What changed in this filing

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2024-03-13 compared with 2023-03-17 · 135 added, 132 removed, 817 unchanged (25% of the section changed)

5 unchanged sentences

subsidiaries that operate in a local currency environment, where the local currency is the functional currency, are translated from foreign currencies into U.S.

dollars using month-end rates of exchange for assets and liabilities, and average rates for the period derived from month-end spot rates for revenue, costs and expenses.

dollars using month-end rates of exchange for assets and liabilities, and average rates for the period for revenue, costs and expenses.

We record translation gains and losses in accumulated other comprehensive (loss) income as a component of stockholders' equity.

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Notwithstanding, those institutions are subject to risk of failure and our balances may be uninsured in certain cases.

For example, on March 10, 2023, SVB was unable to continue their operations and 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.

As of March 15, 2023, substantially all of our cash and cash equivalents are held with other large financial institutions and we do not expect further developments with SVB to have a material impact on our cash and cash equivalents balance, expected results of operations or financial performance for the foreseeable future.

For example, on March 10, 2023, SVB was unable to continue their operations and the FDIC was appointed as receiver for SVB.

Similarly, on March 12, 2023, Signature Bank and Silvergate Capital Corp.

were each swept into receivership.

In addition, on May 1, 2023, the FDIC seized First Republic Bank and sold its assets to JPMorgan Chase & Co.

We do not expect further developments with such banks to have a material impact on our cash and cash equivalents balance, expected results of operations or financial performance for the foreseeable future.

However, if further failures in financial institutions occur where we hold deposits, we could experience additional risk.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Completeness and Measurement of Costs Capitalized to Obtain Revenue Contracts

Description of the Matter

The Company capitalized $29.4 million of costs to obtain revenue contracts during the year ended January 31, 2023.

As described in Note 2 to the consolidated financial statements, capitalized costs are inclusive of sales commissions and any associated payroll taxes or fringe benefit costs that are incremental to obtain the contract with the customer but expected to be recoverable.

Auditing the costs capitalized to obtain revenue contracts required complex auditor judgment and was especially challenging due to the volume of sales commission plans with various underlying criteria and inputs used to calculate amounts capitalized to obtain revenue contracts.

This involved an increased extent of audit effort to test the completeness and accuracy of inputs of the commission-eligible revenue contracts and measurement of incremental costs eligible for capitalization.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s internal controls over the costs to obtain revenue contracts process.

For example, we tested controls over the Company’s processes to evaluate the completeness and accuracy of the underlying criteria and inputs used to calculate amounts capitalized.

This included testing relevant controls over the IT systems that are important to the initiation, processing and recording of amounts capitalized to obtain revenue contracts.

We performed audit procedures that included, among others, assessing whether those costs capitalized were eligible costs and met the criteria of incremental and recoverable.

For example, we tested a sample of commissions transactions by reviewing and assessing the underlying commission plan and tested the measurement of capitalized costs by recalculating the amount earned based on sales and contract data.

We validated that each commission earned and capitalized was an incremental cost to obtain a revenue contract.

Our procedures also included reconciling the capitalized commission population to sales commissions paid throughout the year.

We performed a retrospective review of commission payments made subsequent to the balance sheet date related to commissions earned in the current fiscal year to test the completeness of costs capitalized.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition

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This involved assessing the contractual terms and conditions of both new and modified contracts to determine the contract period, identifying all performance obligations, and determine if the transaction price expected to be received was fixed or variable.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s internal controls over the accounting for revenue.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s internal controls over the accounting for revenue.

For example, we tested controls over the Company’s processes to evaluate contractual terms and conditions and determine the timing and amount of revenue to be recognized related to the performance obligations identified as services are transferred to the customer.

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In our opinion, Yext, Inc.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of January 31, 2023, based on t he COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Yext, Inc.

as of January 31, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended January 31, 2023, and the related notes and our report dated March 17, 2023 expressed an unqualified opinion thereon.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of January 31, 2024, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of January 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended January 31, 2024, and the related notes and our report dated March 13, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

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Interest income

7,094 1,684 22

Interest expense

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$ ( 2,630 ) $ ( 65,938 ) $ ( 93,259 )

$ ( 65,938 ) $ ( 93,259 ) $ ( 94,692 )

Net loss per share attributable to common stockholders, basic and diluted

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$ ( 568 ) $ ( 3,421 ) $ ( 2,609 )

Unrealized loss on marketable securities, net ( 9 ) — —

Unrealized gain (loss) on marketable securities, net 2 ( 9 ) —

Total comprehensive loss $ ( 3,196 ) $ ( 69,368 ) $ ( 95,868 )

