What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-03-18 compared with 2020-03-20 · 418 added, 359 removed, 681 unchanged (53% of the section changed)

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Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Income

Consolidated Statements of Convertible Preferred Stock and Stockholders’ (Deficit) Equity

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Zoom Video Communications, Inc.:

Opinion on the Consolidated Financial Statements

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of Zoom Video Communications, Inc.

and subsidiaries (the Company) as of January 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), convertible preferred stock and stockholders’ (deficit) equity, and cash flows for each of the years in the three-year period ended January 31, 2020, and the related notes and financial statement schedule II:

and subsidiaries (the Company) as of January 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income, convertible preferred stock and stockholders’ (deficit) equity, and cash flows for each of the years in the three-year period ended January 31, 2021, and the related notes and financial statement schedule II:

valuation and qualifying accounts (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the three-year period ended January 31, 2020, in conformity with U.S.

We also have audited the Company’s internal control over financial reporting as of January 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of January 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended January 31, 2021, in conformity with U.S.

generally accepted accounting principles.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2021 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for leases as of February 1, 2019, due to the adoption of Financial Accounting Standards Board’s Accounting Standards Codification (ASC) Topic 842, Leases .

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

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We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

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

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

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

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions

and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated 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 consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a 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.

Sufficiency of Audit Evidence Over Revenue

As discussed in Notes 1 and 2 to the consolidated financial statements, the Company’s revenue is principally derived from the sale of subscriptions to the Company’s video communications platform.

The Company recorded $2,651 million of revenue for the year ended January 31, 2021.

We identified the evaluation of sufficiency of audit evidence over revenue as a critical audit matter.

This matter required especially subjective auditor judgment because the Company’s revenue recognition process is highly automated and is reliant upon a number of customized and proprietary information technology (IT) systems.

Involvement of IT professionals with specialized skills and knowledge was required to assist with the performance of certain procedures and determination of IT applications subject to testing.

The following are the primary procedures we performed to address this critical audit matter.

We applied auditor judgment to determine the nature and extent of procedures to be performed over revenue.

We evaluated the design and tested the operating effectiveness of certain internal controls related to revenue recognition.

This included certain controls related to the Company’s general information technology and application controls related to the systems utilized within the Company’s revenue recognition process.

We involved IT professionals with specialized skills and knowledge, who assisted in testing the IT controls of the various systems interacting with the Company’s revenue recognition process.

We recalculated revenue for system-generated sales transactions during the year using a software audit tool.

For a sample of transactions, we compared the amounts recognized for consistency with underlying documentation, including contracts with customers and cash receipts, and recalculated the amount of revenue recognized in the period based on the terms of the arrangement and the satisfaction of the underlying performance obligation.

In addition, we evaluated the sufficiency of audit evidence obtained over revenue by assessing the results of procedures performed.

We have served as the Company’s auditor since 2016.

San Francisco, California

Santa Clara, California

March 18, 2021

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Operating lease right-of-use assets 97,649 68,608

Goodwill 24,340 —

Other assets, noncurrent 75,953 22,332

Total assets $ 5,297,993 $ 1,289,845

Liabilities, convertible preferred stock, and stockholders’ equity (deficit)

Liabilities and stockholders’ equity

Current liabilities:

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Commitments and contingencies (Note 8)

Convertible preferred stock, $ 0.001 par value per share, zero and 158,104,540 shares authorized as of January 31, 2020 and 2019, respectively;

zero and 152,665,804 shares issued and outstanding as of January 31, 2020 and 2019, respectively

Stockholders’ equity (deficit):

Preferred stock, $ 0.001 par value per share, 200,000,000 and zero shares authorized as of January 31, 2020 and 2019, respectively;

Stockholders’ equity:

Preferred stock, $ 0.001 par value per share, 200,000,000 shares authorized as of January 31, 2021 and 2020;

zero shares issued and outstanding as of January 31, 2021 and 2020

Common stock, $ 0.001 par value per share, 2,000,000,000 and 320,000,000 Class A shares authorized as of January 31, 2020 and 2019, respectively;

123,391,114 and zero shares issued and outstanding as of January 31, 2020 and 2019, respectively;

Common stock, $ 0.001 par value per share, 2,000,000,000 Class A shares authorized as of January 31, 2021 and 2020;

215,737,924 and 123,391,114 shares issued and outstanding as of January 31, 2021 and 2020, respectively;

300,000,000 Class B shares authorized as of January 31, 2021 and 2020;

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Additional paid-in capital 3,187,168 832,705

Accumulated other comprehensive income (loss) 809 ( 135 )

Retained earnings (accumulated deficit) 152 ( 25,153 )

Total stockholders’ equity (deficit) 833,943 ( 7,439 )

Total liabilities, convertible preferred stock, and stockholders’ equity (deficit) $ 1,289,845 $ 354,565

Accumulated other comprehensive income 839 809

Retained earnings 672,468 152

Total stockholders’ equity 3,860,767 833,943

Total liabilities and stockholders’ equity $ 5,297,993 $ 1,289,845

The accompanying notes are an integral part of these consolidated financial statements.

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Total operating expenses 1,169,531 494,566 263,349

Income (loss) from operations 12,696 6,167 ( 4,833 )

Income from operations 659,848 12,696 6,167

Interest income and other, net 18,186 13,666 2,182

Net income (loss) before provision for income taxes 26,362 8,349 ( 3,518 )

Income before provision for income taxes 678,034 26,362 8,349

Provision for income taxes 5,718 1,057 765

Net income (loss) 25,305 7,584 ( 3,822 )

Distributed earnings attributable to participating securities — — ( 4,405 )

Net income 672,316 25,305 7,584

Undistributed earnings attributable to participating securities ( 789 ) ( 3,555 ) ( 7,584 )

Net income (loss) attributable to common stockholders $ 21,750 $ — $ ( 8,227 )

Net income (loss) per share attributable to common stockholders:

Net income attributable to common stockholders $ 671,527 $ 21,750 $ 0

Net income per share attributable to common stockholders:

Basic $ 2.37 $ 0.09 $ 0.00

Diluted $ 2.25 $ 0.09 $ 0.00

Weighted-average shares used in computing net income (loss) per share attributable to common stockholders:

Weighted-average shares used in computing net income per share attributable to common stockholders:

Basic 283,853,654 233,641,336 84,483,094

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ZOOM VIDEO COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

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2021 2020 2019

Net income (loss) $ 25,305 $ 7,584 $ ( 3,822 )

Other comprehensive income (loss):

Unrealized gain (loss) on available-for-sale marketable securities, net of tax 944 396 ( 531 )

Comprehensive income (loss) $ 26,249 $ 7,980 $ ( 4,353 )

Net income $ 672,316 $ 25,305 $ 7,584

Other comprehensive income:

Unrealized gain on available-for-sale marketable securities, net of tax 30 944 396

Comprehensive income $ 672,346 $ 26,249 $ 7,980

The accompanying notes are an integral part of these consolidated financial statements.

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Balance as of January 31, 2018 152,665,804 $ 159,552 82,609,638 $ 80 $ 6,517 $ ( 531 ) $ ( 32,737 ) $ ( 26,671 )

Repurchase of Series A convertible preferred stock ( 1,365,800 ) ( 205 ) — — ( 4,405 ) — — ( 4,405 )

Issuance of common stock upon exercise of stock options — — 7,717,797 9 2,302 — — 2,311

Stock-based compensation expense — — — — 8,941 — — 8,941

Other comprehensive loss — — — — — ( 531 ) — ( 531 )

Net loss — — — — — — ( 3,822 ) ( 3,822 )

Balance as of January 31, 2018 152,665,804 $ 159,552 82,609,638 $ 80 $ 6,517 $ ( 531 ) $ ( 32,737 ) $ ( 26,671 )

Issuance of common stock upon exercise of stock options — — 7,717,797 9 2,302 — — 2,311

Stock-based compensation expense — — — — 8,941 — — 8,941

Other comprehensive income — — — — — 396 — 396

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Balance as of January 31, 2020 — $ — 278,731,143 $ 277 $ 832,705 $ 809 $ 152 $ 833,943

Issuance of common stock upon follow-on public offering, net of underwriting discounts and commissions and other offering costs — — 5,882,353 6 1,979,538 — — 1,979,544

Issuance of common stock upon exercise of stock options — — 7,378,477 7 29,100 — — 29,107

Issuance of common stock upon release of restricted stock units — — 633,697 1 — — — 1

Charitable donation of common stock — — — — 23,312 — — 23,312

Issuance of common stock for employee stock purchase plan — — 923,553 1 38,432 — — 38,433

Stock-based compensation expense — — — — 284,081 — — 284,081

Other comprehensive income — — — — — 30 — 30

Net income — — — — — — 672,316 672,316

Balance as of January 31, 2021 — $ — 293,549,223 $ 292 $ 3,187,168 $ 839 $ 672,468 $ 3,860,767

The accompanying notes are an integral part of these consolidated financial statements.

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Cash flows from operating activities:

Net income (loss) $ 25,305 $ 7,584 $ ( 3,822 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net income $ 672,316 $ 25,305 $ 7,584

Adjustments to reconcile net income to net cash provided by operating activities:

Stock-based compensation expense 275,818 73,109 8,941

Amortization of deferred contract acquisition costs 104,306 37,101 20,839

Provision for accounts receivable allowances 32,007 6,370 1,953

Depreciation and amortization 28,857 16,449 7,008

Charitable donation of common stock 23,312 — —

Non-cash operating lease cost 10,887 6,885 —

Provision for accounts receivable allowances 6,370 1,953 727

Other 3,822 ( 1,068 ) 37

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Maturities of marketable securities 580,795 343,554 68,747

Sales of marketable securities 36,897 — —

Purchases of property and equipment ( 79,972 ) ( 38,084 ) ( 28,432 )

Cash paid for acquisition, net of cash acquired ( 26,486 ) — —

Purchase of equity investment ( 8,000 ) ( 3,000 ) —

Loans to employees ( 1,569 ) — —

Purchases of intangible assets ( 5,843 ) ( 141 ) ( 2,018 )

Purchase of convertible promissory note ( 5,000 ) — —

Other 1,659 ( 1,569 ) —

Net cash used in investing activities ( 1,562,420 ) ( 499,468 ) ( 39,719 )

Cash flows from financing activities:

Proceeds from initial public offering and private placement, net of underwriting discounts and commissions and other offering costs 542,492 ( 939 ) —

Proceeds from international employee stock sales to be remitted to employees and tax authorities 48,547 — —

Proceeds from follow-on public offering, net of underwriting discounts and commissions and other offering costs 1,979,206 — —

Proceeds from issuance of common stock for employee stock purchase plan 38,433 15,482 —

Proceeds from exercise of stock options, net of repurchases 28,550 9,169 3,565

Proceeds from employee equity transactions to be remitted to employees and tax authorities, net 4,088 48,547 —

Proceeds from initial public offering and private placement, net of underwriting discounts and commissions and other offering costs — 542,492 ( 939 )

Proceeds from issuance of convertible promissory notes and derivatives — — 15,000

Principal payments on capital lease obligations — — ( 92 )

Repurchase of convertible preferred stock — — ( 4,610 )

Net cash provided by (used in) financing activities 615,690 17,534 ( 3,997 )

Net increase (decrease) in cash, cash equivalents, and restricted cash 268,114 29,147 ( 97,928 )

Cash, cash equivalents, and restricted cash—beginning of period 65,968 36,821 134,749

Cash, cash equivalents, and restricted cash—end of period $ 334,082 $ 65,968 $ 36,821

Net cash provided by financing activities 2,050,277 615,690 17,534

Net increase in cash, cash equivalents, and restricted cash 1,959,034 268,114 29,147

Cash, cash equivalents, and restricted cash—beginning of year 334,082 65,968 36,821

Cash, cash equivalents, and restricted cash—end of year $ 2,293,116 $ 334,082 $ 65,968

Supplemental disclosures of cash flow information

Cash paid for income taxes $ 1,070 $ 214 $ 133

Cash paid for income taxes, net $ 3,181 $ 1,070 $ 214

Supplemental disclosures of non-cash investing and financing information

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Purchase of equipment during the period included in accounts payable and accrued expenses $ 34,514 $ 1,422 $ 3,284

Purchase of property and equipment under capital lease $ — $ — $ 212

Vesting of early exercised stock options and restricted stock awards $ 558 $ 725 $ 277

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Zoom Video Communications, Inc.

and its subsidiaries (together, “Zoom,” the “Company,” “we,” “us,” or “our”) provide a video-first, unified communications platform.

