency by translating our current period results for entities reporting in currencies other than USD into USD at the average monthly exchange rates in effect during the comparative period, as opposed to the average monthly exchange rates in effect during the current period.

Revenue for the fiscal year ended January 31, 2024 included a positive impact from foreign currency exchange rates of approximately $1.3 million, using a constant currency basis.

We calculate constant currency by translating our current period results for entities reporting in currencies other than U.S.

Dollars (“USD”) into USD at the average monthly exchange rates in effect during the comparative period, as opposed to the average monthly exchange rates in effect during the current period.

The following table summarizes our revenue by sales channel for the periods presented:

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Revenue attributable to direct customers was $327.1 million for the fiscal year ended January 31, 2024, compared to $318.0 million for the fiscal year ended January 31, 2023, an increase of $9.1 million or 3%, primarily driven by new customer subscriptions to our platform, as well as expanded subscriptions for existing customers.

While the attrition of a large direct customer occurred during the three months ended January 31, 2024, we expect that the corresponding absence of revenue from this customer

will become more apparent in our quarterly results for the fiscal year ending January 31, 2025.

Revenue attributable to third-party reseller customers was $77.2 million for the fiscal year ended January 31, 2024, compared to $82.8 million for the fiscal year ended January 31, 2023, a decrease of $5.6 million or 7% primarily due to customer attrition.

Cost of Revenue and Gross Margin

Cost of revenue was $104.0 million for the fiscal year ended January 31, 2023, compared to $98.3 million for the fiscal year ended January 31, 2022, an increase of $5.7 million, or 6%.

The increase was primarily driven by a $5.1 million increase in personnel-related costs, reflecting higher headcount, a $1.7 million increase in costs associated with our data centers and a $1.4 million increase in depreciation expense.

These increases were partially offset by a $2.1 million decrease in stock-based compensation expense, largely due to decreases in the fair value of awards granted, as well as a $1.2 million decrease in Publisher Network provider fees due to favorable contract renewal terms with certain providers in the prior year.

Cost of revenue was $87.5 million for the fiscal year ended January 31, 2024, compared to $104.0 million for the fiscal year ended January 31, 2023, a decrease of $16.5 million, or 16%.

The decrease was primarily driven by employee related costs, as personnel-related costs decreased $11.3 million and stock-based compensation expense decreased $2.1 million, reflecting lower headcount.

In addition, depreciation expense decreased $2.1 million as certain assets have fully depreciated.

Gross margin was 78.4% for the fiscal year ended January 31, 2024, compared to 74.1% for the fiscal year ended January 31, 2023 as reflected in the discussion above.

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Sales and marketing expense was $178.8 million for the fiscal year ended January 31, 2024, compared to $211.5 million for the fiscal year ended January 31, 2023, a decrease of $32.6 million, or 15%.

The decrease was primarily driven by employee-related costs, as personnel-related costs decreased $10.4 million, reflecting lower headcount, and stock-based compensation expense which decreased $3.5 million, largely due to decreases in the fair value of awards granted.

In addition, advertising costs decreased $4.9 million due to certain brand media campaigns in the prior period and professional related costs decreased $2.8 million.

These decreases were partially offset by a $3.1 million increase in conferences and events and a $2.8 million increase in employee travel.

The decrease was primarily driven by employee-related costs, as personnel-related costs decreased $20.2 million and stock-based compensation expense decreased $7.9 million, reflecting lower headcount.

In addition, conferences and events decreased $1.3 million.

Research and development expense was $72.0 million for the fiscal year ended January 31, 2024, compared to $70.9 million for the fiscal year ended January 31, 2023, an increase of $1.1 million, or 2%.

The increase was primarily driven by a $4.9 million increase in personnel-related costs and a $1.3 million increase in costs associated with our data centers.

The increase was primarily driven by a $4.3 million increase in personnel-related costs, as well as smaller increases in depreciation expense, among others.