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Stock-based compensation — — 74,821 — — — 74,821

Other comprehensive income — — — 2,782 — — 2,782

Other comprehensive loss — — — ( 2,609 ) — — ( 2,609 )

Net loss — — — — ( 93,259 ) — ( 93,259 )

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Exercise of stock options 259 — 711 — — — 711

Vested restricted stock units converted to common shares 4,402 4 ( 4 ) — — — —

Issuance of restricted stock 15 — — — — — —

Vested restricted stock units converted to common shares, net of shares withheld for employee taxes 3,967 4 ( 5,137 ) — — — ( 5,133 )

Issuance of common stock under employee stock purchase plan 796 1 3,814 — — — 3,815

Stock-based compensation — — 63,551 — — — 63,551

Repurchase of common stock ( 13,844 ) — — — — ( 77,423 ) ( 77,423 )

Other comprehensive loss — — — ( 3,430 ) — — ( 3,430 )

3 unchanged sentences

Vested restricted stock units converted to common shares, net of shares withheld for employee taxes 2,952 3 ( 13,017 ) — — — ( 13,014 )

Issuance of restricted stock 75 — — — — — —

Issuance of common stock under employee stock purchase plan 782 1 3,671 — — — 3,672

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( 205 ) ( 3,635 ) ( 2,249 )

Net (decrease) increase in cash and cash equivalents ( 70,996 ) 30,799 ( 37,765 )

Net increase (decrease) in cash and cash equivalents 19,970 ( 70,996 ) 30,799

Cash and cash equivalents at beginning of period

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Description of Business

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

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

The 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 the Company refers to as its Publisher Network and includes Amazon Alexa, Apple Maps, Bing, Cortana, Facebook, Google, Google Assistant, Google Maps, Siri and Yelp.

The Answers platform powers all of the Company's key features, including Listings, Pages, and Search, along with its other features and capabilities.

("Yext" or the "Company") 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.

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

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

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

The Company's fiscal year ends on January 31 st .

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Segment Information

The Company is the provider of the Answers platform and operates as one operating segment.

The Company is the provider of the platform and operates as one operating segment.

An operating segment is defined as a component of an enterprise for which separate financial information is evaluated regularly by the chief operating decision makers ("CODM").

The Company defines its CODM as its executive officers, and their role is to make decisions about allocating resources and assessing performance.

The Company's business operates as one operating segment as all of the Company's offerings operate on the Answers platform and are deployed in an identical way, with its CODM evaluating the Company's financial information, resources and performance of these resources on a consolidated basis.

The Company's business operates as one operating segment as all of the Company's offerings operate on the Company's platform and are deployed in an identical way, with its CODM evaluating the Company's financial information, resources and performance of these resources on a consolidated basis.

Since the Company operates as one operating segment, all required financial segment information can be found in the consolidated financial statements.

Revenue Recognition

The Company derives its revenue primarily from its subscriptions and associated support to the Answers platform.

The Company derives its revenue primarily from its subscriptions and associated support to the Company's platform.

The Company's 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.

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The Company estimates the amount of consideration expected to be received in exchange for transferring services if the consideration promised in a contract includes a variable amount.

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

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

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

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Costs capitalized to obtain new revenue contracts are amortized on a straight-line basis over three years , which reflects the average benefit period, and may be longer than the initial contract period.

The Company determined the average benefit period having considered both qualitative and quantitative factors, including the estimated life of capitalized software development costs resulting from additional functionality to the Answers platform and estimated customer life, among other such factors.

The Company determined the average benefit period having considered both qualitative and quantitative factors, including the estimated life of capitalized software development costs resulting from additional functionality to the Company's platform and estimated customer life, among other such factors.

The Company amortizes costs capitalized for contract renewals over the renewal term, reflecting the average benefit period for such renewals, which is typically one year .

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The Company periodically evaluates whether there have been any changes in its business, market conditions, or other events which would indicate that its amortization period should be changed, or if there are potential indicators of impairment.

During the fiscal years ended January 31, 2023 and 2022, the Company capitalized $ 29.4 million and $ 47.8 million of costs to obtain revenue contracts and amortized $ 38.6 million and $ 39.5 million to sales and marketing expense, respectively.

During the fiscal years ended January 31, 2024 and 2023, the Company capitalized $ 27.7 million and $ 29.4 million of costs to obtain revenue contracts respectively, and amortized $ 36.4 million, $ 38.6 million and $ 39.5 million to sales and marketing expense as of January 31, 2024, 2023, and 2022, respectively.