Our platform combines video, audio, phone, screen sharing, and chat functionalities.

and its subsidiaries (collectively, “Zoom,” the “Company,” “we,” “us,” or “our”) provide a video-first unified communications platform that delivers happiness and fundamentally changes how people interact.

We connect people through frictionless and secure video, phone, chat, and content sharing and enable face-to-face video experiences for thousands of people in a single meeting across disparate devices and locations.

We were incorporated in the state of Delaware in April 2011, and are headquartered in San Jose, California.

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Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with GAAP and include the accounts of Zoom Video Communications, Inc., its subsidiaries, and a variable interest entity (“VIE”) for which we are the primary beneficiary.

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and include the accounts of Zoom Video Communications, Inc., its subsidiaries, and a variable interest entity for which we are the primary beneficiary.

All intercompany balances and transactions have been eliminated in consolidation.

Variable Interest Entities

In the normal course of business, we may enter into relationships with entities that are deemed to be VIEs.

A VIE is a legal entity that satisfies any of the following characteristics:

(a) the legal entity does not have sufficient equity investment at risk;

(b) the equity investors at risk, as a group, lack the characteristics of a controlling financial interest;

or (c) the legal entity is structured with disproportionate voting rights, and substantially all of the activities are conducted on behalf of an investor with disproportionately few voting rights.

We consolidate a VIE for which we are the primary beneficiary.

The primary beneficiary of a VIE is the party, if any, with both of the following characteristics:

(a) the power to direct the activities that most significantly affect the VIE’s economic performance (the “power criterion”) and (b) the obligation to absorb losses or the right to receive residual returns of the VIE that could potentially be significant to the VIE (the “economics criterion”).

During fiscal year 2020, a VIE (the “China VIE”) was established and holds the license required to sell our products and services in the People’s Republic of China.

However, we are the exclusive provider of technical and consulting services to the China VIE and own all copyrights, patents, technical secrets, trade secrets, and other intellectual properties related to and arising from the operations of the China VIE.

Any creditors of the China VIE do not have recourse to our general credit.

Through the China VIE agreements, we have the unilateral power to vote all of the shares of the China VIE, set its corporate policies and guidance, and designate the members of its board of directors and management team.

We are also entitled to receive all dividends of the China VIE.

Because both the power and economics criteria are met, we are the primary beneficiary of and therefore have a controlling financial interest in the China VIE.

Initial Public Offering and Private Placement

On April 23, 2019, we completed our IPO, in which we issued and sold 9,911,434 shares of our Class A common stock at $ 36.00 per share, resulting in net proceeds of $ 340.8 million after deducting underwriting discounts and commissions.

On April 18, 2019, the underwriters exercised their option to purchase an additional 3,130,435 shares of our Class A common stock at $ 36.00 per share.

This transaction closed on April 23, 2019, resulting in additional proceeds of $ 107.1 million, net of underwriters’ discounts and commissions.

In connection with the IPO:

• all of the shares of convertible preferred stock outstanding automatically converted into an aggregate of 152,665,804 shares of Class B common stock;

• outstanding convertible promissory notes and accrued interest automatically converted into 426,223 shares of Class A common stock based on the IPO price of $ 36.00 per share;

• Salesforce Ventures LLC purchased 2,777,777 shares of Class A common stock from us at $ 36.00 per share in a concurrent private placement.

We received aggregate proceeds of $ 100.0 million and did not pay any underwriting discounts or commissions with respect to the shares of Class A common stock that were sold in this private placement.

Deferred offering costs consist primarily of accounting, legal, and other fees related to our IPO.

Prior to the IPO, all deferred offering costs were capitalized in other assets, noncurrent in the consolidated balance sheets.

After the IPO, $ 6.4 million of deferred offering costs were reclassified into stockholders’ equity (deficit) as a reduction of the IPO proceeds in the consolidated balance sheets.

We capitalized $ 2.4 million of deferred offering costs within other assets, noncurrent in the consolidated balance sheet as of January 31, 2019, which were reclassified into additional paid-in capital upon the completion of the IPO.

In January 2018, our board of directors approved the amendment and restatement of our certificate of incorporation to effect a four -for-one forward stock split of our common stock and convertible preferred stock (collectively, the “Capital Stock”), which became effective on January 3, 2018.

Accordingly, (i) each share of outstanding Capital Stock was split into four shares of Capital Stock of the same class and series, as applicable;

(ii) the number of shares of Capital Stock issuable upon the exercise of each outstanding option to purchase Capital Stock was proportionately increased on a four -for-one basis;

(iii) the exercise price of each outstanding option to purchase Capital Stock was proportionately reduced on a four -for-one basis;

(iv) the authorized number of each class and series of Capital Stock was proportionally increased in accordance with the four -for-one stock split;

and (v) the par value of each class of Capital Stock was not adjusted as result of this stock split.

All of the share numbers, share prices, and exercise prices have been adjusted retroactively within these consolidated financial statements to reflect this stock split.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.

Significant items subject to such estimates and assumptions include, but are not limited to, the estimated expected benefit period for deferred contract acquisition costs, the accounts receivable allowances, the useful lives of long-lived assets, the incremental borrowing rate for operating leases, the valuation of derivative liabilities, the value of common stock and other assumptions used to measure stock-based compensation expense, sales and other tax liabilities, and the valuation of deferred income tax assets and uncertain tax positions.

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period.

Significant items subject to such estimates and assumptions include, but are not limited to, the estimated expected benefit period for deferred contract acquisition costs, the allowance for credit losses, the useful lives of long-lived assets, the incremental borrowing rate for operating leases, stock-based compensation expense, sales and other tax liabilities, the fair value of marketable securities, equity investment, convertible promissory note, acquired intangible assets and goodwill, and the valuation of deferred income tax assets and uncertain tax positions.

Actual results could differ from those estimates.

The COVID-19 pandemic has created, and may continue to create, significant uncertainty in macroeconomic conditions, and the extent of its impact on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak and the impact on our customers and our sales cycles.

During the fiscal years ended January 31, 2021 and 2020, our estimates and assumptions required increased judgment and carried a higher degree of variability and volatility.

As events continue to evolve and additional information becomes available, our estimates may change materially in future periods.

Concentration of Risks

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Cash and cash equivalents consist of cash in banks and highly liquid investments, primarily money market funds, purchased with an original maturity of three months or less.

Historically, restricted cash consisted of certificates of deposit collateralizing our operating leases and corporate credit cards, and was included in prepaid expenses and other current assets and other assets, noncurrent in the consolidated balance sheets.

In the third quarter of fiscal year 2020, we received $ 48.5 million of cash from proceeds on international employees’ sales of our common stock.

The amount is held in our bank account until it is remitted to the employees and the tax authorities.

Restricted cash consists of certificates of deposit collateralizing our operating leases, corporate credit cards, and cash from proceeds from international employees’ sales of our common stock, and is included in prepaid expenses and other current assets and other assets, noncurrent in the consolidated balance sheets.

As of January 31, 2021 and 2020, we had $ 50.5 million and $ 48.5 million, respectively, of cash from proceeds from international employees’ sales of our common stock.

The amount is held in our bank account until it is remitted to the

employees and the tax authorities.

Due to the restrictions on the use of the funds in the bank account, we have classified the amount as restricted cash included in prepaid expenses and other current assets, and a corresponding amount is included in accrued expenses and other current liabilities in the consolidated balance sheets.

Marketable Securities

Marketable securities consist primarily of high-grade commercial paper, corporate bonds, agency bonds, corporate debt securities, U.S.

Allowance for Credit Losses

We are exposed to credit losses primarily through our accounts receivable and investments in available-for-sale debt securities.

See Note 3 for additional information related to our available-for-sale debt securities.

Accounts receivable, net

Accounts receivable are recorded for invoiced amounts and amounts for which revenue has been recognized, but not invoiced, net of allowances.

Our short-term accounts receivable consist of the following:

As of January 31, 2021

(in thousands)

Accounts receivable, gross $ 331,547

Allowance for credit losses ( 20,500 )

Allowance for returns ( 16,344 )

Accounts receivable, net $ 294,703

We maintain an allowance for credit losses for expected uncollectible accounts receivable, which is recorded as an offset to accounts receivable, and changes in such are classified as general and administrative expense in the consolidated statements of operations.

The allowance for credit losses is based on management’s estimate for expected credit losses for outstanding accounts receivable.

We determine expected credit losses based on historical write-off experience, an analysis of the aging of outstanding receivables, customer payment patterns, the establishment of specific reserves for customers in an adverse financial condition, and adjust based upon our expectations of changes in macroeconomic conditions that may impact the collectibility of outstanding receivables, including noncurrent accounts receivable.

We also consider current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data.

We reassess the adequacy of the allowance for credit losses each reporting period.

Furthermore, the allowance for sales returns is recorded as an offset to accounts receivable, and changes to the allowance are classified as a reduction in revenue in the consolidated statements of operations.

We estimate returns from sales to customers based on historical chargebacks and return rates.

For the fiscal year ended January 31, 2021, our assessment considered business and market disruptions caused by COVID-19 and estimates of credit and collectibility trends.

The continued volatility in market conditions and evolving shifts in credit trends are difficult to predict, causing variability and volatility that may have a material impact on our allowance for credit losses in future periods.

Below is a rollforward of our allowance for credit losses for the fiscal year ended January 31, 2021.

(in thousands)

Balance as of January 31, 2020 $ 5,150

Provision for credit losses 25,651

Write-offs ( 10,301 )

Balance as of January 31, 2021 $ 20,500

Available-for-sale Investments

Available-for-sale investments consist primarily of high-grade commercial paper, agency bonds, corporate bonds, corporate and other debt securities, U.S.

government agency securities, and treasury bills.

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As a result, we classify our securities, including those with maturities beyond 12 months, as current assets in the consolidated balance sheets.

We carry these securities at fair value and

record unrealized gains and losses in accumulated other comprehensive income (loss), which is reflected as a component of stockholders’ equity (deficit).

We evaluate our securities to assess whether those with unrealized loss positions are other than temporarily impaired.