These increases were partially offset by a $5.1 million decrease in stock-based compensation expense, largely due to decreases in the fair value of awards granted.

General and administrative expense was $72.2 million for the fiscal year ended January 31, 2024, compared to $79.3 million for the fiscal year ended January 31, 2023, a decrease of $7.2 million or 9%.

The decrease was primarily driven by a $4.2 million decrease in professional related costs, a $1.1 million decrease in bad debt expense and a $0.6 million decrease in stock-based compensation expense, largely due to decreases in the fair value of awards granted.

This was partially offset by a $0.7 million increase in personnel-related costs, reflecting higher headcount, a $0.7 million increase in software expense and a $0.4 million increase in depreciation expense.

Fiscal Year Ended January 31, 2022 Compared to Fiscal Year Ended January 31, 2021

Revenue and Cost of Revenue

Fiscal year ended January 31, Variance

(in thousands) 2022 2021 Dollars Percent

$ 390,577 $ 354,661 $ 35,916 10 %

Cost of revenue

98,299 86,404 $ 11,895 14 %

$ 292,278 $ 268,257 $ 24,021 9 %

74.8 % 75.6 %

Total revenue was $390.6 million for the fiscal year ended January 31, 2022, compared to $354.7 million for the fiscal year ended January 31, 2021, an increase of $35.9 million or 10%, 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 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.

The following table summarizes our revenue by sales channel for the periods presented:

Fiscal year ended January 31, Variance

2022 2021 Dollars Percent

(in thousands)

Direct Customers $ 303,338 $ 265,756 $ 37,582 14 %

Third-Party Reseller Customers 87,239 88,905 (1,666) (2) %

Total Revenue $ 390,577 $ 354,661 $ 35,916 10 %

Revenue attributable to direct customers was $303.3 million for the fiscal year ended January 31, 2022, compared to $265.8 million for the fiscal year ended January 31, 2021, an increase of $37.6 million or 14%, primarily driven by new customer subscriptions to our platform, as well as expanded subscriptions for existing customers.

Revenue attributable to third-party reseller customers was $87.2 million for the fiscal year ended January 31, 2022, compared to $88.9 million for the fiscal year ended January 31, 2021, a decrease of $1.7 million or 2% primarily due to customer attrition.

Cost of Revenue and Gross Margin

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 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 Publisher 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.

Operating Expenses

Fiscal year ended January 31, Variance

(in thousands) 2022 2021 Dollars Percent

Sales and marketing

$ 230,467 $ 228,417 $ 2,050 1 %

Research and development

$ 68,350 $ 58,146 $ 10,204 18 %

General and administrative

$ 83,420 $ 76,026 $ 7,394 10 %

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 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 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.

Net loss was $65.9 million, $93.3 million, and $94.7 million for the fiscal years ended January 31, 2023, 2022 and 2021, respectively.

The decrease was primarily driven by employee-related costs, as stock-based compensation expense decreased $3.0 million and personnel-related costs decreased $1.8 million, reflecting lower headcount.

In addition, professional related costs decreased $2.8 million.

These decreases were partially offset by smaller increases in bad debt expense, among others.

Net loss was $2.6 million and $65.9 million for the fiscal years ended January 31, 2024 and 2023, respectively.

Non-GAAP Financial Measures

In addition to our financial results determined in accordance with GAAP, we believe that certain non-GAAP financial measures are useful in evaluating our operating performance and our business.

Non-GAAP net loss is a financial measure that is not calculated in accordance with GAAP.

We define non-GAAP net loss as our GAAP net loss as adjusted to exclude the effects of stock-based compensation expense.

We believe non-GAAP net loss provides investors and other users of our financial information consistency and comparability with our past financial performance and facilitates period-to-period comparisons of our results of operations.

We also believe non-GAAP net loss is useful in evaluating our operating performance compared to that of other companies in our industry, as it eliminates the effects of stock-based compensation, which may vary for reasons unrelated to overall operating performance.