Costs capitalized to obtain revenue contracts on the Company's consolidated balance sheet totaled $ 43.4 million and $ 52.1 million at January 31, 2024 and 2023, respectively.

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Cost of revenue is generally expensed as incurred, including personnel-related costs, costs associated with the Company’s Publisher Network application providers, and data center costs.

Capitalized software development costs incurred in connection with additional functionality to the Answers platform are recognized in cost of revenue as depreciation expense in accordance with the “capitalized software development costs” section of this Note.

Capitalized software development costs incurred in connection with additional functionality to the Company's platform are recognized in cost of revenue as depreciation expense in accordance with the “capitalized software development costs” section of this Note.

Cost of revenue also includes lease expenses, software expense, and depreciation expense, each of which are allocated based on employee headcount.

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The fair value of employee stock options is 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.

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, restricted stock and performance-based restricted stock units, and four years for options.

The estimated forfeiture rate applied is based on historical forfeiture rates.

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Research and development costs are generally expensed as incurred, including personnel-related costs.

Research and development costs also include lease expenses and software expense, each of which are allocated based on employee headcount.

Research and development expenses also include data centers costs associated with pre-production costs for testing and quality assurance, as well as lease expenses and software expense, each of which are allocated based on employee headcount.

Research and development costs exclude capitalized software development costs.

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Computer software is recognized on a straight-line basis over an estimated useful life of 2 to 3 years.

Capitalized software development costs incurred in connection with additional functionality to the platform are recognized as depreciation expense in cost of revenue within the consolidated statement of operations and comprehensive loss.

Capitalized software development costs incurred in connection with additional functionality to the Company's platform are recognized as depreciation expense in cost of revenue within the consolidated statement of operations and comprehensive loss.

Capitalized software development costs incurred in internal-use projects are recognized as depreciation expense and are allocated based on employee headcount.

Capitalized software development costs, net were $ 3.9 million and $ 7.2 million as of January 31, 2023 and 2022, respectively, and primarily related to those costs incurred in connection with additional functionality to its platform.

Capitalized software development costs, net were $ 2.1 million and $ 3.9 million as of January 31, 2024 and 2023, respectively, and primarily related to costs incurred in connection with additional functionality to its platform.

Depreciation expense associated with capitalized software development costs was $ 3.2 million, $ 4.9 million and $ 3.7 million during the fiscal years ended January 31, 2024, 2023 and 2022, respectively.

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The Company classifies 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.

The Company reduces deferred tax assets, if necessary, by a valuation allowance if it is more likely than not that the Company will not realize some or all of the deferred tax assets.

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The tax benefit recognized is measured as the largest amount of benefit which is greater than 50 percent likely to be realized upon settlement with the taxing authority.

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

The Company recognizes interest and penalties related to uncertain tax positions within the provision for income taxes on the consolidated statement of operations and comprehensive loss.

Net Loss Per Share

Basic net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period.

Unvested restricted stock and restricted stock units are excluded from the denominator of basic net loss per share.

Unvested restricted stock, restricted stock units and performance-based restricted stock units are excluded from the denominator of basic net loss per share.

Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares plus the common equivalent shares for the period, including any dilutive effect from such shares.

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Recent Accounting Pronouncements

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.

The standard requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers, as if the acquirer had originated the contracts, provided such contracts had been appropriately accounted for under ASC 606 by the acquiree, rather than recognizing them at their estimated fair value on the acquisition date as required under the existing guidance.

The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022 on a prospective basis, with early adoption permitted.

This standard will be adopted by the Company in fiscal year 2024, and no significant impact on its consolidated financial statements is expected.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.

The updated standard is effective for the Company's annual periods beginning in fiscal 2025 and interim periods beginning in the first quarter of fiscal 2026.

Early adoption is permitted.

The Company is currently evaluating the impact of adopting ASU 2023-07.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction.

The amendments are effective for the Company’s annual periods beginning in fiscal 2026, with early adoption permitted, and should be applied either prospectively or retrospectively.

The Company is currently evaluating the impact of ASU 2023-09.

Geographic Region

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The Company's revenue attributable to the United States represented 79 %, 80 %, and 79 % for the fiscal years ended January 31, 2024, 2023 and 2022, respectively.

Revenue attributable to the United Kingdom, which serves as the Company's main contracting entity for Europe effective February 1, 2021, represented 18 % and 19 % of total revenue for the fiscal years ended January 31, 2023 and 2022, respectively.

Revenue attributable to Switzerland, which served as one of the Company's contracting entities for Europe prior to February 1, 2021, represented 16 % of total revenue for the fiscal year ended January 31, 2021.