We consider impairments to be other than temporary if they are related to deterioration in credit risk or if it is likely we will sell the securities before the recovery of their cost basis.

Realized gains and losses from the sale of marketable securities and declines in value deemed to be other than temporary are determined based on the specific identification method.

We carry these securities at fair value and record unrealized gains and losses in accumulated other comprehensive income, which is reflected as a component of stockholders’ equity.

We evaluate our securities with unrealized loss positions as to whether the declines in fair value were due to credit losses, and record the portion of impairment relating to the credit losses through allowance for credit losses limited to the amount that fair value was less than the amortized cost basis.

Realized gains and losses from the sale of marketable securities are determined based on the specific identification method.

Realized gains and losses are reported in interest income and other, net in the consolidated statements of operations.

Equity Investment

In the third quarter of fiscal year 2020, we made a $ 3.0 million strategic investment in a private limited liability company in the business of designing and developing video communications hardware.

We do not have a controlling financial interest in the investee nor the ability to exercise significant influence over the operating and financial policies of the investee.

The investment is included within other assets, noncurrent in the consolidated balance sheets.

Dividend income, unrealized and realized holding gains or losses, and impairment charges would be reported in interest income and other, net in the consolidated statements of operations.

The maximum loss we could incur for this investment is its carrying value.

We have elected to measure this investment, which does not have a readily determinable fair value, at its cost minus impairment, if any.

If we identify observable price changes in orderly transactions for the identical or a similar investment of the same issuer, we will measure the equity security at fair value as of the date that the observable transaction occurred (i.e., using the measurement alternative).

At each reporting period, we perform a qualitative assessment considering impairment indicators to evaluate whether the investment is impaired.

If this qualitative assessment indicates that the investment is impaired and the fair value of the investment is less than its carrying amount, the investment would be written down to its fair value.

As of January 31, 2020, the carrying amount of this investment is $ 3.0 million.

We have not recognized any impairments nor any downward or upward measurement alternative adjustments to this carrying amount.

Fair Value Measurements

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Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Financial instruments consist of cash equivalents, restricted cash, marketable securities, accounts receivable, accounts payable, convertible promissory notes, and derivative liabilities.

Cash equivalents, restricted cash, marketable securities, and derivative liabilities are stated at fair value on a recurring basis.

Financial instruments consist of cash equivalents, restricted cash, marketable securities, accounts receivable, and accounts payable.

Cash equivalents, restricted cash, and marketable securities are stated at fair value on a recurring basis.

Accounts receivable and accounts payable are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment date.

The principal amounts of the convertible promissory notes approximate fair value as the stated interest rates approximate market rates currently available to us.

Accounts Receivable

Accounts receivable are recorded at the invoiced amount and amounts for which revenue has been recognized but not invoiced, net of accounts receivable allowances.

The accounts receivable allowances are based on our assessment of the collectability of accounts.

We regularly review the adequacy of the accounts receivable allowances based on a combination of factors.

In establishing any required allowance, management considers historical losses adjusted to take into account current market conditions and our customers’ financial condition, the amount of any receivables in dispute, the current receivables aging, and the current payment terms.

Accounts receivable deemed uncollectible are charged against the accounts receivable allowances when identified.

Property and Equipment, Net

Property and equipment, net, are stated at cost, less accumulated depreciation.

Depreciation is calculated using the straight-line method over the estimated useful lives of the respective assets, determined to be three to five years .

Property and equipment, net, are stated at cost, less accumulated depreciation and amortization.

Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the respective assets, determined to be three to five years .

Leasehold improvements are amortized over the shorter of the remaining lease term or the estimated useful life of five years .

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Software Development Costs

We capitalize certain development costs related to our video-first communications platform during the application development stage.

Costs incurred in the preliminary stages of development are analogous to research and development activities and are expensed as incurred.

The preliminary stage includes activities such as conceptual formulation of alternatives, evaluation of alternatives, determination of existence of needed technology, and final selection of alternatives.

Once the application development stage is reached, internal and external costs are capitalized until the software is substantially complete and ready for its intended use.

We capitalize certain development costs related to our unified communications platform during the application development stage as long as it is probable the project will be completed, and the software will be used to perform the function intended.

Capitalized software development costs are recorded as part of property and equipment, net.

Maintenance, minor upgrades, and training costs are expensed as incurred.

Costs related to preliminary project activities and post-implementation activities are expensed as incurred.

Capitalized software development costs are amortized on a straight-line basis over the software’s estimated useful life, which is generally three years , and are recorded in cost of revenue in the consolidated statements of operations.

We evaluate the useful lives of these assets on an annual basis and test for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

We have capitalized $ 19.4 million, $ 3.1 million, and $ 2.5 million of software development costs during the fiscal years ended January 31, 2021, 2020, and 2019, respectively.

We adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) and applicable updates as of February 1, 2019, using the modified retrospective method of applying the new standard at the adoption date.

Prior year comparative financial information was not recast under the new standard and continues to be presented under Accounting Standards Codification (“ASC”) 840.

All lease arrangements are generally recognized at lease commencement.

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Our incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, in an economic environment where the leased asset is located.

ROU assets also include any initial direct costs incurred and any lease payments made at or before the lease commencement date, less lease incentives received.

ROU assets also include any initial direct costs incurred and any lease payments made at or before the lease commencement date, less lease

incentives received.

We reassess the lease term if and when a significant event or change in circumstances occurs within our control.

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There were no impairment charges recognized related to long-lived assets during the fiscal years ended January 31, 2021, 2020, or 2019.

Business Combinations

We account for our business combinations using the acquisition method of accounting, which requires, among other things, allocation of the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed at their estimated fair values on the acquisition date.

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

When determining the fair value of assets acquired and liabilities assumed, we make estimates and assumptions, especially with respect to intangible assets.

Our estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

During the measurement period, not to exceed one year from the date of acquisition, we may record adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill if new information is obtained related to facts and circumstances that existed as of the acquisition date.

After the measurement period, any subsequent adjustments are reflected in the consolidated statements of operations.

Acquisition costs, such as legal and consulting fees, are expensed as incurred.

Uncertain tax positions and tax-related valuation allowances are initially established in connection with a business combination as of the acquisition date.

We continue to collect information and reevaluate these estimates and assumptions quarterly.

We will record any adjustments to our preliminary estimates to goodwill, provided that it is within the one-year measurement period.

Goodwill and Intangible Assets

Goodwill amounts are not amortized, but rather tested for impairment at least annually or more often if circumstances indicate that the carrying value may not be recoverable.

Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value.

We have one reporting unit and as a result, goodwill has been assigned to the single reporting unit.

We conducted our annual impairment test of goodwill in the fourth quarter of fiscal year 2021 and determined that no adjustment to the carrying value of goodwill was required.

Intangible assets consist of acquired identifiable intangible assets resulting from business combinations, as well as other intangible assets purchased outside of a business combination, such as domains and intellectual property addresses.

Finite-lived intangible assets are initially recorded at fair value and are amortized on a straight-line basis over their estimated useful lives.

Amortization expense of developed technology is recorded within cost of revenue in the consolidated statements of operations.

We routinely evaluate the estimated remaining useful lives of our finite-lived intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization.

Indefinite-lived intangible assets are recorded at fair value and are not amortized.

We review the useful lives of indefinite-lived intangible assets each reporting period to determine whether events and circumstances continue to support the indefinite useful life classification.

If we determine that the life of an intangible asset is no longer indefinite, that asset would be tested for impairment and amortized prospectively over its estimated remaining useful life.

There were no impairment charges to acquired intangible assets during the fiscal year ended January 31, 2021.

Revenue Recognition

We derive our revenue from subscription agreements with customers for access to our video-first communications platform and services.

We derive our revenue primarily from subscription agreements with customers for access to our unified communications platform and services.

We also provide other services, which include professional services, consulting services, and online event hosting, which were immaterial to our consolidated financial statements.

Revenue is recognized when a customer obtains control of promised services.

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Identification of the performance obligations in the contract

Performance obligations committed in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the services and the products is separately identifiable from other promises in the contract.

Our performance obligations generally consist of access to our video-first communications platform and related support services, which is considered one performance obligation.

Performance obligations committed in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the services or products is separately identifiable from other promises in the contract.

Promised services or products under which both of these two criteria are not met are recognized as a combined, single performance obligation.

Our performance obligations primarily relate to access to our unified communications platform, which consists of one or more software-based services.

Our customers do not have the ability to take possession of our software, and through access to our platform, we provide a series of distinct software-based services that are satisfied over the term of the subscription.

We also provide services, which include professional services, consulting services, and online event hosting, which are generally considered distinct from the access to our video-first communications platform.

Determination of the transaction price

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Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental entities (e.g., sales and other indirect taxes).

Our video-first communications platform and related support services are typically warranted to perform in a professional manner that will comply with the terms of the subscription agreements.

Our unified communications platform and related services are typically warranted to perform in a professional manner that will comply with the terms of the subscription agreements.

In addition, we include service-level commitments to our customers warranting certain levels of uptime reliability and performance and permitting those customers to receive credits in the event that we fail to meet those service levels.

These credits represent a form of variable consideration.

Historically, we have not experienced any significant incidents affecting the defined levels of reliability and performance as required by the subscription agreements.

We have not provided any material refunds related to these agreements in the consolidated financial statements during the periods presented.

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Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on each performance obligation’s relative standalone selling price.

As noted above, access to our video-first communications platform and related support services are considered one performance obligation in the context of the contract and accordingly the transaction price is allocated to this single performance obligation.

Our contracts with multiple performance obligations are generally sold over the same subscription term and have the same pattern of transfer to the customer, and so they are accounted for as one combined performance obligation in the context of the contract.

Accordingly, the transaction price is allocated to this single performance obligation.

Recognition of the revenue when, or as, a performance obligation is satisfied

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Revenue is recognized in an amount that reflects the consideration that we expect to receive in exchange for those services.

Fees for access to our video-first communications platform and related support services are subscription revenue and are considered one performance obligation, and the related revenue is recognized ratably over the subscription period as we satisfy the performance obligation.

Fees for access to our unified communications platform and related services are subscription revenue and are considered one performance obligation, and the related revenue is recognized ratably over the subscription period as we satisfy the performance obligation.

Professional services are time-based arrangements and revenue is recognized as these services are performed.

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Cost of Revenue

Cost of revenue primarily consists of costs related to hosting our video-first communications platform and providing general operating support services to our customers.

These costs are composed of co-located data center costs, third-party cloud hosting costs, integrated third-party PSTN services, personnel-related expenses, amortization of capitalized software

development costs, and allocated overhead costs.

Indirect overhead associated with corporate facilities and related depreciation is allocated to cost of revenue and operating expenses based on applicable headcount.

Cost of revenue primarily consists of costs related to hosting our unified communications platform and providing general operating support services to our customers.

These costs are composed of co-located data center costs, third-party cloud hosting costs, integrated third-party PSTN services, personnel-related expenses, amortization of capitalized software development costs and acquired intangible assets, royalty payments, and allocated overhead costs.

Indirect overhead costs associated with corporate facilities and related depreciation is allocated to cost of revenue and operating expenses based on applicable headcount.

Research and Development

Research and development costs include personnel-related expenses associated with our engineering personnel and consultants responsible for the design, development, and testing of our video-first communications platform, depreciation of equipment used in research and development, and allocated overhead costs.