We use non-GAAP net loss in conjunction with traditional GAAP net loss as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, and to evaluate the effectiveness of our business strategies.

Non-GAAP net income (loss) is a financial measure that is not calculated in accordance with GAAP.

We define non-GAAP net income (loss) as our GAAP net income (loss) as adjusted to exclude the effects of stock-based compensation expense.

We believe non-GAAP net income (loss) provides investors and other users of our financial information consistency and comparability with our past financial performance and facilitates period-to-period comparisons of our results of operations.

We also believe non-GAAP net income (loss) is useful in evaluating our operating performance compared to that of other companies in our industry, as it eliminates the effects of stock-based compensation, which may vary for reasons unrelated to overall operating performance.

We use non-GAAP net income (loss) in conjunction with traditional GAAP net income (loss) as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, and to evaluate the effectiveness of our business strategies.

Adjusted EBITDA is a non-GAAP financial measure that we believe offers a useful view of overall operations used to assess the performance of core business operations and for planning purposes.

We define Adjusted EBITDA as net income (loss) before (1) interest income (expense), net, (2) provision for income taxes, (3) depreciation and amortization, (4) other income (expense), net, and (5) stock-based compensation expense.

The most directly comparable GAAP financial measure to Adjusted EBITDA is GAAP net loss.

We define Adjusted EBITDA as GAAP net income (loss) before (1) interest income (expense), net, (2) provision for income taxes, (3) depreciation and amortization, (4) other income (expense), net, and (5) stock-based compensation expense.

The most directly comparable GAAP financial measure to Adjusted EBITDA is GAAP net income (loss).

Users should consider the limitations of using Adjusted EBITDA, including the fact that this measure does not provide a complete measure of our operating performance.

Adjusted EBITDA is not intended to purport to be an alternate to net loss as a measure of operating performance.

Adjusted EBITDA is not intended to purport to be an alternate to GAAP net income (loss) as a measure of operating performance.

The definitions of our non-GAAP financial measures may differ from the definitions used by other companies and therefore comparability may be limited.

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

Our Non-GAAP financial measures may be limited in their usefulness because they do not present the full economic effect of expenses mentioned above.

Our non-GAAP financial measures may be limited in their usefulness because they do not present the full economic effect of the expenses mentioned above.

We compensate for these limitations by providing a reconciliation of our non-GAAP financial measures to the most closely related GAAP financial measures.

We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view non-GAAP net loss and Adjusted EBITDA in conjunction with GAAP net loss.

The following table reconciles our GAAP net loss to non-GAAP net loss:

We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view non-GAAP net income (loss) and Adjusted EBITDA in conjunction with GAAP net income (loss).

The following table reconciles our GAAP net loss to non-GAAP net income (loss):

Fiscal year ended January 31,

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Stock-based compensation expense 44,961 63,078

Non-GAAP net loss $ (2,860) $ (19,779) $ (22,398)

Non-GAAP net income (loss) $ 42,331 $ (2,860)

The following table reconciles our GAAP net loss to Adjusted EBITDA:

Fiscal year ended January 31,

2023 2022 2021

GAAP net loss to Adjusted EBITDA:

(in thousands)

GAAP net loss $ (2,630) $ (65,938)

Interest (income) expense (1,095) 522 82

Interest (income) expense, net (6,624) (1,095)

Provision for income taxes 2,292 2,080

Depreciation and amortization 15,805 17,583

Other expense (income) 125 1,501 181

Other expense (income), net 761 125

Stock-based compensation expense 44,961 63,078

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We believe providing revenue on a constant currency basis helps our investors to better understand our underlying performance, given the current macroeconomic environment.

We calculate constant currency by using the current period results for entities reporting in currencies other than U.S.

Dollars (“USD”), which are then converted into USD at the average monthly exchange rates in effect during the comparative period, as opposed to the average monthly exchange rates in effect during the current period.