Revenue attributable to the United Kingdom, which serves as the Company's main contracting entity for Europe, represented 20 %, 18 % and 19 % of total revenue for the fiscal years ended January 31, 2024, 2023 and 2022, respectively.

No other individual country represented more than 10% of total revenue during the fiscal years ended January 31, 2024, 2023 and 2022.

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The Company has identified that it has two distinct performance obligations.

The Company predominantly recognizes revenue through its performance obligation of a subscription and associated support to the Answers platform.

The 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.

The Company predominantly recognizes revenue through its performance obligation of a subscription and associated support to the Company's platform.

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

In certain instances, the Company enters into a contract with a customer that includes a promise to provide certain technical or customized professional services, in addition to a promise to provide its subscription and associated support.

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

In those instances when a contract includes more than one performance obligation, the Company must allocate the transaction price to the performance obligations on a relative standalone selling price basis.

The Company's professional services performance obligation is distinct as it does not significantly change or enhance the functionality of the Company's platform.

SSP represents the price at which a company would sell a promised product or service separately to a customer.

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Accordingly, the Company uses the residual method, under which the total transaction price and observable SSP of the professional services performance obligation is used to arrive at the estimated SSP of the subscription and associated support performance obligation.

The Company's revenue is predominantly related to its subscription and associated support to the Answers platform.

The Company's revenue is predominantly related to its subscription and associated support to the Company's platform.

Professional services revenue accounted for approximately 8 %, 9 % and 8 % of the Company's total revenue for the fiscal years ended January 31, 2024, 2023 and 2022, respectively.

Contract Assets

The Company records a contract asset when revenue is recognized prior to being billed.

Contract assets are included in prepaid expenses and other current assets on the consolidated balance sheet and were not significant as of January 31, 2024 and 2023.

Contract Liabilities

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Unearned revenue represents amounts billed, or payments received, in advance of revenue recognition for which the Company has an unconditional obligation to transfer goods or services associated with a non-cancelable contract.

Unearned revenue is subsequently recognized as revenue when transfer of control to a customer has occurred.

revenue is subsequently recognized as revenue when transfer of control to a customer has occurred.

The unearned revenue balance is influenced by several factors, including seasonality, the compounding effects of renewals, and invoice duration, timing and size.

portion of unearned revenue expected to be recognized during the succeeding twelve-month period is classified as unearned revenue, current, and the remaining portion is classified within other long term liabilities in the Company’s consolidated balance sheet.

During the fiscal year ended January 31, 2023, revenue of $ 220.3 million was recognized related to unearned revenue, current as of January 31, 2022.

The portion of unearned revenue expected to be recognized during the succeeding twelve-month period is classified as unearned revenue, current, and the remaining portion is classified within other long term liabilities in the Company’s consolidated balance sheet.

Substantially all of the $ 223.7 million of unearned revenue, current as of January 31, 2023 was subsequently recognized as revenue during the fiscal year ended January 31, 2024.

Customer deposits represent payments received in advance in instances where a revenue contract is cancelable in nature, and therefore the Company does not have an unconditional obligation to transfer control to a customer.

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As of January 31, 2024 and 2023, the Company's marketable securities have a maturity of 90 days or less and are classified as cash and cash equivalents.

For the fiscal years ended January 31, 2023, 2022 and 2021, the Company had no material reclassification adjustments from accumulated other comprehensive loss to net loss.

During the fiscal years ended January 31, 2024, 2023 and 2022, the Company had no material reclassification adjustments from accumulated other comprehensive loss to net loss.

The Company classifies interest income on investments in marketable securities, amortization of premiums and discounts, and realized gains and losses on securities available for sale within interest income in the consolidated statements of operations and comprehensive loss.

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treasury securities — 82,635 — 82,635

— 40,363 — 40,363

Included in cash and cash equivalents $ 63,966 $ 82,635 $ — $ 146,601

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Included in cash and cash equivalents $ 68,165 $ 40,363 $ — $ 108,528

(1) The Company's U.S.

treasury securities purchased with an original maturity of less than three months from the purchase date are classified as cash and cash equivalents on its consolidated balance sheet.

The Company’s cash equivalents and marketable securities for the periods presented were valued using quoted market prices or alternative pricing sources and models utilizing observable market inputs and were classified as Level 1 or Level 2, accordingly.

As of January 31, 2023 and 2022, the Company had goodwill of $ 4.5 million and $ 4.6 million, respectively.

The Company had goodwill of $ 4.5 million as of both January 31, 2024 and 2023.

The changes to goodwill during these periods relate to foreign currency translation adjustments.