Research and development costs include personnel-related expenses associated with our engineering personnel and consultants responsible for the design, development, and testing of our unified communications platform, depreciation of equipment used in research and development, and allocated overhead costs.

Research and development costs are expensed as incurred.

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Stock-Based Compensation

Stock-based compensation expense related to stock awards (including stock options, restricted stock awards (“RSAs”), RSUs, and ESPP) is measured based on the fair value of the awards granted and recognized as an expense on a straight-line basis over the requisite service period for stock options, RSAs and RSUs, and over the offering period for the purchase rights issued under the ESPP.

The fair value of each option and ESPP award is estimated on the grant date using the Black-Scholes option pricing model.

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Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and the tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

We must then assess the likelihood that the resulting deferred tax assets will be realized.

A valuation allowance is provided when it is more likely than not that a deferred tax asset will not be fully realized.

Management believes it is more likely than not that deferred tax assets in the United States and the U.K.

will not be realized and, accordingly, a valuation allowance has been established on such deferred tax assets.

We recognize benefits of uncertain tax positions if it is more likely than not that such positions will be sustained upon examination based solely on their technical merits at the largest amount of benefit that is more likely than not to be realized upon the ultimate settlement.

Our policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense or benefit.

The calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of GAAP and U.S.

and foreign tax laws.

Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent we believe it is more likely than not that they will not be realized.

We consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations.

We record uncertain tax positions in accordance with ASC 740, Income Taxes on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

We consider many factors when evaluating our uncertain tax positions, which involve significant judgment and may require periodic adjustments.

The resolution of these uncertain tax positions in a manner inconsistent with management's expectations could have a material impact on our consolidated financial statements.

Net Income (Loss) Per Share Attributable to Common Stockholders

We calculate our net income (loss) per share attributable to Class A and Class B common stock using the two-class method required for companies with participating securities.

We consider our convertible preferred stock and unvested common stock, which includes early exercised stock options and RSAs, to be participating securities as holders of such securities have

non-forfeitable dividend rights in the event of our declaration of a dividend for shares of common stock.

During the periods when we are in a net loss position, the net loss attributable to common stockholders was not allocated to the convertible preferred stock and unvested common stock under the two-class method as these securities do not have a contractual obligation to share in our losses.

Distributed and undistributed earnings allocated to participating securities are subtracted from net income (loss) in determining net income (loss) attributable to common stockholders.

Basic net income (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of our Class A and Class B common stock outstanding.

We recognize interest and penalties related to uncertain tax positions as a component of our provision for income taxes.

Accrued interest and penalties are included with the related tax liability.

Net Income Per Share Attributable to Common Stockholders

We calculate our net income per share attributable to Class A and Class B common stock using the two-class method required for companies with participating securities.

We consider our convertible preferred stock and unvested common stock,

which includes early exercised stock options and RSAs, to be participating securities as holders of such securities have non-forfeitable dividend rights in the event of our declaration of a dividend for shares of common stock.

Distributed and undistributed earnings allocated to participating securities are subtracted from net income in determining net income attributable to common stockholders.

Basic net income per share is computed by dividing net income attributable to common stockholders by the weighted-average number of shares of our Class A and Class B common stock outstanding.

The diluted net income per share attributable to common stockholders is computed by giving effect to all dilutive securities.

Diluted net income per share attributable to common stockholders is computed by dividing the resulting net income attributable to common stockholders by the weighted-average number of fully diluted common shares outstanding.

During the periods when there is a net loss attributable to common stockholders, potentially dilutive common stock equivalents have been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is anti-dilutive.

Segment Information

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Total property and equipment, net $ 149,924 $ 57,138

Recent Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No.

Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2016-13, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , which replaces the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measured at amortized cost to be presented at the net amount expected to be collected.

The guidance will be effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years.

We do not expect the adoption to have a material impact on our consolidated financial statements.

Measurement of Credit Losses on Financial Instruments , which was subsequently amended by ASU No.

2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses , in November 2018.

Subsequently, the FASB issued ASU No.

2019-04, ASU No.

2019-05, ASU No.

2019-10, and ASU No.

2019-11 to provide additional guidance on the credit losses standard.

2016-13 and the related updates replace the existing incurred loss impairment model with an expected credit loss model, and requires a financial asset measured at amortized cost to be presented at the net amount expected to be collected.

We adopted the standard as of February 1, 2020, using the modified retrospective method of applying the new standard at the adoption date.

Our adoption did not result in any cumulative effect adjustment in our consolidated financial statements upon adoption as of February 1, 2020.

In August 2018, the FASB issued ASU No.

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The amendment aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license).

The guidance will be effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years.

We are currently evaluating whether the adoption of this standard will have a material impact on our consolidated financial statements.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842) , which supersedes FASB Accounting Standards Codification (“ASC”) Topic 840, Leases (“ASC 840”), and makes other conforming amendments to GAAP.

2016-02 requires, among other changes to the lease accounting guidance, lessees to recognize most leases on-balance sheet via an ROU asset and lease liability, and additional qualitative and quantitative disclosures.

2016-02 is effective for the annual periods in fiscal years beginning after December 15, 2018, and interim periods therein.

We adopted the standard as of February 1, 2019, using the modified retrospective method of applying the new standard at the adoption date.

Under this approach, we will continue to report comparative periods presented in the period of adoption under ASC 840.

We have elected the package of practical expedients permitted under the transition guidance within the new standard, which allows us to (1) carry forward the historical lease classification, (2) not reassess whether any expired or existing contracts contain

leases, and (3) not reassess indirect costs for any existing leases.

This election allows us to account for lease components (e.g., fixed payments or variable payments that depend on a rate that can be determined at commencement, including rent for the right to use the asset) together with non-lease components (e.g., other fixed payments that deliver a good or service, including common area maintenance costs) in the calculation of the ROU asset and corresponding liability.

Adoption of this standard resulted in the recording of ROU assets and lease liabilities of $ 40.5 million and $ 43.0 million, respectively, with no material impact on retained earnings as of February 1, 2019.

See Note 7 for further details.

In February 2018, the FASB issued ASU No.

2018-02, Compensation—Stock Compensation (Topic 718):

Income Statement—Reporting Comprehensive Income (Topic 220):

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.

The standard allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (“TCJA”).

The standard eliminates the stranded tax effects from the TCJA and improves the usefulness of information reported to users of our consolidated financial statements.

2018-02 is effective for the annual periods in fiscal years beginning after December 15, 2018, and interim periods therein.

We adopted ASU No.

2018-02 as of February 1, 2019, and our adoption did not have a material impact on the consolidated financial statements.

In June 2018, the FASB issued ASU No.

2018-07, Compensation—Stock Compensation (Topic 718):

Improvements to Nonemploy ee Share-Based Payment Accounting .

The standard simplifies the accounting for share-based payments granted to nonemployees for goods and services and aligns most of the guidance on such payments to nonemployees with the requirements for share-based payments granted to employees.

2018-07 is effective for the annual periods in fiscal years beginning after December 15, 2018, and interim periods therein, using a modified retrospective approach.

We adopted ASU No.

2018-07 as of February 1, 2019, and our adoption did not have a material impact on the consolidated financial statements.

In August 2018, the FASB issued ASU No.

2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement .

The standard no longer requires disclosure of the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy;

however, public companies will be required to disclose the range and weighted-average of significant unobservable inputs used to develop Level 3 fair value measurements.

2018-13 is effective for the annual periods in fiscal years beginning after December 15, 2019, and interim periods therein, with early adoption permitted.

We adopted ASU No.

2018-13 as of February 1, 2019, and our adoption did not have a material impact on the consolidated financial statements.

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes .

The amendment removes certain exceptions to the general principles in Topic 740.

The guidance will be effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years.

Early adoption of the amendments is permitted, including adoption in any interim period for public business entities for periods for which financial statements have not yet been issued.

We have adopted ASU No.

2019-12 as of February 1, 2019, and our adoption did not have a material impact on the consolidated financial statements.

2018-15, prospectively, as of February 1, 2020, and our adoption did not have a material impact on the consolidated financial statements.

Revenue Recognition

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Accounts receivable are recorded when we contractually have the right to consideration.

In some arrangements, a right to consideration for our performance under the customer contract may occur before invoicing to the customer, resulting in an unbilled accounts

In some arrangements, a right to consideration for our performance under the customer contract may occur before invoicing to the customer, resulting in an unbilled accounts receivable.

The amount of unbilled accounts receivable included within accounts receivable, net of allowances in the consolidated balance sheets was $ 24.6 million and $ 12.5 million as of January 31, 2021 and 2020, respectively.

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Remaining Performance Obligation

The terms of our subscription agreements are monthly, annual, and multiyear and we may bill for the full term in advance or on an annual or monthly basis, depending on the billing terms with customers.

The terms of our subscription agreements are monthly, annual, and multiyear and we may bill for the full term in advance or on an annual, quarterly, or monthly basis, depending on the billing terms with customers.

As of January 31, 2021, the aggregate amount of the transaction price allocated to our remaining performance obligations was $ 1,750.9 million, which consists of both billed consideration in the amount of $ 883.5 million and unbilled consideration in the amount of $ 867.4 million that we expect to recognize as revenue.

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Cost to Obtain a Contract

We capitalize sales commissions and associated payroll taxes paid to internal sales personnel that are incremental to the acquisition of customer contracts.

These costs are recorded as deferred contract acquisition costs on the consolidated balance sheets.

We primarily capitalize sales commissions and associated payroll taxes paid to internal sales personnel that are incremental costs from the acquisition of customer contracts.

These costs are recorded as deferred contract acquisition costs in the consolidated balance sheets.

We determine whether costs should be deferred based on our sales compensation plans and if the commissions are incremental and would not have occurred absent the customer contract.

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Amortization is recognized on a straight-line basis commensurate with the pattern of revenue recognition.

We determine the period of benefit for commissions paid for the acquisition of the initial customer contract by taking into consideration the initial estimated customer life and the technological life of our video-first communications platform and related significant features.

We determine the period of benefit for commissions paid for the acquisition of the initial customer contract by taking into consideration the initial estimated customer life and the technological life of our unified communications platform and related significant features.

Amortization of deferred contract acquisition costs is included in sales and marketing expense in the consolidated statements of operations.

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government agency securities 834,894 28 ( 257 ) 834,665

Treasury bills 215,902 6 ( 6 ) 215,902

Marketable securities $ 2,003,560 $ 1,226 $ ( 376 ) $ 2,004,410

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Commercial paper $ 37,894 $ — $ — $ 37,894

Corporate bonds 53,267 — ( 53 ) 53,214

Agency bonds 141,157 49 ( 43 ) 141,163

Corporate and other debt securities 320,407 775 ( 16 ) 321,166

government agency securities 71,794 45 ( 2 ) 71,837

Treasury bills 1,699 — — 1,699

Marketable securities $ 571,252 $ 869 $ ( 61 ) $ 572,060

We review the individual securities that have unrealized losses on a regular basis to evaluate whether or not any security has experienced an other-than-temporary decline in fair value.

We review the individual securities that have unrealized losses on a regular basis to evaluate whether or not any security has experienced, or is expected to experience, credit losses resulting in the decline in fair value.