We calculate constant currency by using the current period results for entities reporting in currencies other than USD, which are then converted into USD at the average monthly exchange rates in effect during the comparative period, as opposed to the average monthly exchange rates in effect during the current period.

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

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Credit Arrangements

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

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

In January 2021, we amended the Credit Agreement which modified the conditions pursuant to which subsidiaries are required to become guarantors.

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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 credit facility contains restrictive covenants that may limit our operating flexibility".

We are also obligated to pay a commitment fee on the unused portion of the facility at a rate of 0.25% per annum.

The obligations under the Credit Facility 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.

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.

The Credit Facility 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 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, 2024, we were in compliance with all debt covenants.

As of such date, the $50.0 million revolving loan facility had $36.4 million available and $13.6 million in letters of credit allocated as security in connection with office space.

On March 10, 2023, the Federal Deposit Insurance Corporation was appointed as receiver for SVB and created the National Bank of Santa Clara to hold the deposits of SVB after SVB was unable to continue their operations.

While the National Bank of Santa Clara has publicly assured holders of credit facilities that they intend to honor those facilities, our credit agreement may not be available in all or in part in the near future depending on the resolution of SVB.

Following the closure of SVB by the California Department of Financial Protection and Innovation on March 10, 2023, and its subsequent receivership by the Federal Deposit Insurance Corporation (“FDIC”), the FDIC announced that all of SVB’s deposits and substantially all of its assets had been transferred to a newly created, full-service FDIC-operated bridge bank, Silicon Valley Bridge Bank N.A.

On March 27, 2023, First Citizens Bank & Trust Company (“First Citizens”) acquired substantially all of the loans and certain other assets of SVBB, and assumed all customer deposits and certain other liabilities of SVBB.

As such, First Citizens assumed SVB’s obligations under the Credit Facility.

Share Repurchase Program

In March 2022, our Board of Directors authorized a $100.0 million share repurchase program of our common stock.

As of January 31, 2023, a total of 13,844,279 shares have been purchased at an average price of $5.59 per share for a total cost of $77.4 million since the commencement of the share repurchase program.

As of January 31, 2023, there was approximately $22.6 million that remained available to be purchased under this share repurchase program.

In September 2023, our Board of Directors authorized an additional $50.0 million to the share repurchase program.

During the fiscal year ended January 31, 2024, 2,980,641 shares were purchased for a total cost of $22.9 million, inclusive of broker commissions.

As of January 31, 2024, a total of 16,824,920 shares have been purchased for a total cost of $100.3 million since the commencement of the program, inclusive of broker commissions, and approximately $49.7 million remains available for future purchases.

In this section, we discuss our cash flows for the fiscal years ended January 31, 2024 and 2023.

For a discussion of our cash flows for the fiscal year ended January 31, 2022, please refer to Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Liquidity and Capital Resources" in our Annual Report on Form 10-K for the fiscal year ended January 31, 2023.

The following table summarizes our cash flows:

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$ (2,728) $ (6,193)

Net cash (used in) provided by financing activities

Net cash used in financing activities

$ (23,254) $ (79,021)

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Net cash provided by operating activities of $46.2 million for the fiscal year ended January 31, 2024 reflected our net loss of $2.6 million, adjusted by non-cash charges including stock-based compensation expense of $45.0 million, depreciation and amortization expense of $15.8 million and amortization of operating lease right-of-use assets of $8.8 million.

In addition, there were positive adjustments resulting from changes in costs to obtain revenue contracts of $8.8 million, prepaid expenses and other current assets of $0.8 million and accounts receivable of $0.5 million, mainly due to timing of billing and cash collections during the period.

These increases were partially offset by changes in operating lease liabilities of $11.7 million, unearned revenue of $11.3 million and accounts payable, accrued expenses and other current liabilities of $10.2 million.