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2,021,494 $ 6.26 2.20 $ 989

Nonvested option activity is as follows:

Options Weighted-Average Grant Date Fair Value

Nonvested as of January 31, 2022

200,000 $ 6.06

Granted — $ —

Forfeited ( 200,000 ) $ 6.06

Balance as of January 31, 2023

The aggregate intrinsic value of options vested and expected to vest and exercisable is calculated based on the difference between the exercise price and the fair value of the Company’s common stock as of January 31, 2024.

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In connection with the offering period which ended on March 15, 2023, 491,600 shares of common stock were purchased under the ESPP at a purchase price of $ 4.31 per share for total proceeds of $ 2.1 million.

In connection with the offering period which ended on September 15, 2022, 339,019 shares of common stock were purchased under the ESPP at a purchase price of $ 4.31 per share for total proceeds of $ 1.5 million.

In connection with the offering period which ended

on September 15, 2023, 289,628 shares of common stock were purchased under the ESPP at a purchase price of $ 5.36 per share for total proceeds of $ 1.6 million.

A new offering period began on September 15, 2023 and will end on March 15, 2024.

As of January 31, 2024, 487,529 shares are estimated to be purchased at the end of the offering period and $ 2.0 million has been withheld on behalf of employees for these future purchases under the ESPP and is included in accounts payable, accrued expenses and other current liabilities.

The Black-Scholes option-pricing model assumptions used to calculate the fair value of shares, estimated at commencement to be purchased during an ESPP offering period were as follows:

The Black-Scholes option-pricing model assumptions used to calculate the fair value of shares, estimated at commencement of the offering period, to be purchased during an ESPP offering period were as follows:

Fiscal year ended January 31,

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Performance-Based Restricted Stock Units

In March 2022, the Company made a grant to an executive in the form of 2,000,000 performance-based restricted stock units.

This grant was outside of the Company’s 2016 Equity Incentive Plan.

These performance-based restricted stock units are subject to the achievement of certain stock price targets.

The Company uses a Monte Carlo simulation model to determine the fair value of this award and recognizes expense using the accelerated attribution method over the requisite service period.

As of January 31, 2023, the market conditions accompanying the performance-based restricted stock units were not satisfied and therefore, no shares vested.

Stock-based compensation expense recognized for performance-based restricted stock was approximately $ 2.9 million and total unrecognized stock-based compensation expense was $ 8.5 million for the fiscal year ended January 31, 2023.

This expense is expected to be amortized over a weighted-average vesting period of 3.14 years.

No stock-based compensation expense was recognized for the fiscal years ended January 31, 2022 and 2021 for performance based restricted stock units.

In March 2022, the Company made a grant to an executive in the form of 2,000,000 performance-based restricted stock units ("PSUs").

This grant was outside of the Company’s 2016 Equity Incentive Plan, and will vest over approximately a four-year period following the achievement of certain stock price targets.

During the fiscal year ended January 31, 2024, the Company granted additional PSUs to certain executives under the Company’s 2016 Equity Incentive Plan, which vest over approximately a one-year period following the achievement of certain stock price targets.

In January 2024, the Company made an additional grant to an executive in the form of 1,250,000 target PSUs under the 2016 Equity Incentive Plan.

The total number of shares that will be eligible to vest ranges from 0 % to 200 % of the target PSUs and is based on the total shareholder return ("TSR") of the Company, relative to the TSR of companies in the S&P Software and Services Select Index over specified performance periods.

These awards vest over approximately a one to two-year period.

The PSUs granted by the Company contain market and service conditions, and the fair value of these awards is determined using a Monte Carlo simulation model on the date of grant.

Stock-based compensation expense associated with PSUs is recognized using the accelerated attribution method and recognized over the requisite service period.

The following table summarizes the activity related to the Company’s PSUs:

Number of Performance-Based Restricted Stock Units Weighted-Average Grant Date Fair Value

Balance as of January 31, 2023

2,000,000 $ 5.72

Granted 1,555,000 $ 6.31

Forfeited or canceled — $ —

Balance as of January 31, 2024

3,555,000 $ 5.98

As of January 31, 2024, the market conditions accompanying the PSUs were not satisfied and therefore, no shares vested.

During the fiscal years ended January 31, 2024 and 2023, the Company recognized stock-based compensation expense related to PSUs of approximately $ 4.6 million and $ 2.9 million, respectively.

As of January 31, 2024, the total unrecognized stock-based compensation expense related to unvested PSUs was $ 13.5 million, which will be amortized over a weighted-average remaining period of 1.98 years.

Stock-Based Compensation Expense

Stock-based compensation represents the cost related to stock-based awards granted in lieu of monetary payment.