We evaluate, among other factors, whether we have the intention to sell any of these marketable securities and whether it is more likely than not that we will be required to sell any of them before recovery of the amortized cost basis.

Based on the available evidence, we concluded that the gross unrealized losses on the marketable securities as of January 31, 2020 and 2019, are temporary in nature.

There were no material realized gains or losses from available-for-sale securities that were reclassified out of accumulated other comprehensive income (loss) for the fiscal years ended January 31, 2020, 2019, and 2018.

We have not recorded an allowance for credit losses, as we believe any such losses would be immaterial based on the high-grade credit rating for each of our marketable securities as of the end of each fiscal year.

There were no material realized gains or losses from available-for-sale securities that were reclassified out of accumulated other comprehensive income for the fiscal years ended January 31, 2021, 2020, and 2019.

The following table presents the contractual maturities of our marketable securities as of January 31, 2021 and 2020:

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Money market funds $ 958,357 $ 958,357 $ — $ —

Commercial paper 4,994 — 4,994 —

Agency bonds 9,999 — 9,999 —

Treasury bills 618,498 — 618,498 —

Cash equivalents 1,576,855 958,357 618,498 —

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government agency securities 834,665 — 834,665 —

Treasury bills 215,902 — 215,902 —

Marketable securities 2,004,410 — 2,004,410 —

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Certificates of deposit included in other assets, noncurrent 2,238 — 2,238 —

Convertible note included in other assets, noncurrent 5,130 — — 5,130

Total financial assets $ 3,588,733 $ 958,357 $ 2,625,246 $ 5,130

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Money market funds $ 96,486 $ 96,486 $ — $ —

Commercial paper 4,994 — 4,994 —

Agency bonds 9,999 — 9,999 —

Cash equivalents 111,479 96,486 14,993 —

Commercial paper 37,894 — 37,894 —

Corporate bonds 53,214 — 53,214 —

Agency bonds 141,163 — 141,163 —

Corporate and other debt securities 321,166 — 321,166 —

government agency securities 71,837 — 71,837 —

Treasury bills 1,699 — 1,699 —

Marketable securities 572,060 — 572,060 —

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Total financial assets $ 685,940 $ 96,486 $ 589,454 $ —

Financial Liabilities:

Convertible promissory notes – derivative liabilities included in other liabilities, noncurrent $ 163 $ — $ — $ 163

Total financial liabilities $ 163 $ — $ — $ 163

We classify our highly liquid money market funds within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets.

We classify our commercial paper, corporate bonds, agency bonds, corporate debt securities, U.S.

We classify our commercial paper, agency bonds, corporate and other debt securities, U.S.

government agency securities, treasury bills, and certificates of deposit within Level 2 because they are valued using inputs other than quoted prices that are directly or indirectly observable in the market, including readily available pricing sources for the identical underlying security, which may not be actively traded.

We classify the derivative liabilities as Level 3 due to the lack of relevant observable market data over fair value inputs, such as the probability weighting of the various scenarios that can impact settlement of the arrangement.

We classify the convertible note as Level 3 due to the lack of relevant observable market data over fair value inputs, such as the probability weighting of the various scenarios that can impact settlement of the arrangement.

We hold a non-marketable equity investment in a private company in the business of designing and developing video communications hardware.

We do not have a controlling financial interest in the investee nor the ability to exercise significant influence over the operating and financial policies of the investee.

We have elected to measure this investment, which does not have a readily determinable fair value, at its cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer (i.e., using the measurement alternative).

As of January 31, 2021 and 2020, the carrying amount of the equity investment was $ 13.5 million and $ 3.0 million, respectively.

We classify the equity investment as Level 3 within the fair value hierarchy only if an impairment or observable adjustment is recognized during the period, as it is based on an observable transaction price at the transaction date and other unobservable inputs, such as volatility.

Business Combinations

On May 7, 2020, we acquired 100 % of the issued and outstanding share capital of Keybase, Inc.

(“Keybase”), a secure messaging and file-sharing company, for purchase consideration of $ 42.9 million in cash.

The acquisition helps us strengthen the security of our video communications platform by providing end-to-end encryption expertise.

The acquisition has been accounted for as a business combination.

In allocating the purchase consideration, $ 24.3 million was attributed to goodwill, $ 3.3 million to intangible assets, and $ 15.3 million to other net assets acquired primarily consisting of cash and cash equivalents of $ 16.4 million.

The goodwill amount represents synergies related to our existing products expected to be realized from the acquisition and assembled workforce.

The associated goodwill is not deductible for tax purposes.

Acquired intangible assets consisted of developed technology with an estimated useful life of five years .

The developed technology had a remaining useful life of 4.3 years as of January 31, 2021, and is amortized using the straight-line method over its estimated useful life.

Not included in the purchase consideration, we also entered into holdback agreements with certain employees for $ 20.0 million in cash payments, which are subject to such employees’ continued service with us.

The holdback amount of $ 20.0 million will be treated as compensation for research and development over the required service period ranging from one to three years .

Transaction costs incurred in connection with the acquisition were immaterial.

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

Pro forma and historical results of operations of Keybase have not been presented, as the results do not have a material effect on any of the periods presented in our consolidated statements of operations.

Balance Sheet Components

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(in thousands)

Restricted cash from international employee stock sales $ 48,547 $ —

Prepaid expenses 60,702 22,320

Restricted cash from international employee stock sales 50,475 48,547

Other 5,642 4,141

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Computer and office equipment $ 137,445 $ 51,375

Leasehold improvements 18,215 7,660

Software 36,216 10,855

Leasehold improvements 23,593 18,215

Furniture and fixtures 4,625 3,949

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Equity investment 13,538 3,000

Prepaid expense, noncurrent 12,386 2,945

Indefinite-lived intangible assets 8,002 2,159

Convertible note 5,130 —

Intangible assets subject to amortization, net 2,814 —

Other 6,075 5,217

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(in thousands)

Liabilities to employees and tax authorities from international employee stock sales $ 49,287 $ —

Accrued compensation and benefits 36,732 12,004

Accrued expenses $ 157,167 $ 17,475

Accrued compensation and benefits 118,640 36,732

Proceeds from employee equity transactions to be remitted to employees and tax authorities 54,174 49,287

Sales and other tax liabilities 27,453 3,774

Customer deposit liabilities 13,050 3,414

Operating lease liabilities, current 15,601 7,675

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Sales and other tax liabilities $ 58,133 $ 33,957

Convertible promissory notes, net of debt discount — 14,858

Other 3,501 2,329

Other liabilities, noncurrent $ 61,634 $ 36,286

Convertible Promissory Notes

In October 2018, we entered into a strategic partnership with Dropbox, Inc.

(“Dropbox”), a global collaboration platform company, which involves the development of technology enabling integrated workflows for users between our platform and the Dropbox platform, as well as a strategic partnership with Atlassian, Inc.

(“Atlassian”), a collaboration software company, which involves the development of technology enabling integrated workflows for users between our platform and Atlassian’s Jira Ops and Jira Service Desk products.

As part of the strategic partnerships, we issued unsecured three -year convertible promissory notes in the principal amounts of $ 5.0 million and $ 10.0 million to Dropbox and Atlassian, respectively, which accrued simple interest at 2.75 % and 5.0 % per annum, respectively.

Both convertible promissory notes are collectively referred to as “the convertible notes” throughout the notes to the consolidated financial statements, unless otherwise stated.

The terms of the convertible notes provided that they would automatically convert into shares of Class A common stock upon an IPO at a conversion price equal to the IPO price.

In connection with the IPO, the convertible notes and accrued interest automatically converted into 426,223 shares of Class A common stock based on the IPO price of $ 36.00 per share.

As a result of the conversion, the related $ 0.2 million derivative liabilities and the $ 0.1 million unamortized debt discount of the convertible notes were recognized in interest income and other, net in the consolidated statements of operations during the fiscal year ended January 31, 2020.

Operating Leases

We have entered into various operating lease agreements for office space, with remaining contractual periods of up to 9 years.

We also enter into equipment operating lease agreements related to our HaaS offering.

As a practical expedient, we account for HaaS with customers as a combined performance obligation with the right to access our unified communications platform under ASC 606, Revenue from Contracts with Customers .

HaaS was immaterial to our consolidated financial statements.

Many of our leases contain one or more options to extend.

As leases approach maturity, we consider various factors such as market conditions and the terms of any renewal options that may exist to determine whether we are reasonably certain to exercise the options to extend the lease.

Operating lease expense for the fiscal year ended January 31, 2020 was $ 9.7 million, excluding short-term lease costs, variable lease costs, and sublease income, each of which was immaterial for the fiscal year ended January 31, 2020 .

Supplemental balance sheet information as of January 31, 2020, related to operating leases was as follows:

Operating lease expense for the fiscal years ended January 31, 2021 and 2020 was $ 14.5 million and $ 9.7 million , respectively, excluding short-term lease costs, variable lease costs, and sublease income, each of which was immaterial for the fiscal years ended January 31, 2021 and 2020 .

Rent expense was $ 7.2 million for the fiscal year ended January 31, 2019, u nder Topic 840.

Supplemental balance sheet information related to operating leases was as follows:

As of January 31,

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Total operating lease liabilities $ 106,016 $ 72,467

As of January 31, 2020, the weighted-average remaining lease term is 7.5 years and the weighted-average discount rate is 5.1 %.

Supplemental cash flow and other information for the fiscal year ended January 31, 2020, related to operating leases was as follows:

January 31, 2020

Weighted average remaining lease term 6.1 years 7.5 years

Weighted average discount rate 4.5 % 5.1 %

Supplemental cash flow and other information related to operating leases was as follows:

Year Ended January 31,

(in thousands)

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Total operating lease liabilities $ 106,016

As previously disclosed in Note 6.

“Commitments and Contingencies” to Notes to Consolidated Financial Statements in our Prospectus and under the previous lease accounting standard, future minimum payments related to operating leases as of January 31, 2019 are as follows:

As of January 31, 2019

(in thousands)

Year Ending January 31,

Thereafter 18,635

Total future minimum payments $ 56,657

Under the previous lease standard, rent expense during the fiscal years ended January 31, 2019 and 2018 was $ 7.2 million and $ 3.3 million, respectively.

Commitments and Contingencies

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As of January 31, 2021, we had outstanding non-cancelable purchase obligations with a term of 12 months or longer of $ 498.6 million.

License Agreement

In May 2020, we entered into a license agreement with MPEGLA to obtain the rights for future use of licensed intellectual property in exchange for periodic royalty payments.

In connection with the license agreement, we made an initial

royalty payment of $ 9.8 million to use the technology until December 31, 2020 and we made an additional payment of $ 9.8 million in the fourth quarter of fiscal year 2021 to use the technology until December 31, 2021.

Both payments were amortized in cost of revenue on a straight-line basis in our consolidated statements of operations.

For the fiscal year ended January 31, 2021, we recorded $ 10.6 million of such costs.

In addition, we made a one-time payment of $ 9.8 million for past use, which was recorded in general and administrative expenses in our consolidated statements of operations for the fiscal year ended January 31, 2021.

Indemnifications and Contingency

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In addition, we have indemnification agreements with our directors and our executive officers that require us, among other things, to indemnify our directors and executive officers for costs associated with any fees, expenses, judgments, fines, and settlement amounts incurred by any of those 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 us, arising out of that person’s services as our director or officer or that person’s services provided to any other company or enterprise at our request.