Net cash provided by operating activities of $17.9 million for the fiscal year ended January 31, 2023 reflected our net loss of $65.9 million, adjusted by non-cash charges including stock-based compensation expense of $63.1 million, depreciation and amortization expense of $17.6 million and amortization of operating lease right-of-use assets of $8.8 million.

In addition, there were positive adjustments resulting from changes in costs to obtain revenue contracts of $8.0 million, unearned revenue of $3.5 million and accounts payable, accrued expenses and other current liabilities of $2.7 million.

These increases were partially offset by changes in operating lease liabilities of $11.0 million, accounts receivable of $10.1 million, mainly due to timing of billing and cash collections during the period, and changes in prepaid expenses and other current assets of $2.3 million.

Net cash provided by operating activities of $21.8 million for the fiscal year ended January 31, 2022 reflected our net loss of $93.3 million, adjusted by non-cash charges including 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 positive adjustments resulting from 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 reflected our net loss of $94.7 million, adjusted by non-cash charges including 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.

In addition, there were positive adjustments resulting from changes in unearned revenue of $12.7 million, operating lease liabilities of $8.9 million, and costs to obtain revenue contracts of $2.4 million.

These increases were partially offset by changes in accounts receivable of $18.0 million, mainly due to timing of billing and cash collections during the period, changes in prepaid expenses and other current assets of $5.5 million, and changes in accounts payable, accrued expenses and other current liabilities of $2.0 million.

Investing Activities

Net cash used in investing activities of $2.7 million for the fiscal year ended January 31, 2024 reflected capital expenditures.

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 used in investing activities of $6.2 million for the fiscal year ended January 31, 2023 reflected capital expenditures.

Financing Activities

Net cash used in financing activities of $23.3 million for the fiscal year ended January 31, 2024 was primarily related to $23.1 million in cash outflows associated with repurchases of common stock as part of our share repurchase program, as well as payments for taxes related to the net share settlement of stock-based compensation awards of $13.0 million and payments of deferred financing costs of $0.5 million.

This was partially offset by proceeds from exercise of stock options of $9.4 million and net proceeds from employee stock purchase plan withholdings of $3.9 million.

Net cash used in financing activities of $79.0 million for the fiscal year ended January 31, 2023 was primarily related to $77.3 million in cash outflows associated with repurchases of common stock as part of our share repurchase program, as well as payments for taxes related to the net share settlement of stock-based compensation awards of $5.1 million and payments of deferred financing costs of $0.5 million.

This was partially offset by net proceeds from employee stock purchase plan withholdings of $3.2 million and proceeds from exercise of stock options of $0.7 million.

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.

Contractual Obligations

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Revenue Recognition

We derive our revenue primarily from our subscriptions and associated support to the Answers platform.

We derive our revenue primarily from our subscriptions and associated support to our platform.

Our subscriptions do not provide customers with the right to take possession of the software supporting the applications and, as a result, are accounted for as service contracts.

Our subscription and associated support performance obligation is distinct because a customer's use of the Answers platform is fully functional upon access, does not require any additional development, modification or customization, and is often sold separately.

Our subscription and associated support performance obligation is distinct because a customer's use of our platform is fully functional upon access, does not require any additional development, modification or customization, and is often sold separately.

In certain instances, we enter into a contract that includes a promise to provide certain technical or customized professional services, in addition to a promise to provide its subscription and associated support.

Our professional services performance obligation is distinct as it does not significantly change or enhance the functionality of the Answers platform.

Our professional services performance obligation is distinct as it does not significantly change or enhance the functionality of our platform.

In instances when a contract includes more than one performance obligation, we must allocate the transaction price to the performance obligations on a relative standalone selling price basis ("SSP").

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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

We capitalize costs of obtaining revenue contracts that are incremental and recoverable.

Incremental costs primarily include sales commissions, certain related incentives, and associated payroll tax and fringe benefit costs.