The Company measures stock-based compensation associated with stock-based awards issued to employees at the grant date, based on the estimated fair value of the award, and recognizes expense net of estimated forfeitures over the vesting period of the applicable award generally using the straight-line method.

The Company measures stock-based compensation associated with stock-based awards issued to employees at the grant date, based on the estimated fair value of the award, and recognizes expense, net of estimated forfeitures, over the requisite service period of the applicable award generally using the straight-line method or accelerated attribution method.

The Company's stock-based compensation expense for the periods presented was as follows:

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During the fiscal years ended January 31, 2024, 2023 and 2022, the Company capitalized $ 0.3 million, $ 0.5 million and $ 1.3 million, respectively, of stock-based compensation related to software development.

As of January 31, 2023, there was approximately $ 93.6 million of total unrecognized compensation cost related to unvested stock-based awards, which are expected to be recognized over an estimated remaining weighted-average vesting period of approximately 2.72 years.

As of January 31, 2024, there was approximately $ 78.2 million of total unrecognized compensation cost related to unvested stock-based awards, which is expected to be recognized over an estimated remaining weighted-average vesting period of approximately 2.48 years.

Preferred Stock

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In March 2022, the Company's Board of Directors authorized a $ 100.0 million share repurchase program of the Company’s 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, the 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 program, inclusive of broker commissions, and approximately $ 49.7 million remained available for future purchases.

As part of the share repurchase program, shares may be purchased in open market transactions or pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

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The repurchase program does not obligate the Company to acquire any specific number of shares, and all open market repurchases will be made in accordance with Exchange Act Rule 10b-18, which sets certain restrictions on the method, timing, price and volume of open market stock repurchases.

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

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

In January 2021, the Company 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 the Company’s average daily usage of the revolving loan facility.

The Company is 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 the tangible and intangible property of the Company and by a pledge of all of the equity interests of the Company's 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.

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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.

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.

The domestic and international components of the Company's loss from operations before income taxes are as follows:

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Loss from operations before income taxes $ ( 338 ) $ ( 63,858 ) $ ( 91,982 )

The Company's (provision for) benefit from income taxes is comprised of the following:

The Company's provision for income taxes is comprised of the following:

Fiscal year ended January 31,

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The Company’s current tax provision is primarily attributable to profitable jurisdictions outside of the United States (U.S.) and U.S.

state income taxes due to mandatory capitalization of research and experimental expenditures.

In the fiscal year ended January 31, 2021, the Company released a portion of its valuation allowance against certain foreign deferred tax assets resulting in an income tax benefit of $ 0.7 million, and recorded a U.S.

tax benefit of $ 0.2 million due to the expiration of certain statutes of limitations of unrecognized tax benefits.

state income taxes due to limitations imposed on state net operating loss ("NOL") carryforwards and state margin tax.

The Company reconciled its income taxes at the federal statutory income tax rate to the provision for income taxes included within its consolidated statements of operations and comprehensive loss.

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Non-deductible expenses ( 1,902 ) ( 1,492 ) ( 1,244 )

Change in valuation allowance ( 4,399 ) ( 22,027 ) ( 23,900 )

R&D credit carryforward 15,656 — —

Changes in valuation allowance ( 13,913 ) ( 4,399 ) ( 22,027 )

Rate change 386 62 ( 66 )

Stock-based compensation ( 1,593 ) ( 2,500 ) ( 1,489 )

Net excess tax (shortfalls) benefits from stock-based compensation ( 6,498 ) ( 990 ) 3,444

Net excess tax benefits (shortfalls) from stock-based compensation 213 ( 6,498 ) ( 990 )

Return to provision adjustment ( 25 ) 235 1,718

Global intangible low-taxed income — ( 1,096 ) —

Intra-entity asset transfer — — 3,944

Other, net 292 ( 239 ) ( 707 )

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Deferred Income Taxes

Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating loss carryforwards.

The components of the Company's deferred income taxes are as follows:

The components of the Company's deferred income taxes were as follows:

As of January 31,

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Net operating loss carryforwards $ 109,415 $ 126,654

Tax credit carryforwards 19,668 —

Stock-based compensation 3,329 5,075

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Total deferred tax liabilities ( 27,684 ) ( 32,262 )

Net deferred tax asset (liability) $ ( 61 ) $ 754

Net deferred tax (liability) asset $ ( 136 ) $ ( 61 )

As of January 31, 2024, for federal income tax purposes, the Company had $ 384.0 million of gross U.S.

federal net operating loss carryforwards, with pre-2018 net operating losses expiring starting in fiscal 2033 and others indefinitely carried forward.