We maintain director and officer insurance coverage that may enable us to recover a portion of any future

indemnification amounts paid.

We maintain director and officer insurance coverage that may enable us to recover a portion of any future indemnification amounts paid.

To date, there have been no claims under any of our directors’ and executive officers’ indemnification provisions.

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Although we are diligent in collecting and remitting such taxes, there is uncertainty as to what constitutes sufficient presence for a jurisdiction to levy taxes, fees, and surcharges for sales made over the Internet.

As of January 31, 2020 and 2019, we recorded sales and other tax liabilities of $ 37.7 million and $ 22.0 million, respectively, of which $ 3.7 million and $ 1.2 million are included in accrued expenses and other current liabilities, respectively, and $ 34.0 million and $ 20.8 million are included in other liabilities, noncurrent, respectively, on our consolidated balance sheets, based on our best estimate of the probable liability for the loss contingency incurred as of those dates.

As of January 31, 2021 and 2020, we recorded sales and other tax liabilities of $ 85.6 million and $ 37.7 million, respectively, of which $ 27.5 million and $ 3.7 million are included in accrued expenses and other current liabilities, respectively, and $ 58.1 million and $ 34.0 million are included in other liabilities, noncurrent, respectively, in our consolidated balance sheets, based on our best estimate of the probable liability for the loss contingency incurred as of those dates.

Our estimate of a probable outcome under the loss contingency is based on analysis of our sales and marketing activities, revenue subject to sales tax, and applicable regulations in applicable jurisdictions in each period.

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economic sanctions or export control laws in the future, it could result in fines and penalties.

In June 2020 we received a grand jury subpoena from the Department of Justice’s U.S.

Attorney’s Office for Eastern District of New York “EDNY”), which requested information regarding our interactions with foreign governments and foreign

political parties, including the Chinese government, as well as information regarding storage of and access to user data, the development and implementation of Zoom’s privacy policies, and the actions we took relating to the Tiananmen commemorations on Zoom.

In July 2020, we received subpoenas from the Department of Justice’s U.S.

Attorney’s Office for the Northern District of California (“NDCA”) and the SEC.

Both subpoenas seek documents and information relating to various security, data protection and privacy matters, including our encryption, and our statements relating thereto, as well as calculation of usage metrics and related public statements.

In addition, the NDCA subpoena seeks information relating to any contacts between our employees and representatives of the Chinese government, and any attempted or successful influence by any foreign government in our policies, procedures, practices, and actions as they relate to users in the United States.

We have since received additional subpoenas from EDNY and NDCA seeking related information.

We are fully cooperating with all of these investigations and have been conducting our own thorough internal investigation.

These investigations are ongoing, and we do not know when they will be completed, which facts we will ultimately discover as a result of the investigations, or what actions the government may or may not take.

We cannot predict the outcome of these investigations, and a negative outcome in any or all of these matters could cause us to incur substantial fines, penalties, or other financial exposure.

Legal Proceedings

In the ordinary course of business, we may be subject from time to time to various proceedings, lawsuits, disputes, or claims.

Although we cannot predict with assurance the outcome of any litigation, we do not believe there are currently any such actions that, if resolved unfavorably, would have a material impact on our financial condition, results of operations, or cash flows.

Convertible Preferred Stock, Stockholders’ Equity (Deficit), and Equity Incentive Plan

Beginning on March 30, 2020, multiple putative class actions have been filed against us in various U.S.

federal district courts and state courts relating to our alleged privacy and security practices, including alleged data sharing with third parties (the “U.S.

Privacy Class Actions”).

We have also been sued under the DC private attorney general statute on behalf of members of the general public.

The plaintiffs claim violations of a variety of state consumer protection and privacy laws, and also assert state constitutional and common law claims such as negligence and unjust enrichment.

Privacy Class Actions seek to certify both nationwide and state-specific classes of individuals using our services in certain time periods.

The plaintiffs seek various forms of injunctive and monetary relief, including restitution, statutory and actual damages, punitive damages, and attorneys’ fees.

The federal cases have been transferred to and consolidated in the Northern District of California with our consent;

lead plaintiffs’ counsel have been appointed;

and plaintiffs filed their first amended consolidated class action complaint on October 28, 2020.

We filed a motion to dismiss the first amended consolidated class action complaint on December 2, 2020, which is pending ruling by the court, and the parties are presently engaged in discovery, with plaintiffs’ motion for class certification due on June 25, 2021.

On April 7, 2020, and April 8, 2020, securities class action complaints were filed against us and two of our officers in the United States District Court for the Northern District of California.

The plaintiffs are purported stockholders of the Company.

The complaints allege, among other things, that we violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 by making false and misleading statements and omissions of material fact about our data privacy and security measures.

The complaints seek unspecified damages, interest, fees, and costs.

On May 18, 2020, the actions were consolidated.

On November 4, 2020, the court appointed a lead plaintiff.

On December 23, 2020, the lead plaintiff filed a consolidated complaint.

The response to the complaint is currently stayed while the court considers a motion for reconsideration regarding its lead plaintiff appointment.

On June 11, 2020 and July 30, 2020, purported shareholder derivative complaints were filed in the United States District Court for the District of Delaware.

The first complaint names as defendants nine of our officers and directors and the second complaint names eight of our officers and directors.

The lawsuits assert state and federal claims and are based on the same alleged misstatements as the shareholder class action complaint.

The lawsuits accuse our board of directors of failing to exercise reasonable and prudent supervision over our management, policies, practices, and internal controls.

The plaintiffs seek unspecified monetary damages on behalf of us as well as governance reforms.

On September 25, 2020, the derivative cases were consolidated.

The consolidated case is stayed pending resolution of a forthcoming motion to dismiss the securities class action.

We believe these lawsuits are without merit, and we are vigorously defending ourselves against them.

Given the uncertainty of litigation, the preliminary stage of the cases, and the legal standards that must be met for, among other things, class certification and success on the merits, we cannot estimate the reasonably possible loss or range of loss that may result from these actions.

In September 2019, the FTC issued a CID to us requiring us to produce certain documents and materials and to answer certain interrogatories relating to our privacy and security representations and practices.

Since then, we have fully cooperated with the investigation.

In October 2020, we reached a proposed settlement agreement with the FTC staff, which would resolve the FTC’s allegations that certain of our statements and practices about our security constituted deceptive and unfair acts or practices in violation of the FTC Act.

On November 10, 2020, the FTC Commissioners voted to approve the settlement and, on November 13, 2020, the FTC published the settlement in the Federal Register for a 30-day public comment period, which ended on December 13, 2020.

On January 19, 2021, the FTC voted to finalize the settlement.

Under the terms of the settlement, we neither admit nor deny the FTC’s allegations, and the FTC does not impose any fine or penalty upon us.

We are required to implement certain injunctive provisions, including, among other things, refraining from making any misrepresentations

regarding the privacy and security of our services or how we collect, maintain, use, delete, disclose, allow access to, and protect user information.

It also requires us to implement a detailed information security program and obtain third-party security assessments periodically.

We do not expect the settlement to have a material impact on our financial results.

We will cooperate with the FTC’s requirements and work to ensure compliance.

Any failure to comply with the settlement may increase the possibility of additional adverse consequences, including litigation, additional regulatory actions, injunctions, or monetary penalties, or require further changes to our business practices, significant management time, or the diversion of significant operational resources, all of which could result in a material loss or otherwise harm our business.

In addition, from time to time, we are involved in various other legal proceedings arising from the normal course of business activities.

We are not presently a party to any other such litigation the outcome of which, we believe, if determined adversely to us, would individually, or taken together, have a material adverse effect on our business, operating results, cash flows, or financial condition.

Defending such proceedings is costly and can impose a significant burden on management and employees.

We may receive unfavorable preliminary or interim rulings in the course of litigation, and there can be no assurances that favorable final outcomes will be obtained.

Convertible Preferred Stock, Stockholders’ Equity (Deficit), and Equity Incentive Plans

Convertible Preferred Stock

Convertible preferred stock consisted of the following as of January 31, 2019 and as of immediately prior to the automatic conversion of convertible preferred stock into common stock:

As of January 31, 2019

Authorized Shares Issued

Outstanding Aggregate

(in thousands, except share data)

Series A 67,083,500 61,717,700 $ 9,258

Series B 25,857,784 25,857,784 6,500

Series C 34,363,256 34,363,256 30,000

Series D 30,800,000 30,727,064 114,966

Total convertible preferred stock 158,104,540 152,665,804 $ 160,724

Upon completion of the IPO in April 2019, all shares of convertible preferred stock outstanding, totaling 152,665,804 shares, were automatically converted into an equivalent number of shares of Class B common stock on a one-to-one basis and their carrying value of $ 159.6 million was reclassified into stockholders’ equity.

As of January 31, 2020, there were no shares of convertible preferred stock issued and outstanding.

As of January 31, 2021 and 2020, there were no shares of convertible preferred stock issued and outstanding.

In connection with the IPO, our amended and restated certificate of incorporation became effective, which authorized the issuance of 200,000,000 shares of undesignated preferred stock with a par value of $ 0.001 with rights and preferences, including voting rights, designated from time to time by our board of directors.

Repurchases of Convertible Preferred Stock

In fiscal year 2018, we voluntarily repurchased 1,365,800 shares of Series A convertible preferred stock from certain existing investors for a total consideration of $ 4.6 million.

The amount paid in excess of the carrying value of the Series A convertible preferred stock is considered a deemed dividend and is reflected as distributed earnings attributable to participating securities in the calculation of net loss attributable to common stockholders.

The shares of Series A convertible preferred stock that we repurchased were retired immediately thereafter.

Dual-Class Common Stock Structure

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Class A and Class B common stock are collectively referred to as “common stock” throughout the notes to the consolidated financial statements, unless otherwise noted.

Equity Financing

On April 23, 2019, we completed our IPO, in which we issued and sold 9,911,434 shares of our Class A common stock at $ 36.00 per share.

On April 18, 2019, the underwriters exercised their option to purchase an additional 3,130,435 shares of our Class A common stock at $ 36.00 per share.

We received aggregate proceeds of $ 447.9 million, net of underwriters’ discounts and commissions.

In connection with the IPO:

• all of the shares of convertible preferred stock outstanding automatically converted into an aggregate of 152,665,804 shares of Class B common stock;

• outstanding convertible promissory notes and accrued interest automatically converted into 426,223 shares of Class A common stock based on the IPO price of $ 36.00 per share;

• Salesforce Ventures LLC purchased 2,777,777 shares of Class A common stock from us at $ 36.00 per share in a concurrent private placement.

Deferred offering costs consist primarily of accounting, legal, and other fees related to our IPO.

Prior to the IPO, all deferred offering costs were capitalized in other assets, noncurrent in the consolidated balance sheets.

After the IPO, $ 6.4 million of deferred offering costs were reclassified into stockholders’ equity (deficit) as a reduction of the IPO proceeds in the consolidated balance sheets.

On January 15, 2021, we completed our follow-on public offering, in which we issued and sold 5,882,353 shares of our Class A common stock, including 735,294 shares pursuant to the full exercise of the underwriter's option to purchase additional shares, at $ 340.00 per share.