We amortize such costs on a straight-line basis over the average benefit period, which is typically three years for new contracts and one year for renewals.

We determine the average benefit period by considering both qualitative and quantitative factors, which include the estimated life of capitalized software development costs resulting from additional functionality to the Answers platform and estimated customer life, among other such factors.

Amortization of costs capitalized to obtain revenue contracts is included in sales and marketing expense in the consolidated statements of operations and comprehensive loss.

Stock-Based Compensation

Stock-based compensation for all employee and non-employee stock-based awards, including restricted stock units, restricted stock, performance-based restricted stock units, and options to purchase common stock, is measured at fair value on the date of grant and recognized over the service period.

The fair value of restricted stock units and restricted stock are estimated on the date of grant based on the fair value of our Company’s common stock.

The fair value of performance-based restricted stock units are estimated on the date of grant using a Monte Carlo simulation model.

The fair value of stock options are estimated on the date of grant using a Black-Scholes option-pricing model.

Stock-based compensation expense is generally recognized over the requisite service periods of awards, which is typically one to four years for restricted stock units and restricted stock, and four years for options and performance-based restricted stock units.

The estimated forfeiture rate applied to employee awards is based on historical forfeiture rates.

The estimated number of stock-based awards that will ultimately vest requires judgment, and to the extent actual results, or updated estimates, differ from our current estimates, such amounts will be recorded as a cumulative adjustment in the period actual results are realized or estimates are revised.

A higher forfeiture rate will result in an adjustment that will decrease stock-based compensation expense, whereas a lower forfeiture rate will result in an adjustment that will increase stock-based compensation expense.

We do not apply a forfeiture rate assumption to value non-employee awards, given the nature of the services provided.

For our Employee Stock Purchase Plan ("ESPP"), we measure stock-based compensation expense at fair-value using a Black-Scholes option-pricing model, at the commencement of each offering period and recognize the expense over that offering period, which is generally six months.

The key assumptions used in the Black-Scholes option-pricing model include a volatility assumption based on the historical volatility of our stock price and the risk-free rate assumption based on the U.S.

treasury yield curve in effect at the commencement of the offering period or grant date.

The dividend yield assumption is zero as we have not historically paid any dividends and do not expect to declare or pay any dividends in the foreseeable future.

We will continue to use judgment in evaluating the assumptions related to our stock-based compensation.

As we continue to accumulate additional data related to our common stock, we may refine our estimates.

If factors change and different assumptions are used, the impact to our stock-based compensation expense could be material.

We account for income taxes in accordance with ASC Topic 740, “Income Taxes,” under which deferred income taxes are provided for temporary differences between the financial reporting and tax basis of our assets and liabilities.

We classify all deferred tax assets and liabilities as non-current on the consolidated balance sheet.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized within the (provision for) benefit from income taxes on the consolidated statement of operations and comprehensive loss in the period that includes the enactment date.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized within the provision for income taxes on the consolidated statement of operations and comprehensive loss in the period that includes the enactment date.

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.

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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.

We recognize interest and penalties related to uncertain tax positions within the (provision for) benefit from income taxes on our consolidated statement of operations and comprehensive loss.

We enter into contracts in the normal course of business and assess whether any such contracts contain a lease.

We classify leases as operating or financing in nature, and record the associated lease liability and right-of-use asset on our balance sheet.

The lease liability represents the present value of future lease payments, net of lease incentives, discounted using incremental borrowing rates.

For each individual lease arrangement, we estimate an incremental borrowing rate at the commencement date.

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.

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.

Non-lease components that are variable are expensed as incurred in the consolidated statement of operations and comprehensive loss.

Lease arrangements with an initial term of 12 months or less are recognized on a straight-line basis over the lease term and are not recorded on the consolidated balance sheet.

We recognize interest and penalties related to uncertain tax positions within the provision for income taxes on our consolidated statement of operations and comprehensive loss.

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