As of January 31, 2023, for state income tax purposes, the Company had $ 22.6 million of post-apportioned, tax-effected net operating loss carryforwards, which expire in fiscal 2024 through fiscal 2041.

As of January 31, 2023, the Company had $ 7.3 million of tax-effected foreign net operating loss carryforwards which expires starting in fiscal 2026.

Utilization of the Company’s net operating loss carryforwards in the future will be dependent upon its ability to generate taxable income and could be limited due to ownership changes, as defined under the provisions of Section 382 of the Code and similar state provisions.

Utilization of the Company’s foreign net operating loss carryforwards in the future will be dependent upon the local tax law and regulation.

federal NOL carryforwards, with pre-2018 NOLs expiring starting in fiscal 2037 with others indefinitely carried forward.

As of January 31, 2024, for state income tax purposes, the Company had $ 20.1 million of post-apportioned, tax-effected NOL carryforwards, which expire in fiscal 2025 through fiscal 2043.

As of January 31, 2024, the Company had $ 8.7 million of tax-effected foreign NOL carryforwards which expire starting in fiscal 2026.

As of January 31, 2024, for federal income tax purposes, the Company had $ 24.5 million of gross U.S.

federal research and development tax credits carryforwards which expire starting in fiscal 2037.

Utilization of the Company’s NOLs and tax credit carryforwards in the future will be dependent upon its ability to generate taxable income and could be limited due to ownership changes, as defined under the provisions of Section 382 of the Code and similar state provisions.

Utilization of the Company’s foreign NOL carryforwards in the future will be dependent upon local tax laws and regulations.

The Company regularly evaluates the realizability of its deferred tax assets and establishes a valuation allowance if it is more likely than not that some or all the deferred tax assets will not be realized.

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Generally, more weight is given to objectively verifiable evidence, such as the cumulative loss in recent years, as a significant piece of negative evidence to overcome.

During the fiscal year ended January 31, 2023, the valuation allowance had a net increase of $ 4.4 million from approximately $ 151.2 million to $ 155.6 million, primarily due to a decrease in U.S.

deferred tax liabilities.

The Company also recorded valuation allowances in certain foreign jurisdictions due to the cumulative book loss in the consolidated group.

During the fiscal year ended January 31, 2022, the valuation allowance increased by $ 22.0 million from approximately $ 129.2 million to $ 151.2 million, primarily due to the impact of the net operating loss carryforwards established in the current period net with other changes in U.S.

deferred tax assets.

During the fiscal year ended January 31, 2024, the valuation allowance had a net increase of $ 13.9 million from approximately $ 155.6 million to $ 169.5 million, primarily due to increases in U.S.

deferred tax assets resulting from capitalization and amortization of research and development expenses, and generation of U.S.

research and development tax credits, then netted with the impact of NOLs utilized in the current period.

During the fiscal year ended January 31, 2023, the valuation allowance increased $ 4.4 million from approximately $ 151.2 million to $ 155.6 million, primarily due to a decrease in U.S.

deferred tax liabilities and the recording of valuation allowance in certain foreign jurisdictions.

The Company will continue to assess the realizability of the deferred tax assets in each applicable jurisdiction going forward.

Other Considerations

income tax has not been recognized on the excess of the amount for financial reporting over the tax basis of certain investments in foreign subsidiaries that is indefinitely reinvested.

The Company may be subject to state income taxes and withholding taxes upon distribution of non-U.S.

The Company generally does not provide deferred income taxes for the undistributed earnings of its foreign subsidiaries where the Company intends to reinvest such earnings indefinitely.

Should circumstances change and it becomes apparent that some or all of the undistributed earnings will no longer be indefinitely reinvested, the Company will accrue for income taxes not previously recognized, where applicable.

Such earnings may be subject to state income taxes and withholding taxes upon distribution of non-U.S.

earnings in the form of dividends.

The Company does not believe these taxes are material.

As of January 31, 2024, the Company's undistributed foreign earnings and unrecorded deferred income taxes with respect to its undistributed earnings are not material.

A reconciliation of the beginning and ending balance of total unrecognized tax benefits for the fiscal years ended January 31, 2024, 2023, and 2022 is as follows:

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End of period $ 4,920 $ — $ 288

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the (provision for) benefit from income taxes and recognized insignificant interest and penalties in each of the fiscal years ended January 31, 2023, 2022, and 2021.

As of January 31, 2023, 2022 and 2021, accrued unrecognized tax benefits were $ — million , $ 0.3 million and $ 0.3 million, respectively, and if recognized would reduce the (provision for) benefit from income taxes, and the Company's effective tax rate.