We received aggregate proceeds of $ 1,980.0 million, net of underwriters’ discounts and commissions.

The other related offering costs were immaterial.

Upon the completion of the IPO in April 2019, our amended and restated certificate of incorporation became effective, which also authorized the issuance of 2,000,000,000 shares of Class A common stock, $ 0.001 par value per share and 300,000,000 shares of Class B common stock, $ 0.001 par value per share.

We have the following shares of common stock reserved for future issuance:

We have the following shares of Class A common stock reserved for future issuance:

As of January 31,

Conversion of convertible preferred stock — 152,665,804

Stock options outstanding 9,239,504 16,833,009

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Remaining shares available for future issuance under the ESPP 9,648,574 7,186,070

Total shares of common stock reserved 60,911,996 189,578,369

Total shares of Class A common stock reserved 68,708,474 60,911,996

Equity Incentive Plans

In 2011, we adopted the 2011 Global Share Plan (“2011 Plan”), under which officers, employees, and consultants may be granted various forms of equity incentive compensation at the discretion of the board of directors, including stock options and restricted stock awards.

The awards have varying terms, but generally vest over four years, and are issued at the Fair Market Value (as defined in the 2011 Plan) of the shares of common stock on the date of grant.

The plan administrator determines the term of stock options granted under the 2011 Plan, up to a maximum of 10 years (or five years for 10 % stockholders as required by the Code).

Certain awards provide for accelerated vesting if there is a Change in Control (as defined in the 2011 Plan).

As of January 31, 2019, our board of directors had authorized 71,240,000 shares of common stock to be reserved for grants of awards under the 2011 Plan.

As of January 31, 2019, stock options covering 35,064,465 shares of our Class B common stock were outstanding and the remaining number of shares available for future issuance was 1,848,100 under the 2011 Plan.

In connection with the IPO, the shares of Class B common stock remaining available for issuance under the 2011 Plan became available for issuance for a corresponding number of shares of our Class A common stock under the 2019 Equity Incentive Plan (“2019 Plan”).

In April 2019, we adopted the 2019 Plan, which is a successor to and continuation of our 2011 Plan.

Our 2019 Plan provides for the grant of stock options, stock appreciation rights, restricted stock awards, RSU awards, performance awards, and other forms of awards.

The plan administrator determines the term of stock options granted under the 2019 Plan, up to a maximum of 10 years.

The maximum number of shares of our Class A common stock that may be issued under our 2019 Plan will not exceed 58,300,889 shares of our Class A common stock, which is the sum of (1) 34,000,000 new shares, plus (2) an additional number of shares not to exceed 24,300,889 , consisting of (A) shares that remain available for the issuance of awards under our 2011 Plan as of immediately prior to the time our 2019 Plan becomes effective and (B) shares of Class B common stock subject to outstanding stock options or other stock awards granted under our 2011 Plan that, on or after the 2019 Plan becomes effective, terminate, or expire prior to exercise or settlement;

In 2011, we adopted the 2011 Global Share Plan (“2011 Plan”), under which officers, employees, and consultants were granted various forms of equity incentive compensation at the discretion of the board of directors, including stock options and restricted stock awards.

In April 2019, we adopted the 2019 Plan, which became effective in connection with our IPO.

Our 2019 Plan provides for the grant of stock options, stock appreciation rights, RSAs, RSU awards, performance awards, and other forms of awards.

The maximum number of shares of our Class A common stock that may be issued under our 2019 Plan will not exceed 58,300,889 shares of our Class A common stock, which is the sum of (1) 34,000,000 new shares, plus (2) an additional number of shares not to exceed 24,300,889 , consisting of (A) shares that remain available for the issuance of awards under our 2011 Plan as of immediately prior to the time our 2019 Plan becomes effective and (B) shares of Class B common stock subject to outstanding stock options or other stock awards granted under our 2011 Plan that, on or after the 2019 Plan became effective, terminate, or expire prior to exercise or settlement;

are not issued because the award is settled in cash;

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or are reacquired or withheld (or not issued) to satisfy a tax withholding obligation or the purchase or exercise price, if any, as such shares become available from time to time.

In addition, the number of shares of our Class A common stock reserved for issuance under our 2019 Plan will automatically increase on February 1 of each calendar year, starting on February 1, 2020 through February 1, 2029, in an amount equal to (i) 5 % of the total number of shares of our common stock (both Class A and Class B) outstanding on January 31 of the fiscal year before the date of each automatic increase or (ii) a lesser number of shares determined by our board of directors prior to the applicable February 1.

In addition, the number of shares of our Class A common stock reserved for issuance under our 2019 Plan automatically increases on February 1 of each calendar year, starting on February 1, 2020 through February 1, 2029, in an amount equal to (i) 5 % of the total number of shares of our common stock (both Class A and Class B) outstanding on January 31 of the fiscal year before the date of each automatic increase or (ii) a lesser number of shares determined by our board of directors prior to the applicable February 1.

Stock Options

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Vested and exercisable as of January 31, 2021 4,641,908 $ 3.98 6.6 $ 1,708,663

There were no options granted for the fiscal year ended January 31, 2021.

The weighted-average grant date fair value of options granted to employees during the fiscal years ended January 31, 2020 and 2019 was $ 25.17 and $ 6.28 , respectively.

The intrinsic value of the options exercised, which represents the difference between the fair market value of our common stock on the date of exercise and the exercise price of each option, was $ 1,786.7 million, $ 767.3 million, and $ 60.8 million during the fiscal years ended January 31, 2021, 2020, and 2019, respectively.

As of January 31, 2020, unrecognized stock-based compensation cost related to outstanding unvested stock options was $ 76.6 million, which is expected to be recognized over a weighted-average period of 2.8 years.

As of January 31, 2021, unrecognized stock-based compensation expense related to outstanding unvested stock options was $ 46.7 million, which is expected to be recognized over a weighted-average period of 1.4 years.

The Black-Scholes assumptions used to value the employee options at the grant dates are as follows:

Year ended January 31,

2020 2019 2018

Expected term (years) 5.0 - 6.1

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44.6 % - 48.2 %

47.7 % - 52.0 %

Risk-free interest rate 1.6 % - 2.5 %

2.6 % - 3.1 %

1.8 % - 2.3 %

Expected dividend yield — —

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A total of 9,000,000 shares of our Class A common stock were initially reserved for issuance under the ESPP.

The number of shares of our Class A common stock reserved for issuance will automatically increase on February 1 of each calendar year, beginning on February 1, 2020 through February 1, 2029, by the lesser of (1) 1 % of the total number of shares of our common stock (both Class A and Class B) outstanding on the last day of the fiscal year before the date of the automatic increase, and (2) 7,500,000 shares;

The number of shares of our Class A common stock reserved for issuance automatically increases on February 1 of each calendar year, beginning on February 1, 2020 through February 1, 2029, by the lesser of (1) 1 % of the total number of shares of our common stock (both Class A and Class B) outstanding on the last day of the fiscal year before the date of the automatic increase, and (2) 7,500,000 shares;

provided that before the date of any such increase, our board of directors may determine that such increase will be less than the amount set forth in clauses (1) and (2).

Generally, all regular employees, including executive officers, employed by us or by any of our designated affiliates, except for those holding 5 % or more of the total combined voting power or value of all classes of our stock, may participate in the ESPP and may contribute, normally through payroll deductions, up to 20 % of their earnings (as defined in the ESPP) for the purchase of our Class A common stock under the ESPP.

Unless otherwise determined by our board of directors, Class A common stock will be purchased for the accounts of employees participating in the ESPP at a price per share equal to the lesser of (1) 85 % of the fair market value of a share of our Class A common stock on the first date of an offering or (2) 85 % of the fair market value of a share of our Class A common stock on the date of purchase.

Under our current ESPP, Class A common stock will be purchased for the accounts of employees participating in the ESPP at a price per share equal to the lesser of (1) 85 % of the fair market value of a share of our Class A common stock on the first date of an offering or (2) 85 % of the fair market value of a share of our Class A common stock on the date of purchase.

No employee may purchase shares under the ESPP at a rate in excess of $ 25,000 worth of our Class A common stock based on the fair market value per share of our Class A common stock at the beginning of an offering for each calendar year such purchase right is outstanding or 3,000 shares.

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The first offering period began on April 18, 2019.

As of January 31, 2020, 490,268 shares of our Class A common stock have been purchased under the ESPP.

During the fiscal years ended January 31, 2021 and 2020, 923,553 and 490,268 shares, respectively, of our Class A common stock were purchased under the ESPP.

As of January 31, 2021, unrecognized stock-based compensation expense related to the ESPP was $ 31.9 million, which is expected to be recognized over a weighted-average period of 0.4 years.

We estimated the fair value of ESPP purchase rights using a Black-Scholes option-pricing model with the following assumptions:

January 31, 2020

Year ended January 31,

Expected term (years) 0.5 - 2.1

Expected volatility 40.3 % - 75.0 %

40.3 % - 56.2 %

Risk-free interest rate 0.1 % - 2.5 %

1.5 % - 2.5 %

Expected dividend yield — —

Early Exercise of Common Stock Options

Our board of directors authorized certain stock option holders to exercise unvested stock options to purchase shares of common stock.

Shares received from such early exercises are subject to repurchase in the event of the optionee’s termination of service, at the original issuance price, until the stock options are fully vested.

As of January 31, 2020 and 2019, 466,819 and 1,261,230 shares of Class B common stock, respectively, were subject to repurchase at a weighted-average price of $ 2.58 and $ 1.41 per share, respectively.

The cash proceeds received for unvested shares of common stock recorded within accrued expenses and other current liabilities in the consolidated balance sheets were $ 1.2 million and $ 1.8 million as of January 31, 2020 and 2019, respectively.

Third-Party Stock Transactions

In May 2017, our CEO sold 2,899,136 shares of our common stock to an existing investor at a per share price of $ 3.74 .

In the consolidated statements of operations for fiscal year 2018, due to the fact that the purchase was made by an economic interest holder and is presumptively considered compensatory under GAAP, we recognized stock-based compensation expense related to such stock sale of $ 8.6 million, the difference between the purchase price and the fair value of our common stock at the time of sale.

Shares Reserved for Charitable Donations

During the fiscal year ended January 31, 2020, our board of directors approved the issuance of 500,000 shares of Class A common stock for the sole purpose of being transferred to a nonprofit organization to be formed or identified by us at a future time.

As of January 31, 2020, no shares have been transferred to a nonprofit organization.

As a result, no expense has been recognized to date.

During fiscal year 2020, our board of directors approved the issuance of 500,000 shares of Class A common stock for the sole purpose of being transferred to nonprofit organizations.

As of January 31, 2021, 94,844 shares of Class A common stock have been transferred to a donor advised fund through an unaffiliated nonprofit organization.

We recorded a non-cash charge of

$ 23.3 million for the fair value of the donated shares, which was recorded in general and administrative expense in the consolidated statements of operations for the fiscal year ended January 31, 2021.