During fiscal 2024, the Company completed an analysis of its historical U.S.

research and development tax credits and recorded a corresponding increase in the uncertain tax position.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes and recognized insignificant interest and penalties in each of the fiscal years ended January 31, 2024, 2023, and 2022.

As of January 31, 2024 and 2023, none of the accrued unrecognized tax benefits, if recognized, would reduce the provision for income taxes, and the Company's effective tax rate.

As of January 31, 2022, accrued unrecognized tax benefits were $ 0.3 million, which if recognized, would reduce the provision for income taxes, and the Company's effective tax rate.

The Company does not expect any unrecognized tax benefits to be recognized within the next 12 months.

The Company is subject to income tax examinations in the United States and various state and foreign jurisdictions.

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During the fiscal year ended January 31, 2024, the Company paid $ 18.5 million for amounts included in the measurement of lease liabilities and did not enter into any new lease arrangements.

During the fiscal years ended January 31, 2023, 2022 and 2021, the Company recognized lease expense which consisted of the following:

During the fiscal years ended January 31, 2024, 2023 and 2022, the Company recognized lease expense, respectively, which consisted of the following:

Fiscal year ended January 31,

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The Company is obligated to make payments under certain non-cancelable contractual obligations in the normal course of business.

The Company's contractual obligations primarily relate to its operating lease arrangements for office space.

The Company's contractual obligations primarily relate to its operating and short-term lease arrangements for office space.

Its other contractual obligations include contracts with its Publisher Network application providers, which generally have a term of one year, although some have a term of several years, and its software vendors, among others.

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Fiscal year ending January 31:

Operating Leases Other

2025 $ 17,746 $ 38,659

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Warranties and Indemnifications

The Answers platform is in some cases warranted to perform in a manner consistent with general industry standards that are reasonably applicable and materially in accordance with the Company's product specifications.

The Company's platform is in some cases warranted to perform in a manner consistent with general industry standards that are reasonably applicable and materially in accordance with the Company's product specifications.

The Company's arrangements generally include certain provisions for indemnifying customers against liabilities if its products or services infringe a third-party's intellectual property rights and/or if the Company breaches its contractual agreements with a customer or in instances of negligence, fraud or willful misconduct by the Company.

To date, the Company has not incurred any material costs as a result of such obligations and has not accrued any liabilities related to such obligations in the accompanying consolidated financial statements.

The Company has also agreed to indemnify certain of its directors and executive officers for costs associated with any fees, expenses, judgments, fines and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person's service as a director or officer, including any action by the Company, arising out of that person's services as the Company's director or officer or that person's services provided to any other company or enterprise at the Company's request.

The Company maintains director and officer insurance coverage that would generally

enable the Company to recover a portion of future amounts paid.

To date, the Company has not incurred any material costs as a result of such obligations and has not accrued any significant liabilities related to such obligations in the accompanying consolidated financial statements.

company or enterprise at the Company's request.

The Company maintains director and officer insurance coverage that would generally enable the Company to recover a portion of future amounts paid.

The Company may also be subject to indemnification obligations by law with respect to the actions of its employees under certain circumstances and in certain jurisdictions.

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Basic net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period.

Unvested restricted stock and restricted stock units are excluded from the denominator of basic net loss per share.

Unvested restricted stock, restricted stock units, and performance-based restricted stock units where the market conditions have not been met are excluded from the denominator of basic net loss per share.

Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares plus common equivalent shares for the period, including any dilutive effect from such shares.

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Performance-based restricted stock units (1)

3,555,000 2,000,000 —

Total anti-dilutive common equivalent shares 15,854,771 18,675,711 17,095,994

Subsequent Events

On March 10, 2023, Silicon Valley Bank (“SVB”) was unable to continue their operations and 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.

While the Company's credit facility was provided by SVB, no amounts were drawn on the credit facility as of March 15, 2023, although the facility backs approximately $ 14 million of letters of credit supporting the Company's leases as of that date.

While the National Bank of Santa Clara has publicly assured holders of credit facilities that they intend to honor those facilities, this credit facility may not be available in all or in part in the near future depending on the resolution of SVB, and the Company may also need to replace it, including the letters of credit if required by various landlords.

In addition, as of March 15, 2023, substantially all of the Company's cash and cash equivalents are held at other large financial institutions.

(1) An additional 1.3 million shares of common stock may be awarded for certain PSUs based on the Company's total shareholder return ("TSR") relative to the TSR of companies in the S&P Software and Services Select Index over specified performance periods.

"Stock-Based Compensation", for further discussion .

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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 7A. Quantitative and Qualitative Disclosures About Market Risk