Stock-Based Compensation

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Total stock-based compensation expense $ 275,818 $ 73,109 $ 8,941

The components of the net income (loss) before the provision for income taxes were as follows:

The components of the net income before the provision for income taxes were as follows:

Year Ended January 31,

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Federal 689 — —

State 248 — —

Foreign ( 175 ) ( 1,183 ) —

13 unchanged sentences

Change in valuation allowance 165,869 30,932 ( 1,438 )

Change in federal tax rate — — ( 881 )

Other 648 ( 479 ) ( 698 )

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Deferred tax liabilities:

Property and equipment ( 6,744 ) ( 4,779 )

Deferred commissions ( 21,156 ) ( 11,468 )

Property and equipment and intangible assets ( 17,229 ) ( 6,744 )

Deferred contract acquisition costs ( 76,593 ) ( 21,156 )

Operating right-of-use assets ( 25,550 ) ( 16,453 )

1 unchanged sentence

Net deferred tax assets $ 112 $ 1,183

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

Management believes it is more likely than not that the deferred tax assets will not be realized;

We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized.

In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, carryback potential if permitted under the tax law, and results of recent operations.

If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

Management believes it is more likely than not that some deferred tax assets will not be realized.

Accordingly, a valuation allowance has been recorded on U.S.

net deferred tax assets.

The valuation allowance increased $ 35.5 million during the fiscal year ended January 31, 2020 and was primarily attributable to net operating losses generated as a result of stock-based compensation windfall benefits.

deferred tax assets as of January 31, 2021 and 2020.

The valuation allowance increased $ 298.7 million and $ 35.5 million during the fiscal years ended January 31, 2021 and 2020, respectively, and was primarily attributable to net operating losses generated as a result of stock-based compensation windfall benefits.

The valuation allowance decreased $ 2.3 million during the fiscal year ended January 31, 2019 and was primarily attributable to deferred tax liabilities generated from the capitalization of commissions for GAAP purposes.

The valuation allowance decreased $ 3.1 million during the fiscal year ended January 31, 2018 and was primarily attributable to remeasuring the U.S.

net deferred tax assets at the applicable tax rate of 21% in accordance with the TCJA, offset by increases in deferred tax assets primarily related to net operating losses.

As of January 31, 2020, we had net operating loss carryforwards of approximately $ 148.0 million for federal income tax purposes, a portion of which will begin to expire in 2032 if unused.

We intend to continue maintaining a full valuation allowance on our deferred tax assets in the U.S.

until there is sufficient evidence to support the reversal of all or some portion of these allowances.

In our valuation allowance evaluation, we give more weight to evidence that can be objectively verified than to evidence that cannot be objectively verified.

Our consideration of the evidence requires management to make a number of significant judgments, estimates, and assumptions about highly complex and inherently uncertain matters.

Given our current earnings and anticipated future earnings, we believe that there is a reasonable possibility that in the foreseeable future, sufficient positive evidence may become available that results in a conclusion that a portion of the valuation allowance will no longer be needed.

Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded.

However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability (pretax income adjusted for permanent differences) that we are able to actually achieve.

As of January 31, 2021, we had net operating loss carryforwards of approximately $ 1,264.3 million for federal income tax purposes, a small portion of which will begin to expire in 2032 if unused.

We had net operating loss carryforwards of approximately $ 797.0 million for state income tax purposes, which will begin to expire in the year 2027 if unused.

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We have not provided foreign withholding taxes for any undistributed earnings of our foreign subsidiaries.

We comply with ASC 740-10, Accounting for Uncertainty in Income Taxes , which prescribes a comprehensive model for the recognition, measurement, presentation, and disclosure in financial statements of any uncertain tax positions that have been taken or are expected to be taken on a tax return.

This pronouncement sets a “more likely than not” criterion for recognizing the tax benefit of uncertain tax positions.

Total unrecognized tax benefits are $ 8.1 million as of January 31, 2020.

If recognized, $ 2.0 million would affect our effective tax rate.

A reconciliation of the beginning and ending balance of total unrecognized tax position is as follows:

A reconciliation of the beginning and ending balance of total unrecognized tax benefits is as follows:

Unrecognized Tax Benefits

1 unchanged sentence

Balance - January 31, 2018 $ 1,976

Increases related to current years’ tax positions 771

Increases related to current year’s tax positions 802

Balance - January 31, 2019 2,778

Increases related to current years’ tax positions 802

Increases related to current year’s tax positions 5,328

Balance - January 31, 2020 8,106

Increases related to current years’ tax positions 5,328

Increases related to current year’s tax positions 6,001

Increases related to prior year’s tax positions 314

Current year acquisitions 885

Lapse of statute of limitations ( 422 )

Balance - January 31, 2021 $ 14,884

Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.

We recognized $ 0.3 million interest and penalties associated with unrecognized tax benefits during the fiscal year ended January 31, 2020, and we incurred no interest and penalties during the fiscal year ended January 31, 2019.

Included in the balance of unrecognized tax benefits as of January 31, 2021, 2020, and 2019, are $ 2.0 million, $ 2.0 million, and $ 1.0 million, respectively, of tax benefits that, if recognized, would affect the effective tax rate.

We recognize interest and penalties related to unrecognized tax benefits as income tax expense.

During the fiscal year ended January 31, 2021, we recognized interest and penalties of $ 0.1 million, and had a cumulative liability of $ 0.2 million as of January 31, 2021.

During the fiscal year ended January 31, 2020, we recognized interest and penalties of $ 0.3 million, and had a cumulative liability of $ 0.3 million as of January 31, 2020.

During the fiscal year ended January 31, 2019, we recognized no interest and penalties.

We file income tax returns in the U.S.

1 unchanged sentence

As of January 31, 2021, all of the years remain open to examination by the federal and state tax authorities, for three or four years from the tax year in which net operating losses or tax credits are utilized.

We are currently under Internal Revenue Service (“IRS”) examination for the tax year ended January 31, 2018.

We believe that an adequate provision has been made for any adjustments that may result from tax examinations.

Although the timing of the resolution, settlement, and closure of audits is not certain, we do not believe it is reasonably possible that our unrecognized tax benefits will materially change in the next 12 months.

Net Income (Loss) Per Share Attributable to Common Stockholders

The following table sets forth the computation of basic and diluted net income (loss) per share attributable to common stockholders for the periods presented:

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act was passed into law.

On December 27, 2020, the Consolidated Appropriations Act (2021) was passed into law.

Both amended portions of relevant tax law and did not have a significant impact on the provision for income taxes for the fiscal year ended January 31, 2021.

We will continue to monitor future guidance regarding these acts and other similar stimulus measures to determine any future impacts.

Net Income Per Share Attributable to Common Stockholders

The following table sets forth the computation of basic and diluted net income per share attributable to common stockholders for the periods presented:

Year Ended January 31,

2 unchanged sentences

(in thousands, except share and per share data)

Net income (loss) $ 5,450 $ 19,855 $ — $ 7,584 $ — $ ( 3,822 )

distributed earnings attributable to participating securities — — — — — ( 4,405 )

Net income $ 432,968 $ 239,348 $ 5,450 $ 19,855 $ — $ 7,584

undistributed earnings attributable to participating securities — ( 789 ) — ( 3,555 ) — ( 7,584 )

Net income (loss) attributable to common stockholders, basic $ 5,450 $ 16,300 $ — $ — $ — $ ( 8,227 )

Reallocation of net income (loss) attributable to common stockholders ( 439 ) 439 — — — —

Net income (loss) attributable to common stockholders, diluted $ 5,011 $ 16,739 $ — $ — $ — $ ( 8,227 )

Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, basic

Net income attributable to common stockholders, basic $ 432,968 $ 238,559 $ 5,450 $ 16,300 $ — $ 0

Reallocation of net income attributable to common stockholders ( 14,321 ) 14,321 ( 439 ) 439 — 0

Net income attributable to common stockholders, diluted $ 418,647 $ 252,880 $ 5,011 $ 16,739 $ — $ 0

Weighted-average shares used in computing net income per share attributable to common stockholders, basic

183,015,245 100,838,409 58,541,269 175,100,067 — 84,483,094

Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, diluted

Weighted-average shares used in computing net income per share attributable to common stockholders, diluted

185,860,412 112,267,257 58,583,874 195,714,140 — 116,005,681

Net income (loss) per share attributable to common stockholders, basic

Net income per share attributable to common stockholders, basic

$ 2.37 $ 2.37 $ 0.09 $ 0.09 $ — $ 0.00

Net income (loss) per share attributable to common stockholders, diluted

Net income per share attributable to common stockholders, diluted

$ 2.25 $ 2.25 $ 0.09 $ 0.09 $ — $ 0.00

The potential shares of common stock that were excluded from the computation of diluted net income (loss) per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive are as follows:

The potential shares of common stock that were excluded from the computation of diluted net income per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive are as follows:

Year Ended January 31,

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

Convertible preferred stock — — — — — 152,665,804

Outstanding stock options 51,444 — 141,782 — — 3,541,878

2 unchanged sentences

14,951 — 1,180,664 — — —

Shares subject to repurchase from early exercised stock options and restricted stock — — — — — 2,302,483

Total 165,336 — 1,929,417 — — 3,541,878

The table above does not include 500,000 shares of issued Class A common stock held by us and reserved for the sole purpose of being transferred to a nonprofit organization to be formed or identified by us at a future time.

The convertible promissory notes are contingently convertible (convertible upon completion of an IPO or a qualified financing event as discussed in Note 6), and the conditions for the convertible feature were not satisfied as of January 31, 2019.

The table above does not include 405,156 and 500,000 shares of issued Class A common stock held by us as of January 31, 2021 and 2020, respectively, that are reserved for the sole purpose of being transferred to nonprofit organizations.

In October 2018, we entered into a strategic partnership with Dropbox, Inc.

As of January 31, 2019, we had issued unsecured three-year convertible promissory notes in the principal amounts of $ 5.0 million and $ 10.0 million to Dropbox and Atlassian, respectively, which accrued simple interest at 2.75 % and 5.0 % per annum, respectively.

The convertible promissory notes are contingently convertible (convertible upon completion of an IPO or a qualified financing event), and the conditions for the convertible feature were not satisfied as of January 31, 2019.

For fiscal year ended January 31, 2019, we have excluded these potential dilutive shares from the calculation of diluted net income per share attributable to common stockholders.

7 unchanged sentences

Income (loss) from operations $ 256,117 $ 192,242 $ 188,104 $ 23,385 $ 10,553 $ ( 1,679 ) $ 2,265 $ 1,557

Net income (loss) attributable to common stockholders $ 15,313 $ 2,207 $ 5,521 $ 198 $ 1,196 $ ( 598 ) $ 496 $ ( 1,340 )

Net income (loss) per share attributable to common stockholders:

Net income attributable to common stockholders $ 260,393 $ 198,440 $ 185,742 $ 27,036 $ 15,313 $ 2,207 $ 5,521 $ 198

Net income per share attributable to common stockholders:

Basic $ 0.91 $ 0.70 $ 0.66 $ 0.10 $ 0.06 $ 0.01 $ 0.02 $ 0.00

Diluted $ 0.87 $ 0.66 $ 0.63 $ 0.09 $ 0.05 $ 0.01 $ 0.02 $ 0.00

Subsequent Events

We have evaluated subsequent events from the balance sheet date through March 20, 2020, the date at which the consolidated financial statements were available to be issued.

Subsequent to January 31, 2020, we entered into an agreement to lease additional space and extend the term of existing leases located in the United States.

We expect to make $ 8.9 million of additional rent payments over the term of these leases, which expires during the year ending January 31, 2030.

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 8. Financial Statements and Supplementary Data